S-1

As filed with the Securities and Exchange Commission on June 25, 2004

Registration Statement No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Milacron Inc.

(Exact name of registrant as specified in its charter)

Delaware	3559	No. 31-1062125
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

2090 Florence Avenue

Cincinnati, Ohio 45206

(513) 487-5000

(Address, including ZIP Code, and telephone number, including area code, of registrant’s principal executive offices)

Hugh C. O’Donnell, Esq.

Vice President, General Counsel and Secretary

Milacron Inc.

2090 Florence Avenue

Cincinnati, Ohio 45206

(513) 487-5000

(Name, address, including ZIP Code, and telephone number, including area code, of agent for service)

Copy to:

Mark I. Greene, Esq.

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York 10019

(212) 474-1000

     Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to rule 415 under the Securities Act of 1933 check the following box:    o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:    o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount to	Offering Price	Aggregate	Registration
Securities to be Registered	be Registered	Per Unit(1)	Offering Price(2)	Fee
Subscription rights	16,183,457	—	N/A	(3)
Shares of common stock issuable upon exercise of subscription rights	16,183,457	$2.00	$32,366,914	$4,100.89
Preferred stock purchase rights	16,183,457	—	N/A	(4)

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
(2)	The maximum aggregate offering price is based on the $2.00 offering price per share, which is not based on the market price of the common stock.
(3)	Pursuant to Rule 457(g), no separate registration fee is required for the subscription rights, since they are being registered in the same registration statement as the common stock underlying the subscription rights.
(4)	The preferred stock purchase rights initially will trade together with the common stock. The value attributable to the preferred stock purchase rights, if any, is reflected in the offering price of the common stock.

         The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 25, 2004

PRELIMINARY PROSPECTUS

16,183,457 Shares

[MILACRON LOGO]

Milacron Inc.

Common Stock, par value $0.01 per share

Rights to Purchase up to 16,183,457 Shares of Common Stock

at $2.00 per Share

          If you were a holder of our common stock (other than any common stock received upon conversion of our convertible preferred stock) as of 5:00 p.m., New York City time, on                     , 2004, we have granted to you rights to purchase additional shares of our common stock.

      Nontransferable subscription certificates are being delivered to you along with this prospectus.

      Each right entitles you to purchase one share of our common stock for a subscription price of $2.00 per share. Each shareholder is being granted 0.452 rights for each share of our common stock (other than any common stock received upon conversion of our convertible preferred stock) held as of 5:00 p.m., New York City time, on                     , 2004, but fractional rights held by a shareholder after aggregating all rights to which the shareholder is entitled will be rounded up to the nearest whole number. You will be able to exercise your rights until 5:00 p.m., New York City time, on                     , 2004, unless we extend the expiration date.

      Our common stock is quoted on the New York Stock Exchange (Ticker: MZ). On June 24, 2004, the last reported sale price of our common stock was $3.97 per share.

      The shares are being offered directly by us without the services of an underwriter or selling agent.

	Per Share	Total
Subscription price	$2.00	$32,366,914
Estimated expenses
Net proceeds

       You should consider carefully the risks that we have described in “Risk Factors” beginning on page 11 before deciding whether to invest in our common stock.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2004

TABLE OF CONTENTS

	Page
Where You Can Find More Information		i
Forward-looking Statements		ii
Industry and Market Data		iii
Prospectus Summary		1
Risk Factors		11
Use of Proceeds		25
Price Range of Common Stock and Dividend Policy		26
Capitalization		27
Dilution		29
Selected Consolidated Financial and Other Data		30
Unaudited Pro Forma Consolidated Financial Statements		35
Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
Business		75
Management		82
Principal Holders of Voting Securities		92
Share Ownership of Directors and Executive Officers		95
Securities Authorized for Issuance Under Equity Compensation Plans		96
Certain Relationships and Related Transactions		97
Performance Graph		98
Description of Certain Indebtedness		99
The Rights Offering		104
Plan of Distribution		112
Description of Capital Stock		113
Shares Eligible for Future Sale		120
Certain U.S. Federal Income Tax Consequences		121
Legal Matters		123
Independent Auditors		123
Index to Consolidated Financial Statements		F-1
FORM OF SPECIMEN STOCK CERTIFICATE
CONTINGENT WARRANT AGREEMENT
LETTER AMENDMENT TO NOTE PURCHASE AGREEMENT
LETTER AMENDMENT TO NOTE PURCHASE AGREEMENT
AMENDMENT NO.2 TO RIGHTS AGREEMENT
2004 LONG TERM INCENTIVE PLAN
FINANCING AGREEMENT
STATEMENTS REGARDING COMPUTATION OF RATIOS
SUBSIDIARIES
CONSENT OF ERNST & YOUNG

WHERE YOU CAN FIND MORE INFORMATION

      We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the SEC’s public reference rooms at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operations of the public reference rooms. Our SEC filings are also available to the public over the Internet at the SEC’s web site at http://www.sec.gov and at the public reference room of the New York Stock Exchange, 20 Broad Street, New York, New York.

FORWARD-LOOKING STATEMENTS

      This prospectus includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. The statements contained in this prospectus that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

      We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions, in this prospectus to identify forward-looking statements. These forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•  our ability to comply with financial and other covenants contained in the agreements governing our indebtedness, including our asset based revolving credit facility;

•  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 we have 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 our plastics technologies products, as well as steel and oil;

•  lower than anticipated levels of our 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 introduced and expected to be introduced in 2004;

•  any major disruption in production at key customer or supplier facilities or at our facilities;

•  disruptions in global or regional commerce due to wars, to social, civil or political unrest in the non-U.S. countries in which we operate, 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 we do 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 we do business;

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

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

•  the other factors discussed under the heading “Risk Factors” and elsewhere in this prospectus.

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      All of our forward-looking statements should be considered in light of these factors. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events or otherwise.

INDUSTRY AND MARKET DATA

      Industry and market data used throughout this prospectus were obtained through company research, surveys and studies conducted by third parties including the Society of Plastics Industry, the United States Federal Reserve and the United States Department of Commerce. We have not independently verified market and industry data we derived from third-party sources. While we believe internal company surveys are reliable and market definitions are appropriate, neither these surveys nor these definitions have been verified by any independent sources.

iii

PROSPECTUS SUMMARY

      The following summary highlights selected information contained elsewhere in this prospectus. It does not contain all the information that may be important to you. You should read this entire prospectus carefully, particularly the “Risk Factors” section and the financial statements and related notes to those financial statements contained in this prospectus. As used in this prospectus, the terms “we,” “us,” “Milacron,” “our company” and “the company” refer to Milacron Inc. and its subsidiaries on a consolidated basis unless the context requires otherwise. References in this prospectus to “our plastics technologies businesses” refer collectively to the businesses conducted by our Machinery Technologies — North America, Machinery Technologies — Europe and Mold Technologies segments. When we refer to the “March 12 Transactions,” the “June 10 Transactions” and the “Refinancing Transactions” in this prospectus we are using such terms as defined below in this Prospectus Summary under “The Refinancing Transactions.”

Our Company

      We are the largest and broadest-line manufacturer and supplier of plastics processing equipment and related supplies in North America and the third largest worldwide. Our equipment, supplies and services are used by a wide range of plastics processors to produce plastic products and parts for consumer, commercial and industrial markets. Plastics processing is one of the largest industries in the world with total shipments of plastic products and parts valued at over $300 billion in 2003 in the U.S. alone. We also believe we are the second largest global manufacturer of synthetic (water-based) industrial fluids used in metalworking applications.

      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 injection molding, blow molding and extrusion machinery, as well as associated tooling and parts and related services. Our Mold Technologies segment manufactures and supplies mold bases and components used with injection molding machinery. Our Industrial Fluids segment produces and sells metalworking fluids for machining, stamping, grinding and cleaning applications. We sell to a variety of end markets on a global basis, including packaging, automotive, industrial components, construction and building materials, consumer goods and medical applications. In 2003, we generated approximately 38% of our sales outside North America.

      In 2003, we generated sales of $739.7 million and a net loss of $191.7 million. Between our fiscal years ending December 31, 1999 and 2002, our sales declined sharply, from $994.3 million to $693.2 million, and our net earnings declined from $70.1 million to a net loss of $222.9 million, as our business was impacted by the general economic downturn and severe manufacturing recession that began in late 2000. This difficult economic environment also significantly impaired our liquidity and access to capital. In response, we reduced our cost structure, exited noncore businesses and entered into the Refinancing Transactions in order to improve our profitability, focus on our core competencies, reduce our indebtedness and increase our financial flexibility.

      We were first incorporated in 1884, and our shares have been traded on the New York Stock Exchange since 1946 (Ticker: MZ).

The Refinancing Transactions

March 12 Transactions

      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 our new exchangeable debt securities. The proceeds from this transaction, together with existing cash balances, were used to repay our 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, which we refer to in this prospectus as the Series A Notes, and $70 million of 20% Secured Step-Up Series B Notes due 2007, which we refer to in this prospectus as the Series B Notes. The $30 million of Series A Notes were convertible into shares of our common stock at a conversion price of $2.00 per share.

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Glencore and Mizuho converted the entire principal amount of the Series A Notes into 15 million shares of common stock on April 15, 2004. The Series A Notes and Series B Notes initially bore a combination of cash and pay-in-kind interest at a total rate of 20% per annum, which rate was retroactively reset on June 10, 2004 to 6% per annum from the date of issuance, payable in cash.

      On March 12, 2004, we also reached a separate agreement with Credit Suisse First Boston for a $140 million senior secured credit facility having a term of approximately one year. This senior secured credit facility consisted of a $65 million revolving A facility, which we refer to in this prospectus as the revolving A facility, and a $75 million term loan B facility, which we refer to in this prospectus as the term loan B facility. On March 12, 2004, we used extensions of credit under the revolving A facility and term loan B facility in an aggregate amount of $84 million to repay and terminate our then-existing revolving credit facility (and to replace or provide credit support for outstanding letters of credit) and our then-existing receivables purchase program.

      As used in this prospectus, the term “March 12 Transactions” refers to the issuance of $30 million of Series A Notes and $70 million of Series B Notes, the initial extensions of credit under the revolving A facility and the term loan B facility, and the applications of the proceeds of the foregoing as described above.

June 10 Transactions

      On June 10, 2004, the common stock into which the Series A Notes were converted and the Series B Notes were exchanged for 500,000 shares of a new series of our convertible preferred stock with a cumulative cash dividend rate of 6%. We refer to this new series of convertible preferred stock in this prospectus as the Series B Preferred Stock. On June 10, 2004, we also satisfied the conditions to release to us from escrow the proceeds from a private placement of $225 million in aggregate principal amount of our 11 1/2% Senior Secured Notes due 2011 and entered into an agreement for a new $75 million asset based revolving credit facility with JPMorgan Chase Bank as administrative agent and collateral agent, which we refer to in this prospectus as our asset based facility. The 11 1/2% Senior Secured Notes were issued at a discount to effectively yield 12% and the proceeds thereof were originally placed in escrow on May 26, 2004. We refer to these notes in this prospectus as the 11 1/2% Senior Secured Notes.

      On June 10, 2004, we applied the proceeds of the 11 1/2% Senior Secured Notes, together with $7.3 million in borrowings under our asset based facility and approximately $10.3 million of cash on hand, to:

•  purchase €114,990,000 of the €115 million aggregate outstanding principal amount of Milacron Capital Holdings B.V.’s 7 5/8% Guaranteed Bonds due in April 2005, which we refer to in this prospectus as the Eurobonds, at the settlement of a tender offer therefor;

•  terminate and repay $19 million in amounts outstanding under the revolving A facility (we also used $17.4 million of availability under our asset based facility to replace or provide credit support for the outstanding letters of credit under the revolving A facility);

•  repay the $75 million term loan B facility; and

•  pay transaction expenses.

      As used in this prospectus, the term “June 10 Transactions” refers collectively to (1) the issuance of the 11 1/2% Senior Secured Notes and the release to us from escrow of the proceeds therefrom, (2) the execution and delivery of the definitive documentation for, and the initial borrowings and issuances of letters of credit under, our asset based facility, (3) the exchange of the common stock into which the Series A Notes were converted and the Series B Notes for shares of Series B Preferred Stock and (4) the use of the proceeds of the 11 1/2% Senior Secured Notes and our asset based facility as described above. As used in this prospectus, the term “Refinancing Transactions” refers collectively to the March 12 Transactions and the June 10 Transactions on a cumulative basis.

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Summary of the Rights Offering

      The following material is qualified in its entirety by the information appearing elsewhere in this prospectus.

Issuer	Milacron Inc.
Rights	Each holder of common stock will be granted 0.452 rights for each share of common stock (other than any common stock received upon conversion of Series B Preferred Stock) held of record as of 5:00 p.m., New York City time, on                     , 2004, the record date. The number of rights we grant to each holder of common stock will be rounded up to the nearest whole number. An aggregate of up to 16,183,457 rights will be granted pursuant to the rights offering. Each right will be exercisable for one share of common stock. An aggregate of up to 16,183,457 shares of common stock will be sold upon exercise of the rights. See “The Rights Offering — The Rights.”
Subscription Privilege	Holders of rights are entitled to purchase for the subscription price one share of common stock for each right. See “The Rights Offering — Subscription Privilege.”
Subscription Price	$2.00 in cash per share of common stock subscribed for pursuant to the subscription privilege.
Shares of Common Stock outstanding after Rights Offering	51,778,116 shares, based on the number of shares outstanding on June 18, 2004 and assuming full subscription of the offering (without giving effect to any rounding up of fractional rights). In addition, the 350,000 shares of Series B Preferred Stock that would be outstanding after the rights offering, assuming full subscription of the offering and use of the gross proceeds to redeem 150,000 shares of the Series B Preferred Stock, would be convertible into an aggregate of 35,000,000 shares of common stock at a conversion price of $2.00 per share. If the conversion price is reset to $1.75 per share pursuant to the terms thereof, the Series B Preferred Stock will be convertible into an aggregate of 40,000,000 shares of common stock.
Transferability of Rights	The rights are not transferable and may be exercised only by the persons to whom they are granted. Any attempt to transfer rights will render them null and void.
Record Date	As of 5:00 p.m., New York City time, on                     , 2004.
Expiration Date	As of 5:00 p.m., New York City time, on                     , 2004.
Procedure to Exercise Rights	Subscription privileges may be exercised by properly completing a subscription certificate and forwarding such subscription certificate, with payment of the subscription price for each share subscribed for, to the subscription agent at or prior to 5:00 p.m., New York City time, on the expiration date. Uncertified personal checks used to pay the subscription price must be received by the subscription agent at least five business days before the expiration date to allow sufficient time for the check to clear. Accordingly, rights holders who wish to pay the subscription price by means of uncertified personal check are urged to consider, in the alternative,

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	payment by means of certified check, bank draft or money order. If the mail is used to forward subscription certificates, it is recommended that insured, registered mail be used. See “The Rights Offering — Procedure to Exercise Rights.”
Procedure for Exercising Rights by Shareholders Outside the United States and Canada	Subscription certificates will not be mailed to record date holders whose addresses are outside the United States and Canada or who have an APO or FPO address, but will be held by the subscription agent for such record date holders’ account. To exercise their rights, such persons must request from the subscription agent a subscription certificate sufficiently in time for the completed certificate to be received by the subscription agent at or prior to 5:00 p.m., New York City time, on the expiration date. See “The Rights Offering — Shareholders Outside the United States and Canada and Certain Other Shareholders.”
Persons Holding Shares, or Wishing to Exercise Rights, Through Others	Persons holding shares of common stock, to whom we grant rights with respect thereto, through a broker, dealer, trustee, depository for securities, custodian bank or other nominee, should contact the appropriate institution or nominee and request it to effect the transaction for them. See “The Rights Offering — Procedure to Exercise Rights.”
Persons Holding Shares Through Our 401(k) Plan	If shares of our common stock are held by our 401(k) plan for your account under our 401(k) plan as of 5:00 p.m., New York City time, on the record date, you will be notified by us of the offering. If you wish to exercise some or all of your rights, you will need to notify the trustee of the 401(k) plan of your decision and the trustee will act for you. The trustee must receive your properly completed form entitled “401(k) Plan Participant Election Form” at least five business days before the expiration date of the offering. If you elect to exercise some or all of your subscription rights, you must ensure that the total amount of the funds required for such exercise has been allocated to an account created by you, or which you currently maintain, in the Putnam Money Market Fund (an existing investment election under the 401(k) plan) five business days before the expiration date of the offering. The trustee, to exercise rights on your behalf in the offering, will transfer funds from your Putnam Money Market Fund account one business day before the expiration date. If these funds are insufficient to exercise all of your rights in accordance with your election, the subscription rights will be exercised to the maximum extent possible with the amount you have invested in your Putnam Money Market Fund account. You should receive the “401(k) Plan Participant Election Form” with the other offering materials. You should contact the information agent if you do not receive this form but you believe you are entitled to participate in the offering with respect to shares held for your account under the 401(k) plan.
No Revocation	Once you send in your subscription certificate and payment (or, in the case of a 401(k) plan participant, once you send to the trustee

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	the form entitled “401(k) Plan Participant Election Form”), you cannot revoke the exercise of your rights.
Issuance of Common Stock	As soon as practicable after the completion of the offering, shares of common stock subscribed for and issued pursuant to exercise of the rights will be delivered to subscribers. Such shares will be issued in the same form, certificated or book-entry, as the shares of common stock held by the subscriber exercising rights for such shares.
Use of Proceeds	To redeem up to 150,000 shares of the Series B Preferred Stock issued in the June 10 Transactions for $210 per share pursuant to the terms of the Series B Preferred Stock. See “Use of Proceeds.”
Subscription Agent	Mellon Bank, N.A.
Information Agent	Innisfree M&A Incorporated

Risk Factors

      Exercising subscription rights for shares of our common stock involves a high degree of risk. See the “Risk Factors” section of this prospectus for a description of certain of the risks you should carefully consider before exercising your rights.

      Our principal executive office is located at 2090 Florence Avenue, Cincinnati, Ohio 45206-2425 and our telephone number is (513) 487-5000.

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Summary Consolidated Financial and Other Data

      The following tables present summary consolidated financial and other data for our company for the periods presented. The unaudited pro forma information for the year ended December 31, 2003 and for the quarter ended March 31, 2004 gives effect to the indicated transactions as if they had occurred at the beginning of the period. We derived the summary consolidated financial and other data for the years ended December 31, 1999, 2000, 2001, 2002 and 2003 based on our audited consolidated financial statements. We derived the summary consolidated financial and other data for the three months ended March 31, 2004 and March 31, 2003 from our unaudited consolidated condensed financial statements. The unaudited consolidated condensed financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this data. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. You should read this data in conjunction with the information set forth under “Capitalization,” “Unaudited Pro Forma Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements, the related notes and the other financial information in this prospectus.

																Three Months
																Ended
			Year Ended December 31,													March 31,
			1999		2000		2001			2002			2003			2003			2004
			(Dollars in millions, except per share amounts)
Summary of Operations:
Sales			$	994.3	$	974.5	$	755.2		$	693.2		$	739.7		$	190.2		$	188.9
Earnings (loss) from continuing operations before cumulative effect of change in method of accounting				60.6		48.8		(28.7	)		(18.4	)		(184.5	)		(7.6	)		(16.0	)
	Per common share
		Basic		1.64		1.39		(0.87	)		(0.56	)		(5.49	)		(0.23	)		(0.47	)
		Diluted(1)		1.63		1.39		(0.87	)		(0.56	)		(5.49	)		(0.23	)		(0.47	)
Earnings (loss) from discontinued operations(2)				9.5		23.5		(7.0	)		(16.8	)		(7.2	)		(0.7	)		(0.6	)
	Per common share
		Basic		0.26		0.67		(0.21	)		(0.50	)		(0.21	)		(0.02	)		(0.02	)
		Diluted(1)		0.26		0.67		(0.21	)		(0.50	)		(0.21	)		(0.02	)		(0.02	)
Cumulative effect of change in method of accounting(3)				—		—		—			(187.7	)		—			—			—
	Per common share
		Basic		—		—		—			(5.61	)		—			—			—
		Diluted(1)		—		—		—			(5.61	)		—			—			—
Net earnings (loss)				70.1		72.3		(35.7	)		(222.9	)		(191.7	)		(8.3	)		(16.6	)
	Per common share
		Basic		1.90		2.06		(1.08	)		(6.67	)		(5.70	)		(0.25	)		(0.49	)
		Diluted(1)		1.89		2.06		(1.08	)		(6.67	)		(5.70	)		(0.25	)		(0.49	)

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														Three Months
														Ended
		Year Ended December 31,												March 31,
		1999			2000		2001		2002		2003			2003		2004
		(Dollars in millions, except per share amounts)
Financial Position at Year or Quarter End
Working capital of continuing operations		$	(14.0	)	$	92.8	$	166.9	$	157.5	$	11.8		$	30.1	$	9.2
Property, plant and equipment — net			171.5			165.0		165.8		149.8		140.8			147.2		135.3
Total assets			1,536.7			1,464.9		1,512.3		915.7		711.5			879.0		724.8
Long-term debt			286.0			371.3		501.1		255.4		163.5			144.9		159.7
Total debt			500.4			457.2		576.7		301.5		323.4			304.3		348.1
Net debt (total debt less cash and cash equivalents)			422.7			423.4		486.6		179.2		230.6			222.0		286.1
Shareholders’ equity (deficit)			490.9			484.4		434.9		134.0		(33.9	)		129.2		(43.4	)
	Per common share		13.18			14.37		12.80		3.79		(1.15	)		3.64		(1.42	)
Other Data
Dividends paid to common shareholders			17.9			16.8		12.4		1.4		0.7			0.3		—
	Per common share		0.48			0.48		0.37		0.04		0.02			0.01		—
Capital expenditures			23.9			26.5		13.5		6.2		6.5			1.3		1.5
Depreciation and amortization			34.9			35.4		34.9		23.0		21.7			5.7		5.3
Ratio of earnings to fixed charges(4)			4.1			3.6		—		—		—					—
Deficiency of earnings in relation to fixed charges pro forma for Refinancing Transactions(4)(5)												(116.0	)				(14.5	)
Ratio of earnings to fixed charges plus preferred stock dividends(4)			4.1			3.5		—		—		—					—
Deficiency of earnings in relation to fixed charges plus preferred stock dividends pro forma for Refinancing Transactions(4)(6)												(122.2	)				(16.1	)
Deficiency of earnings in relation to fixed charges plus preferred stock dividends pro forma for Refinancing Transactions and the rights offering(4)(7)												(120.4	)				(15.6	)

      The following table presents summary consolidated financial and other data for our segments for the periods presented.

																		Three Months
																		Ended
			Year Ended December 31,															March 31,
			1999			2000			2001			2002			2003			2003			2004
			(In millions)
Segment Data:
Total Sales
	Machinery Technologies — North America		$	508.1		$	550.0		$	361.7		$	313.6		$	321.2		$	88.3		$	77.3
	Machinery Technologies — Europe			219.0			145.2			122.6			117.4			151.0			35.0			42.5
	Mold Technologies			188.1			190.3			184.6			174.7			168.7			44.6			43.3
	Eliminations			(11.0	)		(11.7	)		(6.5	)		(8.5	)		(5.4	)		(3.0	)		(0.4	)
		Total plastics technologies		904.2			873.8			662.4			597.2			635.5			164.9			162.7
	Industrial fluids			90.1			100.7			92.8			96.0			104.2			25.3			26.2
		Total continuing operations	$	994.3		$	974.5		$	755.2		$	693.2		$	739.7		$	190.2		$	188.9

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																		Three Months
																		Ended
			Year Ended December 31,															March 31,
			1999			2000			2001			2002			2003			2003			2004
			(In millions)
Operating earnings (loss)(8)
	Machinery Technologies — North America		$	54.9		$	67.2		$	(13.5	)	$	8.0		$	6.7		$	2.1		$	(0.6	)
	Machinery Technologies — Europe			19.6			2.2			(9.1	)		(8.1	)		(1.4	)		(0.7	)		1.1
	Mold Technologies			28.1			27.2			12.1			5.3			1.8			0.3			1.4
		Total plastics technologies		102.6			96.6			(10.5	)		5.2			7.1			1.7			1.9
	Industrial Fluids			21.2			17.5			18.1			14.4			15.7			3.5			2.5
	Goodwill impairment charge			—			—			—			—			(65.6	)		—			—
	Restructuring costs			(7.2	)		(1.4	)		(17.5	)		(13.9	)		(27.1	)		(6.0	)		(1.1	)
	Refinancing costs			—			—			—			—			(1.8	)		—			(6.4	)
	Corporate expenses and other			(20.5	)		(23.6	)		(18.6	)		(19.0	)		(17.1	)		(4.3	)		(3.9	)
		Total continuing operations	$	96.1		$	89.1		$	(28.5	)	$	(13.3	)	$	(88.8	)	$	(5.1	)	$	(7.0	)
Depreciation & amortization
	Machinery Technologies — North America		$	13.5		$	13.4		$	14.0		$	9.9		$	8.7		$	2.4		$	2.0
	Machinery Technologies — Europe			8.0			5.4			4.8			3.5			3.9			1.0			1.1
	Mold Technologies			11.3			12.0			12.8			7.4			6.7			1.7			1.6
		Total plastics technologies		32.8			30.8			31.6			20.8			19.3			5.1			4.7
	Industrial Fluids			1.5			3.9			2.6			1.5			2.0			0.5			0.5
	Unallocated corporate			0.6			0.7			0.7			0.7			0.4			0.1			0.1
		Total continuing operations	$	34.9		$	35.4		$	34.9		$	23.0		$	21.7		$	5.7		$	5.3

(1)	For the periods ended December 31, 2003, 2002 and 2001 and March 31, 2004 and 2003, diluted earnings per common share is equal to basic earnings per common share because the inclusion of potentially dilutive securities would result in a smaller loss per common share.
(2)	In 2002 and 2003, earnings (loss) from discontinued operations includes the following components:

	Year Ended
	December 31,
	2002			2003
	(In millions)
Gain on sale of Valenite	$	31.3		$	0.4
Loss on sale of Widia and Werkö		(14.9	)		0.9
Loss on sale of round metalcutting tools business		(4.7	)		(2.2	)
Estimated loss on sale of grinding wheels business		(5.2	)		1.0
Adjustment of reserves related to the 1998 divestiture of the machine tools segment		1.9			(0.9	)
Net gain (loss) on divestitures	$	8.4		$	(0.8	)

(3)

Represents a pre-tax goodwill impairment charge of $247.5 million ($187.7 million after tax) recorded in 2002 in connection with the mandatory adoption of a new accounting standard.

(4)

Earnings (loss) used in computing the ratios of earnings to fixed charges and earnings to fixed charges plus preferred stock dividends consist of earnings (loss) from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense on debt and amortization of deferred debt issuance costs and the portion of rental expense that we believe is representative of the interest component of rental expense. In 2001, 2002, 2003 and the three months ended March 31, 2004, our earnings were insufficient to cover our fixed charges by $51.1 million, $36.7 million, $111.8 million and $14.9 million, respectively. In 2001, 2002, 2003 and the three months ended March 31, 2004, our earnings

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	were insufficient to cover our fixed charges plus preferred stock dividends by $51.3 million, $36.9 million, $112.1 million and $14.9 million, respectively.
(5)	Represents the deficiency of earnings in relation to fixed charges on a pro forma basis to give effect to the Refinancing Transactions.
(6)	Represents the deficiency of earnings in relation to fixed charges plus preferred stock dividends on a pro forma basis to give effect to the Refinancing Transactions, assuming that we elect to pay these dividends and have the capacity to pay these dividends in cash under our restricted payments covenant in the indenture governing the 11 1/2% Senior Secured Notes and under the covenants in the agreement governing our asset based facility.
	The following table sets forth the calculation of preferred stock dividends to give pro forma effect to the Refinancing Transactions.

				Year Ended		Three Months Ended
				December 31, 2003		March 31, 2004
				(In thousands)
Historical dividends on 4% Cumulative Preferred Stock				$	240.0	$	60.0
	Adjustment for Refinancing Transactions:
		Dividends on Series B Preferred Stock(a)			6,000.0		1,500.0
			Pro forma for Refinancing Transactions	$	6,240.0	$	1,560.0

(a)  Assumes the payment of cash dividends on $100 million of liquidation preference of Series B Preferred Stock. If we were restricted by our financing agreements or the terms of our 4% Cumulative Preferred Stock from paying dividends on the Series B Preferred Stock in cash, we would have the option to pay such dividends on a pay-in-kind basis at a rate of 8% per annum rather than the 6% per annum cash rate.

(7)

Represents the deficiency of earnings in relation to fixed charges plus preferred stock dividends on a pro forma basis to give effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom, assuming that we elect to pay preferred stock dividends and have the capacity to pay these dividends in cash under our restricted payments covenant in the indenture governing the 11 1/2% Senior Secured Notes and under the covenants in the agreement governing our asset based facility.

The following table sets forth the calculation of preferred stock dividends to give pro forma effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom.

				Year Ended			Three Months Ended
				December 31, 2003			March 31, 2004
				(In thousands)
Historical dividends on 4% Cumulative Preferred Stock				$	240.0		$	60.0
	Adjustment for Refinancing Transactions:
		Dividends on Series B Preferred Stock(a)			6,000.0			1,500.0
			Pro forma for Refinancing Transactions		6,240.0			1,560.0
	Adjustments for the rights offering:
		Dividends on Series B Preferred Stock			(1,800.0	)		(500.0	)
			Pro forma for Refinancing Transactions and the rights offering	$	4,440.0		$	1,060.0

(a)  Assumes the payment of cash dividends on $100 million of liquidation preference of Series B Preferred Stock. If we were restricted by our financing agreements or the terms of our 4% Cumulative Preferred Stock from paying dividends on the Series B Preferred Stock in cash, we would have the option to pay such dividends on a pay-in-kind basis at a rate of 8% per annum rather than the 6% per annum cash rate.

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(8)

Operating earnings (loss) for all periods include income or expense related to our principal defined benefit plan for certain U.S. employees. Machinery Technologies — North America recorded pension income of $5.1 million in 1999, $7.0 million in 2000, $7.5 million in 2001, $6.6 million in 2002 and $0.5 million in 2003 and pension expense of $0.2 million in the three months ended March 31, 2003 and $1.5 million in the three months ended March 31, 2004. Industrial Fluids recorded pension income of $0.5 million in 1999, $0.6 million in 2000, $0.6 million in 2001, $1.0 million in 2002 and less than $0.1 million in 2003 and pension expense of less than $0.1 million in the three months ended March 31, 2003 and $0.1 million in the three months ended March 31, 2004. The amounts discussed above exclude the costs of supplemental retirement benefits related to continuing operations of $1.5 million in 1999, $0.8 million in 2001, $4.7 million in 2002 and $3.2 million in 2003. Of these amounts, $0.5 million in 2001 and $2.9 million in 2002 are included in restructuring costs as is the entire $3.2 million in 2003.

Operating earnings (loss) also include royalty income from the licensing of patented technology to other manufacturers of plastics processing machinery recorded by Machinery Technologies — North America of $8.3 million in 2000, $1.1 million in 2001, $4.5 million in 2002 and $0.9 million in 2003. We negotiated these royalties with certain of our competitors after we determined that they were using our patented designs in the design of their machines. While there can be no assurance that these royalties will continue in the future, we continue to negotiate with additional parties.

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RISK FACTORS

      You should carefully consider the risks described below and all other information contained in this prospectus before you make a decision to participate in the rights offering. The risks described below are not the only ones facing our company or relating to participation in the rights offering.

Risks Relating to Our Liquidity and Our Indebtedness

If our cash flow available to service our debt does not significantly increase from levels in 2003, we may not be able to service our debt with cash from operating activities, which may cause us to default on our debt instruments.

      In 2001, 2002 and 2003, we experienced significantly lower demand for our plastics machinery, primarily due to the global economic slowdown and, more specifically, a dramatic decline in capital goods spending. These lower levels of demand for plastics machinery led to significantly more intense price competition than we had historically experienced. For example, we have seen an increase in the average discount of our sales prices in relation to our published list prices. In combination, these lower volumes and price levels sharply reduced our profitability and materially and adversely impacted our results of operations, financial condition and access to capital. Our plastics processing customers’ production capacities have been and continue to be underutilized, and they are not making the capital expenditures for new plastics machinery in the volumes and at price levels that our business depends upon.

      During the year ended December 31, 2003, our earnings were inadequate to cover fixed charges by $111.8 million. During the same period, on a pro forma basis to give effect to the Refinancing Transactions, our earnings would have been inadequate to cover fixed charges by $116.0 million. We cannot assure you that our business will generate sufficient cash flow from operations to service our indebtedness and pay other expenses, that currently anticipated cost savings and operating improvements will be realized on schedule or at all or that future borrowings will be available to us under our asset based facility in an amount sufficient to enable us to make interest payments on our indebtedness or to fund our other liquidity needs.

      Our continued viability depends on realizing anticipated cost savings and operating improvements on schedule during 2004 and a significant improvement in demand levels in 2004 and beyond, the latter of which is largely beyond our control. Unless we realize anticipated cost savings and operating improvements on schedule and volume and pricing levels improve significantly, we may need to fund interest payments on the 11 1/2% Senior Secured Notes in part with the proceeds of borrowings under our asset based facility. However, our ability to borrow under our asset based facility is subject to borrowing base limitations, including an excess availability reserve, which may be adjusted from time to time by the administrative agent for the lenders under our asset based facility at its discretion, and our satisfaction of certain conditions to borrowing under our asset based facility, including, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults (including under financial covenants) or any material adverse change in our business or financial condition. If we have no additional availability or are unable to satisfy the borrowing conditions, our liquidity would be impaired and we would need to sell assets, refinance debt or raise equity to service our debt and pay our expenses. We cannot assure you that we would be able to sell assets, refinance debt or raise equity on commercially acceptable terms or at all, which could cause us to default on our obligations under our indebtedness. Our inability to generate sufficient cash flow or draw sufficient amounts under our asset based facility to satisfy our debt obligations and pay our other expenses could cause us to default on our obligations and would have a material adverse effect on our business, financial condition and results of operations.

Our liquidity depends on the availability of borrowings under our asset based facility, which is subject to the discretion of the administrative agent thereunder.

      Pursuant to the terms of our asset based facility, the cash we receive from collection of receivables is subject to an automatic “sweep” to repay the borrowings under our asset based facility on a daily basis. As a result, we rely on borrowings under our asset based facility as our primary source of cash for use in our North American operations. The availability of borrowings under our asset based facility is subject to a borrowing

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base limitation, including an excess availability reserve, and conditions to borrowing. Certain of the components of the borrowing base are subject to the discretion of the administrative agent. In addition, the satisfaction of conditions to borrowing under our asset based facility is determined by the administrative agent in its discretion. Further, the administrative agent has the customary ability to reduce, unilaterally, the availability of borrowings at any time by, for example, reducing advance rates, imposing or changing collateral value limitations, establishing reserves or declaring certain collateral ineligible. If the administrative agent exercises its discretion and limits the availability of borrowings under our asset based facility, our liquidity could be materially adversely affected.

Our substantial level of indebtedness may adversely affect our financial condition, limit our ability to grow and compete and prevent us from fulfilling our obligations under our indebtedness.

      As of March 31, 2004, on a pro forma basis to give effect to the June 10 Transactions, we would have had approximately $252 million in total indebtedness. In addition, as of March 31, 2004, we and certain of our non-U.S. subsidiaries have guaranteed $8.2 million of off-balance sheet obligations related to customer financings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Off-Balance Sheet Arrangements.” As of June 10, 2004, after giving effect to initial borrowings and issuances of letters of credit under our asset based facility, we had approximately $50.3 million of undrawn commitments thereunder of which approximately $24.4 million was available to be borrowed.

      Our substantial indebtedness could have important consequences to you. For example, it could:

•  require us to dedicate a substantial portion or even all of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;

•  increase the amount of interest expense that we have to pay because some of our borrowings are at variable rates of interest, which, if increased, will result in higher interest payments;

•  increase our vulnerability to existing and future adverse economic and industry conditions;

•  limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

•  make it more difficult for us to satisfy our obligations with respect to our indebtedness;

•  place us at a competitive disadvantage compared to our competitors that have less indebtedness;

•  limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds, dispose of assets or pay cash dividends; and

•  restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities.

      The agreements governing our indebtedness impose financial and other restrictions upon us, including compliance with certain financial covenants. In addition, our asset based facility is subject to a borrowing base limitation, including an excess availability reserve, which may be adjusted from time to time in the discretion of the administrative agent for the lenders under our asset based facility and is subject to meeting financial covenants. We may not be able to comply with these covenants in the future or satisfy conditions to the availability of borrowings. Failure to achieve compliance with covenants contained in any of these agreements could result in a loss of funding availability or a default under the related agreement, and could lead to acceleration of the related debt and the acceleration of debt under the other agreements which contain cross-acceleration or cross-default provisions. If we are unable to meet our expenses and debt obligations, we will need to refinance all or a portion of our indebtedness, sell assets or raise equity. However, we may not be able to refinance or otherwise repay such indebtedness, sell assets or raise equity on acceptable terms or at all and, if that is the case, we would be unable to service our indebtedness and our continued viability would be threatened.

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Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

      We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the agreements governing our indebtedness do not fully prohibit us or our subsidiaries from doing so. We expect that, subject to borrowing base limitations, including an excess availability reserve, which may be adjusted from time to time in the discretion of the administrative agent for the lenders under our asset based facility, and our satisfaction of certain conditions to borrowing under our asset based facility, including, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults (including under financial covenants) or any material adverse change in our business or financial condition, our asset based facility permits additional borrowings thereunder. As of June 10, 2004, after giving effect to initial borrowings and issuances of letters of credit under our asset based facility, we had approximately $50.3 million of undrawn commitments thereunder of which approximately $24.4 million was available to be borrowed. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify. See “Description of Certain Indebtedness.”

Restrictions and covenants in debt agreements limit our ability to take certain actions.

      The indenture governing the 11 1/2% Senior Secured Notes and the credit agreement for our asset based facility contain a number of significant restrictions and covenants that limit our ability and our subsidiaries’ ability, among other things, to:

•  borrow money;

•  use assets as security in other borrowings or transactions;

•  pay dividends on stock or purchase stock;

•  sell assets;

•  enter into certain transactions with affiliates; and

•  make certain investments or acquisitions.

      In addition, the credit agreement for our asset based facility requires us to satisfy certain financial covenants and restricts our ability and the ability of our subsidiaries to make capital expenditures. Also, the availability of borrowings under our asset based facility are subject to a borrowing base limitation, including an excess availability reserve, which may be adjusted from time to time by the administrative agent for the lenders under our asset based facility at its discretion, and our satisfaction of certain conditions to borrowing under our asset based facility, including, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults (including under financial covenants) or any material adverse change in our business or financial condition. Subject to certain limited exceptions, our accounts receivable and inventory, our cash and cash equivalents and certain other collateral, are pledged to secure on a first priority basis our asset based facility and certain other obligations and, subject to certain exceptions, are not permitted to be pledged to secure other indebtedness we or our subsidiaries may otherwise be able to incur.

      Events beyond our control, such as prevailing economic conditions, changes in consumer preferences and changes in the competitive environment, could hinder any improvement in, or further impair, our operating performance, which could affect our ability and that of our subsidiaries to comply with the terms of our debt instruments. We cannot assure you that we and our subsidiaries will be able to comply with the provisions of our respective debt instruments, including any applicable financial covenants in the credit agreement for our asset based facility. Breaching any of these covenants or restrictions or the failure to comply with our obligations after the lapse of any applicable grace periods could result in a loss of funding availability or a default under the applicable debt instruments, including the credit agreement for our asset based facility. If there were an event of default, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately. We cannot assure you that our assets or cash flow or that of

13

our subsidiaries would be sufficient to fully repay borrowings under the outstanding debt instruments, either upon maturity or if accelerated upon an event of default or, if we were required to repurchase the 11 1/2% Senior Secured Notes or any other debt securities upon a change of control, that we would be able to refinance or restructure the payments on such debt. Further, if we are unable to repay, refinance or restructure our indebtedness under our asset based facility, the lenders under our asset based facility could proceed against the collateral securing that indebtedness. In that event, any proceeds received upon a realization of such collateral would be applied first to amounts due under our asset based facility before any proceeds would be available to make payments on the 11 1/2% Senior Secured Notes. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our or our subsidiaries’ other debt instruments, including the 11 1/2% Senior Secured Notes.

      Due to the restrictions and covenants contained in the credit agreement for our asset based facility, we may need to seek amendments or waivers from our lenders in order to avoid a loss of funding availability or a default resulting from an inability to improve, or further impairment of, our results of operations or our entry into certain transactions we may desire to consummate in the future. In the past we have had to seek amendments and waivers to financing facilities and in certain cases we have agreed to pay the lenders a fee to obtain their consent. We may be required to pay the lenders under our asset based facility a fee for their consent to any amendment or waiver we may seek in the future. We cannot assure you that we will be able to obtain any amendment or waiver we may seek in the future.

“Ownership change” for U.S. federal income tax purposes will cause utilization of our tax loss carryforwards and other tax attributes to be substantially delayed, which will increase income tax expense and decrease available cash in future years.

      The conversion of the Series A Notes into newly issued common stock, and the exchange of such common stock and the Series B Notes for Series B Preferred Stock, triggered an “ownership change” for U.S. federal income tax purposes. As a consequence of this ownership change, the timing of our utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

Risks Relating to Our Business

Many of our customers are in cyclical industries currently experiencing significant downturns, which has resulted in substantially reduced demand for our products.

      The success of our business depends on the profitability of our customers’ businesses. Many of our customers are in businesses that are highly cyclical in nature and sensitive to changes in general economic conditions, such as the automotive, building materials, electronics and consumer durables industries. Their demand for our products and services changes as a result of general economic conditions, interest rates and other factors beyond our control. The performance of our business is directly related to the production levels of our customers. In particular, prices for plastic resins used to make plastic products and parts tend to fluctuate to a greater degree than our customers can adjust for in the pricing of their products. When resin prices increase, our customers’ profit margins decrease, resulting in lower demand for our products. Therefore, our business is affected by fluctuations in the price of resin which could have an adverse effect on our business and ability to generate operating cash flows.

      As a result of the significant downturn in the U.S. manufacturing sector that began in 2001, consolidated sales from continuing operations fell from peak levels of $994.3 million in 1999 and $974.5 million in 2000 to $755.2 million in 2001, $693.2 million in 2002 and $739.7 million in 2003. As a result, we sustained substantial losses in 2001, 2002 and 2003. Our net loss from all operations including goodwill impairment charges, restructuring costs, discontinued operations and cumulative effect of change in method of accounting was $35.7 million in 2001, $222.9 million in 2002 and $191.7 million in 2003. In 2001 and 2002, we experienced a substantial decrease in our plastics machinery sales and pricing levels because of the slowdown in many of our plastics technologies businesses end markets. For the year ended December 31, 2003, sales in our three plastics technologies businesses were $635.5 million, compared to $904.2 million, $873.8 million, $662.4 mil-

14

lion and $597.2 million in the equivalent periods in 1999, 2000, 2001 and 2002, respectively. From continuing operations, we lost $28.7 million in 2001, $18.4 million in 2002 and $184.5 million in 2003. The loss from continuing operations for 2003 includes a noncash goodwill impairment charge of $65.6 million and an income tax charge of approximately $71 million to establish valuation allowances related to U.S. deferred tax assets. The decline in economic conditions in the industries served by our customers has and may continue to have a material adverse effect on our business and ability to generate positive operating cash flows.

If a large portion of our North American and Western European customers outsource their manufacturing activities to areas where we do not currently have manufacturing operations, we may encounter difficulties keeping these customers.

      In recent years, many companies have been outsourcing their manufacturing activities to lower cost regions such as Asia and Eastern Europe. The toy industry and the electronics industry, for example, have outsourced much of their manufacturing to areas outside the United States and Western Europe. Retaining business from outsourcing customers involves challenges such as being able to compete for their business with competitors that have more proximate operations, incurring extra costs to supply those customers, and in some cases being able to establish our own manufacturing operations closer to those customers, which involves significant investment and time. If our customers continue to outsource, we may not be able to expand our operations rapidly enough to meet their needs on a cost-effective basis or at all. Additionally, if our competitors expand their operations to areas where manufacturing activities are outsourced before we do, they may increase their customer base at our expense.

We operate in highly competitive industries, many of which are currently subject to intense price competition, and if we are unable to compete successfully our results of operations could fail to improve or could deteriorate further.

      Many of the industries in which we operate are highly competitive. Our products may not compete successfully with those of our competitors. The markets for plastics machinery and related products are highly competitive and include a number of North American, European and Asian competitors. Principal competitive factors in the plastics machinery industry are: price, product features, technology, performance, reliability, quality, delivery and customer service. We also face many competitors in the Industrial Fluids segment of our business. Principal competitive factors in our Industrial Fluids segment include price, market coverage, technology, performance, delivery and customer service.

      We are currently experiencing increased price competition as a result of the general economic downturn, which has resulted in a sharp downward trend in pricing. In certain cases we have lost business to competitors who offered prices lower than ours. In addition, certain of our competitors have built up large excess inventories and therefore may continue to offer their products at prices lower than ours until such inventories are reduced. In addition, some of our competitors may have greater financial resources and less debt than we do which may place us at a competitive disadvantage in the future. These competitors may be better able to withstand and respond to changes in conditions within our industry, such as the dramatic reduction in demand and pricing levels we are experiencing, and throughout the economy as a whole.

We may encounter difficulties in our restructuring and cost-savings efforts, which could prevent us from achieving our anticipated cost savings.

      Over the past four years we have taken significant actions to realign our cost structure with the lower levels of demand we have experienced and continue to experience in our plastics technologies businesses and are currently implementing additional plans to further reduce our costs. However, we may not be able to fully implement these plans or achieve anticipated cost reductions and we cannot assure you that our cost-savings measures will be successful. In addition, our anticipated cost savings are based upon certain estimates that may prove to be inaccurate. Our ability to achieve the anticipated cost savings could be adversely affected by a number of factors, including, for example, compliance with foreign labor and other laws and regulations and disruptions to our operations that may occur in implementing planned restructurings.

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Our significant international operations subject us to risks such as unfavorable political, regulatory, labor and tax conditions.

      Our business is subject to risks related to the different legal, political, social and regulatory requirements and economic conditions of many jurisdictions. For the year ended December 31, 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%. We expect sales from international markets to represent an increasing portion of our total sales. Risks inherent in our international operations include the following:

•  agreements may be difficult to enforce and receivables difficult to collect through a foreign country’s legal system;

•  foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including currency exchange controls;

•  general economic and political conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries;

•  fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars or products and services provided by us in foreign markets where payment for our products and services is made in the local currency;

•  unexpected adverse changes in foreign laws or regulatory requirements may occur; and

•  compliance with a variety of foreign laws and regulations may be difficult.

      Our overall success as a global business depends, in part, upon our ability to succeed in differing and unpredictable legal, regulatory, economic, social and political conditions. We may not be able to continue to succeed in developing and implementing policies and strategies that will be effective in each foreign market where we do business. Any of the foregoing factors may have a material adverse effect on our ability to generate cash flow and grow our business.

Our operations are conducted worldwide and our results of operations are subject to currency translation risk and currency transaction risk that could adversely affect our financial condition and results of operations.

      The financial condition and results of operations of each of our foreign operating subsidiaries are reported in the relevant local currency and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our financial statements. Exchange rates between these currencies and U.S. dollars in recent years have fluctuated significantly and may do so in the future. For the year ended December 31, 2003, we generated approximately 41% of our sales in foreign currency. Significant changes in the value of the euro relative to the U.S. dollar could have an adverse effect on our financial condition and results of operations and our ability to meet interest and principal payments on euro-denominated debt and U.S. dollar denominated debt, including the 11 1/2% Senior Secured Notes and borrowings under our asset based facility. For the year ended December 31, 2003, we experienced favorable translation effects on new orders of $40 million and sales of $39 million in relation to the same period in 2002. The effect on earnings was not material. If the euro should weaken against the U.S. dollar in the future, we will experience a negative effect in translating our European new orders, sales and earnings when compared to historical results. In addition to currency translation risks, we incur currency transaction risk whenever one of our operating subsidiaries enters into either a purchase or a sales transaction using a different currency from the currency in which it records revenues. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Given the volatility of exchange rates, we may not be able to effectively manage our currency transaction and translation risks and any volatility in currency exchange rates may have an adverse effect on our financial condition or results of operations and, therefore, on our ability to make principal and interest payments on our indebtedness when due.

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Our operations depend to a great extent on the economy of the European and Asian markets. These economies may not be as stable as that of the U.S.

      Our operations depend upon the economies of the European and Asian markets. These markets include countries with economies in various stages of development or structural reform, some of which are subject to rapid fluctuations in terms of consumer prices, employment levels, gross domestic product, interest and foreign exchange rates. We may be subject to such fluctuations in the local economies. To the extent such fluctuations have an effect on the ability of our consumers to pay for our products, the growth of our products in such markets could be impacted negatively.

      Certain of our targeted markets are in countries in which the rate of inflation is significantly higher than that of the U.S. We cannot assure you that any significant increase in the rate of inflation in such countries could be offset, in whole or in part, by corresponding price increases by us even over the long-term.

Our principal U.S. pension plan is underfunded, which we expect will require us to make cash contributions to the plan which will reduce the cash available for our business, and adverse equity market conditions may increase our pension liability and expense.

      As of December 31, 2003, the projected benefit obligation under our Milacron Retirement Plan exceeded the plan’s fair value of assets by $124 million, based on an assumed discount rate of 6.25%. We may be required to make significant additional contributions to the plan in the future in order to comply with minimum funding requirements imposed by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The amount of any such required contributions will be determined annually based on an annual actuarial valuation of the plan as performed by the plan’s actuaries. While we currently do not expect to make significant additional contributions to the plan in the near term, we cannot predict whether changing economic conditions or other factors will result in our being required to make contributions to the plan in excess of our current expectations. Based on an actuarial valuation for the plan completed as of January 1, 2003, we expect to contribute approximately $3 million in each of 2004, 2005 and 2006 and up to $8 million in 2007 and $23 million in 2008. Additionally, there is a risk that if the Pension Benefit Guaranty Corporation concludes that its risk with respect to our pension plan may increase unreasonably if it continues to operate, if we are unable to satisfy the minimum funding requirement for the plan or if the plan becomes unable to pay benefits, then the Pension Benefit Guaranty Corporation could terminate the plan and take control of its assets. In such event, we may be required to make an immediate payment to the Pension Benefit Guaranty Corporation of all or a substantial portion of the underfunding as calculated by the Pension Benefit Guaranty Corporation based upon its own assumptions. The underfunding calculated by the Pension Benefit Guaranty Corporation could be substantially greater than the underfunding we have calculated because, for example, the Pension Benefit Guaranty Corporation may use a significantly lower discount rate. If such payment is not made, then the Pension Benefit Guaranty Corporation could place liens on a material portion of our assets and the assets of any members of our controlled group. Such action could adversely affect our financial condition and results of operation.

      As a result of the decline in the financial markets, we changed our assumption for our expected rate of return on plan assets in 2003 from 9.5% to 9% and will continue to use 9% as our expected rate of return in 2004. The change from the 9.5% 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, and we expect that this change will also reduce the amount of pension income that would otherwise be reportable in 2004 by approximately $2 million. Before deducting charges of $4.7 million for supplemental retirement benefits, we recorded pension income of $9.4 million related to this plan in 2002, of which $7.6 million related to continuing operations. In 2003, however, pension income decreased to $0.6 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 approximately $7 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.

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      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, we 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. Adverse market conditions may result in an increase in the plan’s underfunded position, which may result in further minimum pension liability adjustments.

We may be unable to respond in an effective and timely manner to technological changes in our industry and could lose customers as a result.

      Our success in the future will depend in part upon our ability to maintain and enhance our technological capabilities, develop and market products and applications that meet changing customer needs and successfully anticipate or respond to technological changes of our competitors in a cost-effective and timely manner. Our inability to anticipate, respond to or utilize changing technologies could cause us to lose customers.

We may not be able to adequately protect our intellectual property and proprietary rights, which could harm our future success and competitive position.

      Our future success and competitive position depend in part upon our ability to obtain and maintain certain proprietary technologies used in our principal products. We have not always been successful in preventing the unauthorized use of our existing intellectual property rights by our competitors. For example, in the past we have determined that certain of our competitors were using our patented designs in the designs of their machines. We negotiated royalty payments from these competitors which totaled $8.3 million in 2000, $1.1 million in 2001, $4.5 million in 2002 and $0.9 million in 2003. We cannot assure you that we will be able to discover unauthorized use of our proprietary technologies in the future or that we will be able to receive any payments therefor. If we are not successful in protecting our intellectual property it may result in the loss of valuable technologies or require us to make payments to other companies for infringing on their intellectual property rights. We generally rely on patent, trade secret and copyright laws as well as confidentiality agreements with other parties to protect our technologies; however, some of our technologies may not be protected. We also cannot assure you that:

•  any of our patents will not be invalidated, circumvented, challenged or licensed to others;

•  any of our pending or future patent applications will be issued within the scope of the claims sought by us, if at all;

•  others will not develop technologies that are similar or superior to our technologies, duplicate our technologies or design around our patents; or

•  steps taken by us to protect our technologies will prevent misappropriation of such technologies.

      We also own or have rights to various trademark registrations and trademark registration applications in the United States and certain international jurisdictions that we use in connection with our business. Policing unauthorized use of our trademarks is difficult and expensive, and we cannot assure that we will be able to prevent misappropriation of our trademark rights in all jurisdictions, particularly in countries whose laws do not grant the same protections as does the United States.

We are subject to litigation that could have an adverse effect upon our business, financial condition, results of operations or reputation.

      We are a defendant in or otherwise a party to numerous lawsuits and other proceedings that result from, and are incidental to, the conduct of our business. These suits and proceedings concern issues including

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product liability, patent infringement, environmental matters and personal injury matters. In several such lawsuits and proceedings, some of which seek substantial dollar amounts, multiple plaintiffs allege personal injury involving products, including metalworking fluids, supplied and/or managed by us. While it is not feasible to predict the outcome of all pending suits, claims and proceedings, the ultimate resolution of these matters could have an adverse effect upon our business, financial condition, results of operations or reputation.

Our operations may subject us to potential responsibilities and costs under environmental laws that could have an adverse effect on our business, financial condition or results of operations.

      Our operations are subject to environmental laws and regulations in the U.S. and abroad relating to the protection of the environment and health and safety matters, including those governing discharges of pollutants to the air and water, the management and disposal of hazardous substances and wastes and the clean-up of contaminated sites. The operation of manufacturing plants entails risks under environmental laws and regulations. We could incur significant costs, including clean-up costs, fines and sanctions, and claims by third parties for property damage and personal injury, as a result of violations of or liabilities under these laws and regulations. We are currently involved in a limited number of remedial investigations and actions at various locations, including former plant facilities and off-site disposal sites. While, based on information currently known to us, we believe that we maintain adequate reserves with respect to these matters, our liability could exceed forecasted amounts, and the imposition of additional clean-up obligations or the discovery of additional contamination at these or other sites could result in additional costs. In addition, potentially significant expenditures could be required to comply with environmental laws and regulations, including requirements that may be adopted or imposed in the future.

An extended delay in the recovery of the U.S. economy could require us to change our assumptions regarding our deferred tax assets, which could materially increase our income tax expense and adversely affect our results of operations.

      At December 31, 2003, we 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 and Mizuho on March 12, 2004 will 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 “Risks Relating to Our Liquidity and Our Indebtedness — ‘Ownership change’ for U.S. federal income tax purposes will cause utilization of our tax loss carryforwards and other tax attributes to be substantially delayed, which will increase income tax expense and decrease available cash in future years.”

      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 our 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 our 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, we expected to incur a

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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 our 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 adversely affect our results of operations.

If we are unable to retain key employees, our performance may be hindered.

      Our ability to provide high-quality products and services depends in part on our ability to retain our skilled personnel in the areas of management, product engineering, servicing and sales. Certain of our businesses rely heavily on key personnel in the engineering, design and formulation of our products. Recent levels of cash flow from operations may hamper our ability to retain certain employees. If we were to lose any of our key employees our results of operations could be adversely affected. In addition, the Refinancing Transactions discussed above, among other things, have had the following impact on awards under our 1997 and 1994 long-term incentive plans: unvested stock options (none of which are currently in-the-money) with respect to approximately 3,525,500 shares of common stock have become vested and exercisable, restrictions have lapsed with respect to approximately 1,026,600 shares of common stock granted in the form of restricted stock awards, an additional 63,710 shares of common stock issued in the form of performance grants have been canceled and settled through cash payments to the grantees of approximately $465,083 and 12,128 shares of common stock that were deferred under the plans have been accelerated. In addition, an amount in cash equal to approximately $1,829,122 became subject to distribution under our Compensation Deferral Plan as a result of the Refinancing Transactions. These events could adversely affect our financial condition and results of operation because of their financial impact and because the retention value of the accelerated awards will be lost and may therefore impact our ability to retain the skilled personnel who hold such awards.

Risks Relating to Our Common Stock and Our Preferred Stock

Our common stock price may be volatile, and consequently investors may not be able to resell their common stock at or above the subscription price.

      The price at which our common stock will trade after the rights offering may be volatile and may fluctuate due to factors such as:

•  our historical and anticipated quarterly and annual operating results;

•  variations between our actual results and analyst and investor expectations or changes in financial estimates and recommendations by securities analysts;

•  the performance and prospects of the plastics manufacturing industry;

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•  the depth and liquidity of the market for our common stock;

•  investor perception of us and the industry in which we operate;

•  domestic and international economic conditions; and

•  conditions and trends in general market conditions.

      Fluctuations may be unrelated to or disproportionate to our financial performance. These fluctuations may result in a material decline in the trading price of our common stock.

Our share price may decline due to eligibility for future sale of shares of Series B Preferred Stock, contingent warrants and/or common stock issued upon conversion of Series B Preferred Stock or exercise of contingent warrants.

      There are currently outstanding 500,000 shares of our Series B Preferred Stock, which are initially convertible into an aggregate of 50,000,000 shares of our common stock and represent approximately 57% of our outstanding equity (on an as-converted basis). We intend to redeem up to 150,000 shares of the outstanding Series B Preferred Stock with the proceeds of this rights offering, which would reduce the number of shares into which the outstanding Series B Preferred Stock would initially be convertible down to an aggregate of 35,000,000 shares and would reduce the outstanding equity represented by the Series B Preferred Stock down to approximately 43% (on an as-converted basis). However, if the initial conversion price of the Series B Preferred Stock is reset from $2.00 per share to $1.75 per share based upon our failure to meet a financial performance test for 2004 and/or we elect to pay dividends on the Series B Preferred Stock with additional shares of Series B Preferred Stock under certain circumstances, then the outstanding shares of Series B Preferred Stock would be convertible into a greater number of shares of our common stock. The holders of the Series B Preferred Stock also hold contingent warrants exercisable at $0.01 per share for an aggregate of 1,000,000 shares of our common stock if we fail to meet a financial performance test for 2005. The holders of the Series B Preferred Stock have the right, at any time after March 7, 2005, to request that we register under the Securities Act sales of Series B Preferred Stock and any common stock issued upon conversion of Series B Preferred Stock. As a result, it is contemplated that shares of Series B Preferred Stock and any common stock issued upon conversion of such Series B Preferred Stock will in the future become eligible for sale in registered offerings. We cannot predict the effect, if any, of future sales of shares of Series B Preferred Stock and/or any common stock issued upon conversion of such Series B Preferred Stock, or the availability of such shares for sale, on the market price for our common stock prevailing from time to time. Sales of Series B Preferred Stock and/or common stock issued upon conversion of Series B Preferred Stock in the public market, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.

We have not recently paid dividends on our common stock and cannot assure you that we will do so in the future.

      We did not pay dividends on our common stock in the last two quarters of 2003 and the first quarter of 2004, and we cannot assure you that we will do so in the future. The indenture governing our 11 1/2% Senior Secured Notes and the agreement governing our asset based facility contain restrictions on our ability to pay dividends. Our certificate of incorporation, including the certificate of designation for our Series B Preferred Stock, also contain limitations on our ability to pay dividends on our common stock.

The interests of our principal shareholders may conflict with yours.

      As of June 18, 2004, Glencore and Mizuho collectively owned 100% of the shares of our outstanding Series B Preferred Stock, which represents approximately 57% of our outstanding equity (on an as-converted basis). Glencore has reported in a Schedule 13D filing with the SEC that it has sold an undivided participation interest in its investment in us to Triage Offshore Fund, Ltd. equivalent to 62,500 shares of Series B Preferred Stock, representing approximately 7.2% of our outstanding equity (on an as-converted basis), with Glencore remaining as the record holder of such shares. After we redeem a portion of Glencore’s

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and Mizuho’s shares of Series B Preferred Stock with the proceeds of the rights offering, Glencore’s and Mizuho’s collective holdings would represent approximately 43% of our outstanding equity, with Triage’s participation interest in Glencore’s holdings representing approximately 5.0% of our outstanding equity, in each case on an as-converted basis and assuming full subscription in the rights offering. If the initial conversion price of the Series B Preferred Stock is reset from $2.00 per share to $1.75 per share based upon our failure to meet a financial performance test for 2004 and/or we elect to pay dividends on the Series B Preferred Stock with additional shares of Series B Preferred Stock under certain circumstances, then Glencore’s and Mizuho’s holdings of Series B Preferred Stock would represent a greater percentage of our outstanding equity on an as-converted basis. Glencore and Mizuho also hold contingent warrants to purchase an additional 1,000,000 shares of common stock at $0.01 per share if we fail to meet a financial performance test for 2005. In addition, Glencore and Mizuho have special voting and approval rights as holders of shares of Series B Preferred Stock. By virtue of such stock ownership, Glencore and Mizuho have the power to significantly influence our affairs and to influence, if not decide, the outcome of matters required to be submitted to shareholders for approval, including the election of our directors and amendment of our charter and bylaws. We cannot assure you that Glencore and Mizuho will not exercise their influence over us in a manner detrimental to your interests. See “Description of Capital Stock — Voting Power.”

Upon purchase, your right to receive payments on the common stock is junior to our existing and future senior and subordinated indebtedness and preferred stock. You may receive no compensation of any kind relating to the common stock if there is a bankruptcy, liquidation or similar proceeding affecting us.

      The common stock ranks behind all of our existing indebtedness. It will also rank behind our preferred stock and any future indebtedness. As a result, upon any distribution to our creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, we will have to pay the holders of debt and our preferred stock in full before we can make any payment on the common stock. Moreover, the common stock will be structurally subordinated to all liabilities, including trade payables, of our subsidiaries, and upon their liquidation or reorganization, the rights of the holders of the common stock to share in those assets would be subordinate to the claims of the subsidiaries’ creditors.

Our charter documents, rights agreement and Delaware law have anti-takeover provisions that may discourage transactions involving actual or potential changes of control at premium prices.

      Provisions of our Certificate of Incorporation, By-laws and shareholders rights agreement may inhibit changes in control of our company not approved by our Board of Directors and could limit the circumstances in which a premium may be paid for our stock in proposed transactions. These provisions provide for:

•  a classified Board, which is divided into three classes with staggered three-year terms;

•  the removal of any director by the holders of a majority of the votes entitled to be cast at an election of directors, but shareholders may effect such removal only for cause;

•  all vacancies on the Board to be filled by the remaining directors, provided there is no default in the payment of dividends to holders of our preferred stock;

•  common stock shareholder action by written consent only being available where signatures are obtained from all the stockholders of Milacron Inc. who would be entitled to notice of a meeting regarding such action;

•  the common stock shareholders, or any percent thereof, not being able to call a special meeting;

•  stockholders only being able to nominate directors or propose any new business to be considered at any meeting of stockholders if they have provided advance notice;

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•  the Board having the authority to issue one or more series of Serial Preference Stock, and with respect to each such series to fix by resolution or resolutions providing for the issue of such series the powers, preferences or rights, or any qualifications, limitations or restrictions thereof; and

•  common stock shareholders having a right to purchase additional shares at a discount in the event of certain takeover-related activity (see “Description of Capital Stock — Rights Agreement”).

      In addition, we are subject to provisions of General Corporation Law of the State of Delaware that may make some business combinations more difficult. As a result, transactions that otherwise could involve a premium over prevailing market prices to holders of our common stock may be discouraged or may be more difficult for us to effect as compared to companies organized in other jurisdictions.

The personal liability of our directors is limited.

      Our charter documents limit the liability of our directors for breach of their fiduciary duty to our company and provide for indemnification to the fullest extent permitted by Delaware law. The liability of our directors under the federal securities laws, however, will not be affected.

Risks Relating to the Rights Offering

The subscription price is not an indication of our value.

      The subscription price does not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or any other established criteria for value. You should not consider the subscription price an indication of our value or any assurance of future value. After the date of this prospectus, our common stock may trade at prices above or below the subscription price.

If you do not exercise all of your rights, you may suffer dilution of your percentage ownership of our common stock.

      The rights offering is designed to enable each holder of our common stock (other than any common stock issued upon conversion of Series B Preferred Stock) on the record date to acquire our stock at a price equal to the initial conversion price of the Series B Preferred Stock and thereby increase their proportionate voting and economic interest relative to Glencore and Mizuho and any shareholders who do not exercise their entire initial subscription privilege.

      To the extent that you do not exercise your rights and shares are purchased by other shareholders in the rights offering, your proportionate voting and ownership interest will be reduced.

Once you exercise your rights, you may not revoke your exercise.

      Once you exercise your rights, unless we materially amend the terms of the rights offering, you cannot revoke your exercise even if there is a decline in the price of our common stock or you learn information about us that you consider unfavorable before the expiration date. You should not exercise your rights unless you are certain that you wish to purchase additional shares of our common stock at the subscription price.

The subscription rights are not transferable and there is no market for the subscription rights.

      You may not sell, give away or otherwise transfer your subscription rights. Because the subscription rights are nontransferable, there is no market or other means for you to directly realize any value associated with the subscription rights. You must exercise the subscription rights and acquire additional shares of our common stock to realize any value.

If you exercise your subscription rights, you may be unable to sell any shares you purchase at a profit and your ability to sell may be delayed by the time required to deliver the stock certificates.

      The public trading market price of our common stock may decline after you elect to exercise your subscription rights. If that occurs, you will have committed to buy shares of common stock at a price above the

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prevailing market price and you will have an immediate unrealized loss. Moreover, we cannot assure you that following the exercise of subscription rights you will be able to sell your shares of common stock at a price equal to or greater than the subscription price. Until shares are delivered after completion of the rights offering, you may not be able to sell the shares of our common stock that you purchase in the rights offering. Certificates representing shares of our common stock purchased in the rights offering will be delivered as soon as practicable after completion of the rights offering. We will not pay you interest on any funds delivered to the subscription agent pursuant to the exercise of subscription rights.

Because we may cancel the rights offering, your participation in the offering is not assured.

      We may close the rights offering even if less than all of the shares that we are offering are actually purchased. We may unilaterally withdraw or terminate the rights offering at our discretion until the time the share certificates are actually distributed. If we elect to withdraw or terminate the rights offering, neither we nor the subscription agent will have any obligation with respect to the subscription rights except to return, without interest or penalty, any subscription payments actually received.

To exercise your subscription rights, you must act promptly and follow the subscription instructions carefully.

      Eligible shareholders who desire to purchase shares in the rights offering must act promptly to ensure that all required forms and payments are actually received by the subscription agent at or prior to 5:00 p.m., New York City time, on                     , 2004, the expiration date. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your desired transaction, the subscription agent may, depending on the circumstances, reject your subscription or accept it to the extent of the payment received. Neither we, the subscription agent, the information agent nor the 401(k) plan trustee has any obligation to contact you concerning, or attempt to correct, an incomplete or incorrect subscription form or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

      If you are a participant in our 401(k) plan, you must act promptly to ensure that all required forms are received by the trustee and that the total amount of the funds required for an exercise of your rights have been allocated to an account created by you, or which you currently maintain, in the Putnam Money Market Fund at least five business days before the expiration date of the rights offering. See “The Rights Offering — Special Instructions for Participants in Our 401(k) Plan.”

You will be immediately and substantially diluted by $4.71 in pro forma net tangible book value per share if you subscribe for shares of common stock in this rights offering.

      If you exercise your subscription rights to purchase shares of our common stock, you will incur immediate and substantial dilution in pro forma net book value per share because the subscription price of $2.00 per share is substantially higher than the negative pro forma net tangible book value per share immediately after this rights offering. See “Dilution.”

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USE OF PROCEEDS

      We expect to receive gross proceeds from this offering of approximately $32.2 million, based on the number of shares of our common stock outstanding on June 18, 2004 and assuming full subscription of the rights offering (without giving effect to rounding up of any fractional rights). We intend to use up to $31.5 million of the gross proceeds of this offering to redeem up to 150,000 shares of the Series B Preferred Stock. We estimate that our offering expenses will be $          . We expect to pay such expenses from any gross proceeds from the rights offering remaining after application to redeem Series B Preferred Stock and, if necessary, cash on hand. Pending such use, we will invest the gross proceeds of the offering in U.S. dollar denominated, short-term, interest bearing and investment-grade securities. Any gross proceeds remaining after application to redeem Series B Preferred Stock and pay offering expenses will be used for general corporate purposes.

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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

      Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “MZ.” Shares of such stock are also traded on the National Stock Exchange, Boston Stock Exchange, Pacific Stock Exchange, Philadelphia Stock Exchange and Midwest Stock Exchange, with options traded on the Philadelphia Stock Exchange. The following table sets forth, for the quarters indicated, the range of high and low sale prices for the common stock as reported on the NYSE for the periods indicated and the cash dividends per share declared on such stock.

		High		Low		Dividends
Fiscal Year Ended December 31, 2002
	First Quarter	$	16.60	$	10.92	$	.01
	Second Quarter		14.63		9.65		.01
	Third Quarter		10.31		4.20		.01
	Fourth Quarter		8.15		3.10		.01
Fiscal Year Ending December 31, 2003
	First Quarter	$	6.55	$	3.76	$	.01
	Second Quarter		5.59		4.08		.01
	Third Quarter		5.00		2.00		—
	Fourth Quarter		4.47		2.23		—
Fiscal Year Ending December 31, 2004
	First Quarter	$	4.55	$	1.86		—

      As of June 18, 2004, there were 4,189 shareholders of record of our common stock, which does not reflect those shares held beneficially or those shares held in “street” name. On June 24, 2004, the last price reported on the NYSE for our common stock was $3.97 per share.

      Restrictive covenants contained in the indenture governing our 11 1/2% Senior Secured Notes and in the financing agreement governing our asset based facility limit our ability to pay dividends on our common stock. See “Description of Certain Indebtedness — 11 1/2% Senior Secured Notes due 2011 — Covenants” and “Description of Certain Indebtedness — The Asset Based Facility — Covenants and Conditions” in this prospectus. Our certificate of incorporation, including the certificate of designation for our Series B Preferred Stock, also contains limitations on our ability to pay dividends on our common stock. See “Description of Capital Stock — 4% Preferred Stock” and “Description of Capital Stock — Series B Preferred Stock” in this prospectus. Due to these restrictions, we do not at this time anticipate paying dividends on our common stock over the next few years.

26

CAPITALIZATION

      The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 31, 2004 on an actual basis, as adjusted for the June 10 Transactions and as further adjusted for the rights offering and the use of proceeds therefrom.

      This table should be read in conjunction with “Unaudited Pro Forma Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness” and our consolidated financial statements and unaudited consolidated condensed financial statements and the related notes included in this prospectus.

			As of March 31, 2004
									As Further
						As Adjusted			Adjusted for
						for June 10			the rights
			Actual			Transactions			offering
			(In millions)
Cash and cash equivalents(a)			$	62.0		$	40.4		$	39.8
Debt:
Revolving A facility(b)				7.5			—			—
Term loan B facility				75.0			—			—
Asset based facility(c)				—			8.4			8.4
Series A Notes and Series B Notes(d)				100.0			—			—
Premium on Series A Notes and Series B Notes(e)				2.9			—			—
7 5/8% Eurobonds due April 6, 2005(f)				139.4			—			—
11 1/2% senior secured notes(g)				—			219.8			219.8
Other(h)				23.3			23.3			23.3
	Total debt		$	348.1		$	251.5		$	251.5
Shareholders’ equity (deficit):
Series B Preferred Stock — 500,000 shares authorized, issued and outstanding, $.01 par value per share(i)			$	—		$	—		$	—
Series B Preferred Stock capital in excess of par value(i)				—			114.0			77.1
4% Cumulative Preferred shares — 60,000 shares authorized, issued and outstanding, $100 par value per share, redeemable at $105 per share				6.0			6.0			6.0
Common shares — 50,000,000 shares authorized, 34,829,991 shares issued and outstanding, $1 par value per share(j)				34.8			0.3			0.5
Capital in excess of par value of common shares				291.0			318.9			349.6
Contingent warrants to issue 1,000,000 additional common shares				—			2.6			2.6
Accumulated deficit(k)				(268.6	)		(306.3	)		(300.9	)
Accumulated other comprehensive loss				(106.6	)		(106.6	)		(106.6	)
	Total shareholders’ equity (deficit)		$	(43.4	)	$	28.9		$	28.3
		Total capitalization	$	304.7		$	280.4		$	279.8

(a)	Adjustment for June 10 Transactions is for application of cash towards the purchase of 99.99% of the Eurobonds pursuant to a tender offer at a price of 104% of principal amount. Adjustment for the rights offering is for estimated costs related to this rights offering and the use of the proceeds therefrom.
(b)	Actual amount of revolving A facility does not include $12.1 million of letters of credit that were outstanding thereunder on March 31, 2004.
(c)	Adjustment for June 10 Transactions is for application of drawings under our asset based facility towards the purchase of 99.99% of the Eurobonds pursuant to a tender offer at a price of 104% of principal

27

	amount. Adjustment for drawings under the asset based facility does not include $17.4 million in letters of credit outstanding thereunder as of June 10, 2004.
(d)	The $30 million in aggregate principal amount of Series A Notes were converted by the holders thereof into 15,000,000 shares of our common stock on April 15, 2004. As of June 10, 2004, the shares of common stock into which the Series A Notes had been converted were exchanged for 150,000 shares of Series B Preferred Stock.
(e)	Represents a premium on the Series A Notes and the Series B Notes related to a derivative (as defined in accounting principles generally accepted in the United States) that is embedded therein. The derivative relates to the required increase or decrease in the interest rate on the Series A Notes and the Series B Notes that would have occurred if the Refinancing Transactions had not been approved by our shareholders. The debt premium was applied on June 10, 2004 to reduce the interest expense on the Series A Notes and the Series B Notes from a 20% rate to a 6% rate for the periods of time they were outstanding.
(f)	On June 10, 2004, we purchased 99.99% of the Eurobonds pursuant to the tender offer.
(g)	Represents the aggregate stated principal amount of $225 million of the 11 1/2% Senior Secured Notes, net of discount at issuance of $5.2 million.
(h)	Other includes $16.6 million in capital leases and $6.7 million in borrowings under foreign credit facilities.
(i)	On June 10, 2004, we issued 500,000 shares of Series B Preferred Stock, par value $.01, in exchange for the common stock into which the Series A Notes had been converted and the Series B Notes.
(j)	On April 15, 2004, we issued an additional 15,000,000 shares of common stock upon conversion of the Series A Notes into common stock. On June 9, 2004, we obtained shareholder approval to increase the number of authorized common shares to 165,000,000 shares and to decrease the par value of our common shares to $.01 per share. The adjustment for the June 10 Transactions gives effect to the decrease of the par value. The adjustment for the rights offering assumes full subscription in the rights offering.
(k)	The adjustment for the June 10 Transactions includes:

•  an $18.0 million decrease related to a beneficial conversion feature arising from the difference between the effective conversion price of the Series B Preferred Stock and the March 12, 2004 market value of the common stock into which the Series B Preferred Stock is convertible,

•  a $6.1 million decrease to be recorded in the second quarter of 2004 related to the 4% tender premium on the Eurobonds and the write-off of deferred financing fees related thereto,

•  a $6.4 million decrease to be recorded in the second quarter of 2004 that results from the conversion of the Series A Notes into common stock and the required write-off of a financial asset related thereto,

•  a $6.3 million decrease to be recorded in the second quarter of 2004 related to:

•  the write-off of deferred financing fees pertaining to the revolving A facility and the term loan B facility and

•  expense related to the early vesting of 1,090,310 shares of restricted stock due to a change in control provision,

•  a $1.5 million decrease to be recorded in the second quarter of 2004 for a prepayment penalty related to the term loan B facility and

•  a $0.6 million increase to be recorded in the second quarter of 2004 for the reset of the interest rates on the Series A Notes and the Series B Notes from 20% to 6% as a result of obtaining shareholder approval for the issuance of the Series B Preferred Stock.

The adjustment for the rights offering and the use of the proceeds therefrom gives effect to the reversal of 30% of the beneficial conversion feature related to the Series B Preferred Stock reflecting the fact that the Series B Preferred Stock shares that are redeemed will no longer be convertible into common shares at a price of $2.00 per share.

28

DILUTION

      Subscribers in this rights offering will experience immediate dilution in pro forma net tangible book value per share of our common stock. The following table illustrates this dilution:

Subscription Price					$2.00
	Net tangible book value per share as of March 31, 2004(a)		($3.98	)
		Decrease in net tangible book value per share attributable to June 10 Transactions	(0.80	)
	Pro forma net tangible book value per share as of March 31, 2004(b)		($4.78	)
		Increase in net tangible book value per share attributable to the rights offering	2.07
	Adjusted pro forma net tangible book value per share after this offering(c)				($2.71	)
Dilution in pro forma net tangible book value per share to subscribers in this offering(c)(d)					$4.71

(a)	Net tangible book value per share is the amount by which total tangible assets exceed the sum of total liabilities and the liquidation preference of our outstanding preferred stock, divided by the total number of shares of common stock outstanding.
(b)	Pro forma net tangible book value per share is net tangible book value per share as of March 31, 2004 adjusted to give effect to the June 10 Transactions. Pro forma net tangible book value per share assumes that no shares of Series B Preferred Stock are converted into common stock.
(c)	Adjusted pro forma net tangible book value per share assumes full participation in this rights offering and application of the gross proceeds therefrom to redeem 150,000 shares of Series B Preferred Stock as described under “Use of Proceeds.” Without application of the proceeds to redeem the Series B Preferred Stock, adjusted pro forma net tangible book value per share would increase from ($2.71) to ($2.68) and dilution would decrease from $4.71 to $4.68.

(d)  Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by subscribers in this rights offering and adjusted pro forma net tangible book value per share.

29

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

      The following tables present selected consolidated financial and other data for our company for the periods presented. The unaudited pro forma information for the year ended December 31, 2003 and for the quarter ended March 31, 2004 gives effect to the indicated transactions as if they had occurred at the beginning of the period. We derived the selected consolidated financial and other data for the years ended December 31, 1999, 2000, 2001, 2002 and 2003 based on our audited consolidated financial statements. We derived the selected consolidated financial and other data for the three months ended March 31, 2004 and March 31, 2003 from our unaudited consolidated condensed financial statements. The unaudited consolidated condensed financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this data. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. You should read this data in conjunction with the information set forth under “Capitalization,” “Unaudited Pro Forma Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements, the related notes and the other financial information in this prospectus.

																	Three Months
																	Ended
			Year Ended December 31,														March 31,
			1999			2000		2001			2002			2003			2003			2004
			(Dollars in millions, except per share amounts)
Summary of Operations:
Sales			$	994.3		$	974.5	$	755.2		$	693.2		$	739.7		$	190.2		$	188.9
Earnings (loss) from continuing operations before cumulative effect of change in method of accounting				60.6			48.8		(28.7	)		(18.4	)		(184.5	)		(7.6	)		(16.0	)
	Per common share
		Basic		1.64			1.39		(0.87	)		(0.56	)		(5.49	)		(0.23	)		(0.47	)
		Diluted(1)		1.63			1.39		(0.87	)		(0.56	)		(5.49	)		(0.23	)		(0.47	)
Earnings (loss) from discontinued operations(2)				9.5			23.5		(7.0	)		(16.8	)		(7.2	)		(0.7	)		(0.6	)
	Per common share
		Basic		0.26			0.67		(0.21	)		(0.50	)		(0.21	)		(0.02	)		(0.02	)
		Diluted(1)		0.26			0.67		(0.21	)		(0.50	)		(0.21	)		(0.02	)		(0.02	)
Cumulative effect of change in method of accounting(3)				—			—		—			(187.7	)		—			—			—
	Per common share
		Basic		—			—		—			(5.61	)		—			—			—
		Diluted(1)		—			—		—			(5.61	)		—			—			—
Net earnings (loss)				70.1			72.3		(35.7	)		(222.9	)		(191.7	)		(8.3	)		(16.6	)
	Per common share
		Basic		1.90			2.06		(1.08	)		(6.67	)		(5.70	)		(0.25	)		(0.49	)
		Diluted(1)		1.89			2.06		(1.08	)		(6.67	)		(5.70	)		(0.25	)		(0.49	)
Financial Position at Year or Quarter End
Working capital of continuing operations			$	(14.0	)	$	92.8	$	166.9		$	157.5		$	11.8		$	30.1		$	9.2
Property, plant and equipment — net				171.5			165.0		165.8			149.8			140.8			147.2			135.3
Total assets				1,536.7			1,464.9		1,512.3			915.7			711.5			879.0			724.8
Long-term debt				286.0			371.3		501.1			255.4			163.5			144.9			159.7
Total debt				500.4			457.2		576.7			301.5			323.4			304.3			348.1
Net debt (total debt less cash and cash equivalents)				422.7			423.4		486.6			179.2			230.6			222.0			286.1
Shareholders’ equity (deficit)				490.9			484.4		434.9			134.0			(33.9	)		129.2			(43.4	)
	Per common share			13.18			14.37		12.80			3.79			(1.15	)		3.64			(1.42	)

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													Three Months
													Ended
		Year Ended December 31,											March 31,
		1999		2000		2001		2002		2003			2003		2004
		(Dollars in millions, except per share amounts)
Other Data
Dividends paid to common shareholders		$	17.9	$	16.8	$	12.4	$	1.4	$	0.7		$	0.3	$	—
	Per common share		0.48		0.48		0.37		0.04		0.02			0.01		—
Capital expenditures			23.9		26.5		13.5		6.2		6.5			1.3		1.5
Depreciation and amortization			34.9		35.4		34.9		23.0		21.7			5.7		5.3
Ratio of earnings to fixed charges(4)			4.1		3.6		—		—		—					—
Deficiency of earnings in relation to fixed charges pro forma for Refinancing Transactions(4)(5)											(116.0	)				(14.5	)
Ratio of earnings to fixed charges plus preferred stock dividends(4)			4.1		3.5		—		—		—					—
Deficiency of earnings in relation to fixed charges plus preferred stock dividends pro forma for Refinancing Transactions(4)(6)											(122.2	)				(16.1	)
Deficiency of earnings in relation to fixed charges plus preferred stock dividends pro forma for Refinancing Transactions and the rights offering(4)(7)											(120.4	)				(15.6	)
Backlog of unfilled orders at year- or quarter-end			153.0		100.0		61.2		76.4		92.0			74.7		89.5
Employees (average)			5,240		4,789		4,672		4,090		3,760			3,939		3,509

      The following table presents summary consolidated financial and other data for our segments for the periods presented.

																		Three Months
																		Ended
			Year Ended December 31,															March 31,
			1999			2000			2001			2002			2003			2003			2004
			(In millions)
Segment Data:
Total Sales
	Machinery Technologies — North America		$	508.1		$	550.0		$	361.7		$	313.6		$	321.2		$	88.3		$	77.3
	Machinery Technologies — Europe			219.0			145.2			122.6			117.4			151.0			35.0			42.5
	Mold Technologies			188.1			190.3			184.6			174.7			168.7			44.6			43.3
	Eliminations			(11.0	)		(11.7	)		(6.5	)		(8.5	)		(5.4	)		(3.0	)		(0.4	)
		Total plastics technologies		904.2			873.8			662.4			597.2			635.5			164.9			162.7
	Industrial fluids			90.1			100.7			92.8			96.0			104.2			25.3			26.2
		Total continuing operations	$	994.3		$	974.5		$	755.2		$	693.2		$	739.7		$	190.2		$	188.9
Operating earnings (loss)(8)
	Machinery Technologies — North America		$	54.9		$	67.2		$	(13.5	)	$	8.0		$	6.7		$	2.1		$	(0.6	)
	Machinery Technologies — Europe			19.6			2.2			(9.1	)		(8.1	)		(1.4	)		(0.7	)		1.1
	Mold Technologies			28.1			27.2			12.1			5.3			1.8			0.3			1.4
		Total plastics technologies		102.6			96.6			(10.5	)		5.2			7.1			1.7			1.9
	Industrial Fluids			21.2			17.5			18.1			14.4			15.7			3.5			2.5
	Goodwill impairment charge			—			—			—			—			(65.6	)		—			—
	Restructuring costs			(7.2	)		(1.4	)		(17.5	)		(13.9	)		(27.1	)		(6.0	)		(1.1	)
	Refinancing costs			—			—			—			—			(1.8	)		—			(6.4	)
	Corporate expenses and other			(20.5	)		(23.6	)		(18.6	)		(19.0	)		(17.1	)		(4.3	)		(3.9	)
		Total continuing operations	$	96.1		$	89.1		$	(28.5	)	$	(13.3	)	$	(88.8	)	$	(5.1	)	$	(7.0	)

31

													Three Months
													Ended
			Year Ended December 31,										March 31,
			1999		2000		2001		2002		2003		2003		2004
			(In millions)
Depreciation & amortization
	Machinery Technologies — North America		$	13.5	$	13.4	$	14.0	$	9.9	$	8.7	$	2.4	$	2.0
	Machinery Technologies — Europe			8.0		5.4		4.8		3.5		3.9		1.0		1.1
	Mold Technologies			11.3		12.0		12.8		7.4		6.7		1.7		1.6
		Total plastics technologies		32.8		30.8		31.6		20.8		19.3		5.1		4.7
	Industrial Fluids			1.5		3.9		2.6		1.5		2.0		0.5		0.5
	Unallocated corporate			0.6		0.7		0.7		0.7		0.4		0.1		0.1
		Total continuing operations	$	34.9	$	35.4	$	34.9	$	23.0	$	21.7	$	5.7	$	5.3

(1)	For the periods ended December 31, 2003, 2002 and 2001 and March 31, 2004 and 2003, diluted earnings per common share is equal to basic earnings per common share because the inclusion of potentially dilutive securities would result in a smaller loss per common share.
(2)	In 2002 and 2003, earnings (loss) from discontinued operations includes the following components:

	Year Ended
	December 31,
	2002			2003
	(In millions)
Gain on sale of Valenite	$	31.3		$	0.4
Loss on sale of Widia and Werkö		(14.9	)		0.9
Loss on sale of round metalcutting tools business		(4.7	)		(2.2	)
Estimated loss on sale of grinding wheels business		(5.2	)		1.0
Adjustment of reserves related to the 1998 divestiture of the machine tools segment		1.9			(0.9	)
Net gain (loss) on divestitures	$	8.4		$	(0.8	)

(3)	Represents a pre-tax goodwill impairment charge of $247.5 million ($187.7 million after tax) recorded in 2002 in connection with the mandatory adoption of a new accounting standard.
(4)	Earnings (loss) used in computing the ratios of earnings to fixed charges and earnings to fixed charges plus preferred stock dividends consist of earnings (loss) from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense on debt and amortization of deferred debt issuance costs and the portion of rental expense that we believe is representative of the interest component of rental expense. In 2001, 2002, 2003 and the three months ended March 31, 2004, our earnings were insufficient to cover our fixed charges by $51.1 million, $36.7 million, $111.8 million and $14.9 million, respectively. In 2001, 2002, 2003 and the three months ended March 31, 2004, our earnings were insufficient to cover our fixed charges plus preferred stock dividends by $51.3 million, $36.9 million, $112.1 million and $14.9 million, respectively.
(5)	Represents the deficiency of earnings in relation to fixed charges on a pro forma basis to give effect to the Refinancing Transactions.
(6)	Represents the deficiency of earnings in relation to fixed charges plus preferred stock dividends on a pro forma basis to give effect to the Refinancing Transactions, assuming that we elect to pay these dividends and have the capacity to pay these dividends in cash under our restricted payments covenant in the indenture governing the 11 1/2% Senior Secured Notes and under the covenants in the agreement governing our asset based facility.

32

The following table sets forth the calculation of preferred stock dividends to give pro forma effect to the Refinancing Transactions.

				Year Ended		Three Months Ended
				December 31, 2003		March 31, 2004
				(In thousands)
Historical dividends on 4% Cumulative Preferred Stock				$	240.0	$	60.0
	Adjustment for Refinancing Transactions:
		Dividends on Series B Preferred Stock(a)			6,000.0		1,500.0
			Pro forma for Refinancing Transactions	$	6,240.0	$	1,560.0

(a)  Assumes the payment of cash dividends on $100 million of liquidation preference of Series B Preferred Stock. If we were restricted by our financing agreements or the terms of our 4% Cumulative Preferred Stock from paying dividends on the Series B Preferred Stock in cash, we would have the option to pay such dividends on a pay-in-kind basis at a rate of 8% per annum rather than the 6% per annum cash rate.

(7)

Represents the deficiency of earnings in relation to fixed charges plus preferred stock dividends on a pro forma basis to give effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom, assuming that we elect to pay preferred stock dividends and have the capacity to pay these dividends in cash under our restricted payments covenant in the indenture governing the 11 1/2% Senior Secured Notes and under the covenants in the agreement governing our asset based facility.

The following table sets forth the calculation of preferred stock dividends to give pro forma effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom.

				Year Ended			Three Months Ended
				December 31, 2003			March 31, 2004
				(In thousands)
Historical dividends on 4% Cumulative Preferred Stock				$	240.0		$	60.0
	Adjustment for Refinancing Transactions:
		Dividends on Series B Preferred Stock(a)			6,000.0			1,500.0
			Pro forma for Refinancing Transactions		6,240.0			1,560.0
Adjustments for the rights offering:
	Dividends on Series B Preferred Stock				(1,800.0	)		(500.0	)
			Pro forma for Refinancing Transactions and the rights offering	$	4,440.0		$	1,060.0

(a)  Assumes the payment of cash dividends on $100 million of liquidation preference of Series B Preferred Stock. If we were restricted by our financing agreements or the terms of our 4% Cumulative Preferred Stock from paying dividends on the Series B Preferred Stock in cash, we would have the option to pay such dividends on a pay-in-kind basis at a rate of 8% per annum rather than the 6% per annum cash rate.

(8)  Operating earnings (loss) for all periods include income or expense related to our principal defined benefit plan for certain U.S. employees. Machinery Technologies — North America recorded pension income of $5.1 million in 1999, $7.0 million in 2000, $7.5 million in 2001, $6.6 million in 2002 and $0.5 million in 2003 and pension expense of $0.2 million in the three months ended March 31, 2003 and $1.5 million in the three months ended March 31, 2004. Industrial Fluids recorded pension income of $0.5 million in 1999, $0.6 million in 2000, $0.6 million in 2001, $1.0 million in 2002 and less than $0.1 million in 2003 and pension expense of less than $0.1 million in the three months ended March 31, 2003 and $0.1 million in the three months ended March 31, 2004. The amounts discussed above exclude the costs of supplemental retirement benefits related to continuing operations of $1.5 million in 1999,

33

$0.8 million in 2001, $4.7 million in 2002 and $3.2 million in 2003. Of these amounts, $0.5 million in 2001 and $2.9 million in 2002 are included in restructuring costs as is the entire $3.2 million in 2003.

Operating earnings (loss) also include royalty income from the licensing of patented technology to other manufacturers of plastics processing machinery recorded by Machinery Technologies — North America of $8.3 million in 2000, $1.1 million in 2001, $4.5 million in 2002 and $0.9 million in 2003. We negotiated these royalties with certain of our competitors after we determined that they were using our patented designs in the design of their machines. While there can be no assurance that these royalties will continue in the future, we continue to negotiate with additional parties.

34

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

      The following unaudited pro forma consolidated financial information has been prepared based on the historical financial statements included elsewhere in this prospectus, adjusted to give pro forma effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2003 and the three months ended March 31, 2004 give effect to the Refinancing Transactions and the rights offering and the use of proceeds therefrom as if they had occurred at the beginning of the respective periods. The unaudited pro forma consolidated balance sheet as of March 31, 2004 gives effect to the conversion of the entire $30 million principal amount of Series A Notes into shares of common stock at a price of $2.00 per share on April 15, 2004, the June 10 Transactions and the rights offering and the use of proceeds therefrom as if they were completed on that date.

      The unaudited pro forma consolidated financial information is based upon currently available information, assumptions, and estimates which we believe are reasonable. These assumptions and estimates, however, are subject to change. In our opinion, all adjustments have been made that are necessary to present fairly the pro forma data. The unaudited pro forma consolidated financial information is presented for informational purposes only and is not indicative of either future results of operations or results that might have been achieved if the transactions had been consummated as of January 1, 2003, January 1, 2004 or March 31, 2004. The unaudited pro forma consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the historical consolidated financial statements, together with the notes related thereto, included in this prospectus.

35

MILACRON INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

				Year Ended December 31, 2003
													Pro Forma			Adjustment
							Adjustment for			Adjustment for			for			for
							March 12			June 10			Refinancing			Rights		Pro Forma for
				Historical			Transactions			Transactions			Transactions			Offering(k)		Rights Offering
				(In millions except share and per-share amounts)
				(Unaudited)
Sales				$	739.7		$			$			$	739.7		$		$	739.7
Cost of products sold					605.3									605.3					605.3
Cost of products sold related to restructuring					3.3									3.3					3.3
	Total cost of products sold				608.6			—			—			608.6			—		608.6
		Manufacturing margins			131.1			—			—			131.1			—		131.1
Other costs and expenses
	Selling and Administrative				129.0									129.0					129.0
	Goodwill impairment charge				65.6									65.6					65.6
	Restructuring costs				23.8									23.8					23.8
	Refinancing costs				1.8			(1.8	)(a)					—					—
	Other — net				(0.3	)		(1.3	)(b)					(1.6	)				(1.6	)
		Total other costs and expenses			219.9			(3.1	)		—			216.8			—		216.8
Operating loss					(88.8	)		3.1			—			(85.7	)		—		(85.7	)
Interest
	Income				1.9									1.9					1.9
	Expense				(24.9	)		13.5	(c)					(30.4	)				(30.4	)
								(4.2	)(d)		4.2	(f)
								(9.8	)(e)		9.8	(g)
											10.4	(h)
											(27.8	)(i)
											(1.6	)(j)
			Interest — net		(23.0	)		(0.5	)		(5.0	)		(28.5	)		—		(28.5	)
Loss from continuing operations before income taxes					(111.8	)		2.6			(5.0	)		(114.2	)		—		(114.2	)
Provision for income taxes					72.7									72.7					72.7
Loss from continuing operations					(184.5	)		2.6			(5.0	)		(186.9	)		—		(186.9	)
Discontinued operations net of income taxes
	Loss from operations				(6.4	)		0.3	(b)					(6.1	)				(6.1	)
	Net loss on sale				(0.8	)								(0.8	)				(0.8	)
		Total discontinued operations			(7.2	)		0.3			—			(6.9	)		—		(6.9	)
Net Loss				$	(191.7	)	$	2.9		$	(5.0	)	$	(193.8	)	$	—	$	(193.8	)
Loss per common share — basic and diluted
	Continuing operations			$	(5.49	)							$	(5.43	)			$	(3.72	)
	Discontinued operations				(0.21	)								(0.20	)				(0.14	)
	Net loss			$	(5.70	)							$	(5.63	)			$	(3.86	)
Weighted average common shares — basic and diluted (in thousands)					33,660									34,438	(l)				50,186	(l)

(a) This adjustment eliminates $1.8 million of costs that were incurred during 2003 in pursuing various alternatives to the Refinancing Transactions. If the Refinancing Transactions had actually taken place as

36

	of the beginning of 2003 as is contemplated in the Unaudited Pro Forma Consolidated Statement of Operations for the period, these costs would not have been incurred.
(b)	These adjustments eliminate financing fees related to the company’s then-existing receivables purchase agreement which was terminated on March 12, 2004.
(c)	This adjustment eliminates historical interest of $11.6 million on the 8 3/8% Notes due 2004 and borrowings under the then-existing revolving credit facility, both of which were repaid using the proceeds of the March 12 Transactions and existing cash, and expense of $1.9 million for the amortization of deferred financing costs related to these borrowings.
(d)	This adjustment reflects interest on the Series B Notes that were issued on March 12, 2004. The interest rate is 6% per annum reflecting a retroactive reset of the interest rate from 20% per annum as a result of shareholder approval of the issuance of the Series B Preferred Stock. No interest expense is assumed for the Series A Notes because they are assumed to have been converted into common shares as of the beginning of the period. The actual conversion took place on April 15, 2004.
(e)	This adjustment reflects interest on borrowings under the revolving A facility and the term loan B facility entered into on March 12, 2004 for the period prior thereto. Interest of $0.8 million on the revolving A facility is based on a rate of 4.75% per annum and an assumed draw against the facility of $18.9 million. Interest of $9.0 million on the term B facility is based on a rate of 12.0% per annum and the $75.0 million principal amount received on March 12, 2004.
(f)	This adjustment eliminates the pro forma interest on the Series B Notes which were repaid with the proceeds received in the June 10 Transactions (see adjustment (d)).
(g)	This adjustment eliminates the pro forma interest on borrowings under the revolving A facility and the term loan B facility entered into on March 12, 2004 which were repaid with the proceeds of the June 10 Transactions (see adjustment (e)).
(h)	This adjustment eliminates the historical interest and amortization of deferred financing fees on the Eurobonds. €114,990,000 of the €115 million aggregate principal amount of Eurobonds was repaid with the proceeds of the June 10 Transactions.
(i)	This adjustment reflects interest expense of $25.9 million on the 11 1/2% Senior Secured Notes due 2011 and expense of $1.9 million for the amortization of (i) deferred financing fees related thereto and (ii) the original issue discount.
(j)	This adjustment reflects interest expense of $0.8 million and expense of $0.8 million for the amortization of deferred financing fees related to the asset based facility. The interest expense is based upon a weighted average rate of 4.04% per annum and an average draw against the facility of $18.9 million. The asset based facility bears interest, at the company’s option at LIBOR or an ABR, in each case, plus an applicable margin. A change in the interest rate of one-eighth percent (0.125%) per annum would have an effect on interest expense of $23,625.
(k)	The rights offering and the use of proceeds therefrom have no effect on the Unaudited Pro Forma Consolidated Statement of Operations other than increasing the number of shares used for calculating earnings per share.
(l)	Weighted average common shares do not include the shares into which the Series B Preferred Stock is convertible because their inclusion would result in a smaller loss per common share. Had these shares been included, weighted average common shares would be higher by 50,000 thousand before the rights offering and by 35,000 thousand after the rights offering and the use of the proceeds therefrom.

The Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2003 does not include or give effect to the following nonrecurring charges directly attributable to the Refinancing Transactions:

(1)  A $6.4 million charge to interest expense to be recorded in the second quarter of 2004 resulting from the write-off of a financial asset related to the Series A Notes. The asset results from a beneficial conversion feature that allowed the holders of the Series A Notes to acquire common shares of the

37

	company at an effective conversion price of $1.96 per common share compared to a fair value of $2.40 per common share on March 12, 2004 when the Series A Notes were issued.
(2)	A $1.5 million charge to refinancing costs to be recorded in the second quarter of 2004 for a prepayment penalty related to the term loan B facility entered into on March 12, 2004.
(3)	A charge to refinancing costs of approximately $6.1 million to be recorded in the second quarter of 2004 related to the 4% tender premium on the Eurobonds and the write-off of deferred financing fees related to the Eurobonds.
(4)	A charge to refinancing costs of $6.3 million to be recorded in the second quarter of 2004 related to (i) the write-off of deferred financing fees pertaining to the revolving A facility and term loan B facility and (ii) expense related to the early vesting of 1,090,310 shares of restricted stock due to a change in control provision.

38

MILACRON INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

			Three Months Ended March 31, 2004
												Pro Forma			Adjustment
						Adjustment for			Adjustment for			for			for
						March 12			June 10			Refinancing			Rights		Pro Forma for
			Historical			Transactions			Transactions			Transactions			Offering(k)		Rights Offering
			(In millions except share and per-share amounts)
			(Unaudited)
Sales			$	188.9		$			$			$	188.9		$		$	188.9
Cost of products sold				156.1									156.1					156.1
	Manufacturing margins			32.8			—			—			32.8			—		32.8
Other costs and expenses
	Selling and Administrative			30.9									30.9					30.9
	Restructuring costs			1.1									1.1					1.1
	Refinancing costs			6.4			(3.8	)(a)					2.6					2.6
	Other — net			1.4			(0.3	)(b)					1.1					1.1
		Total other costs and expenses		39.8			(4.1	)		—			35.7			—		35.7
Operating loss				(7.0	)		4.1			—			(2.9	)		—		(2.9	)
Interest
	Income			0.4									0.4					0.4
	Expense			(8.3	)		3.2	(c)					(8.2	)				(8.2	)
							(0.2	)(d)		1.1	(f)
							(2.0	)(e)		2.5	(g)
										2.9	(h)
										(7.0	)(i)
										(0.4	)(j)
		Interest — net		(7.9	)		1.0			(0.9	)		(7.8	)		—		(7.8	)
Loss from continuing operations before income taxes				(14.9	)		5.1			(0.9	)		(10.7	)		—		(10.7	)
Provision for income taxes				1.1									1.1					1.1
Loss from continuing operations				(16.0	)		5.1			(0.9	)		(11.8	)		—		(11.8	)
Discontinued operations net of income taxes				(0.6	)								(0.6	)				(0.6	)
Net loss			$	(16.6	)	$	5.1		$	(0.9	)	$	(12.4	)	$	—	$	(12.4	)
Loss per common share — basic and diluted
		Continuing operations	$	(0.47	)							$	(0.34	)			$	(0.24	)
		Discontinued operations		(0.02	)								(0.02	)				(0.01	)
		Net loss	$	(0.49	)							$	(0.36	)			$	(0.25	)
Weighted-average common shares — basic and diluted (in thousands)				33,880									34,658	(l)				50,406	(l)

(a)	This adjustment eliminates $3.8 million of costs that were incurred during the first quarter of 2004 in pursuing various alternatives to the Refinancing Transactions. If the Refinancing Transactions had actually taken place as of the beginning of the first quarter of 2004 as is contemplated in the Unaudited Pro Forma Consolidated Statement of Operations for the period, these costs would not have been incurred. The remaining $2.6 million of refinancing costs that were charges to expense in the first quarter of 2004 we incurred in 2003 and recorded as deferred charges as of December 31, 2003.
(b)	This adjustment eliminates financing fees related to the company’s then-existing receivables purchase agreement which was terminated on March 12, 2004.
(c)	This adjustment eliminates historical interest of $2.4 million on the 8 3/8% Notes due 2004 and borrowings under the then-existing revolving credit facility, both of which were repaid using the proceeds of the

39

	March 12 Transactions and existing cash, and expense of $0.8 million for the amortization of deferred financing costs related to these borrowings.
(d)	This adjustment reflects interest on the Series B Notes that were issued on March 12, 2004. The interest rate is 6% per annum reflecting a retroactive reset of the interest rate from 20% per annum as a result of shareholder approval of the issuance of the Series B Preferred Stock. Historical interest of $8.6 million on the Series B Notes had been accrued at a 20% per annum rate. This adjustment records interest at 6% per annum for the period prior to the issuance of the Series B Notes and adjusts the interest for the period the Series B Notes were outstanding from 20% per annum to 6% per annum. No interest expense is assumed for the Series A Notes because they are assumed to have been converted into common shares at the beginning of the period. The actual conversion took place on April 15, 2004. Historical interest of $0.3 million had been accrued at a rate of 20% per annum. Because of the assumption of their conversion to common shares, this adjustment eliminates that amount.
(e)	This adjustment reflects interest on borrowings under the revolving A facility and the term loan B facility entered into on March 12, 2004 for the period prior thereto. Interest of $0.2 million on the revolving A facility is based on a rate of 4.75% per annum and an assumed draw against the facility of $8.4 million. Interest of $1.8 million on the term B facility is based on a rate of 12.0% per annum and the $75.0 million principal amount received on March 12, 2004.
(f)	This adjustment eliminates the pro forma interest on the Series B Notes which were repaid with the proceeds received in the June 10 Transactions (see adjustment (d)).
(g)	This adjustment eliminates the pro forma interest on borrowings under the revolving A facility and the term loan B facility entered into on March 12, 2004 which were repaid with the proceeds of the June 10 Transactions (see adjustment (e)).
(h)	This adjustment eliminates the historical interest and amortization of deferred financings fees on the Eurobonds. €114,990,000 of the €115 million aggregate principal amount of the Eurobonds was repaid with the proceeds of the June 10 Transactions.
(i)	This adjustment reflects interest expense of $6.5 million on the 11 1/2% Senior Secured Notes due 2011 and expense of $0.5 million for the amortization of (i) deferred financing fees related thereto and (ii) the original issue discount.
(j)	This adjustment reflects interest expense of $0.2 million and expense of $0.2 million for the amortization of deferred financing fees related to the asset based facility. The interest expense is based upon a weighted average rate of 3.85% per annum and an average draw against the facility of $18.1 million. The asset based facility bears interest, at the company’s option at LIBOR or an ABR, in each case, plus an applicable margin. A change in the interest rate of one-eighth percent (0.125%) per annum would have an effect on interest expense of $22,659.
(k)	The rights offering and the use of proceeds therefrom have no effect on the Unaudited Pro Forma Consolidated Statement of Operations other than increasing the number of shares used for calculating earnings per share.
(l)	Weighted average common shares do not include the shares into which the Series B Preferred Stock is convertible because their inclusion would result in a smaller loss per common share. Had these shares been included, weighted average common shares would be higher by 50,000 thousand before the rights offering and by 35,000 thousand after the rights offering and the use of the proceeds therefrom.

The Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2004 does not include or give effect to the following nonrecurring charges directly attributable to the Refinancing Transactions:

(1)  A $6.4 million charge to interest expense to be recorded in the second quarter of 2004 resulting from the write-off of a financial asset related to the Series A Notes. The asset results from a beneficial conversion feature that allowed the holders of the Series A Notes to acquire common shares of the company at an effective conversion price of $1.96 per common share compared to a fair value of $2.40 per common share on March 12, 2004 when the Series A Notes were issued.

40

(2)	A $1.5 million charge to refinancing costs to be recorded in the second quarter of 2004 for a prepayment penalty related to the term loan B facility entered into on March 12, 2004.
(3)	A charge to refinancing costs of approximately $6.1 million to be recorded in the second quarter of 2004 related to the 4% tender premium on the Eurobonds and the write-off of deferred financing fees related to the Eurobonds.
(4)	A charge to refinancing costs of $6.3 million to be recorded in the second quarter of 2004 related to (i) the write-off of deferred financing fees pertaining to the revolving A facility and term loan B facility and (ii) expense related to the early vesting of 1,090,310 shares of restricted stock due to a change in control provision.

41

MILACRON INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of March 31, 2004

			March 31, 2004
						Adjustment			Adjustment			Pro Forma for			Adjustment			Pro Forma
						for Series A			for June 10			Refinancing			for Rights			for Rights
			Historical			Conversion			Transactions			Transactions			Offering			Offering
			(In millions)
			(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents		$	62.0		$			$	219.8	(c)	$	40.4		$	30.9	(m)	$	39.8
										(8.3	)(d)					(31.5	)(n)
										(84.0	)(e)
										8.4	(f)
										(2.0	)(g)
										(155.5	)(h)
	Notes and accounts receivable less allowances			123.0									123.0						123.0
	Inventories			131.1									131.1						131.1
	Other current assets			71.2			(2.4	)(a)		(5.6	)(i)		50.2						50.2
							(6.4	)(b)		(2.9	)(j)
										(3.7	)(k)
		Current assets of continuing operations		387.3			(8.8	)		(33.8	)		344.7			(0.6)			344.1
	Assets of discontinued operations			9.9									9.9						9.9
		Total current assets		397.2			(8.8	)		(33.8	)		354.6			(0.6)			354.0
Property, plant and equipment — net				135.3									135.3						135.3
Goodwill				83.3									83.3						83.3
Other noncurrent assets				109.0						8.3	(d)		118.8						118.8
										2.0	(g)
										(0.5	)(h)
Total Assets			$	724.8		$	(8.8	)	$	(24.0	)	$	692.0		$	(0.6)		$	691.4
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Short-term borrowings		$	186.1		$	(30.4	)(a)	$	(82.5	)(e)	$	9.1		$			$	9.1
										8.4	(f)
										(70.0	)(i)
										(2.5	)(j)
	Long-term debt due within one year			2.3									2.3						2.3
	Trade accounts payable			65.4									65.4						65.4
	Advance billings and deposits			16.6									16.6						16.6
	Accrued and other current liabilities			107.7						(10.5	)(h)		96.6						96.6
										(0.6	)(j)
		Current liabilities of continuing operations		378.1			(30.4	)		(157.7	)		190.0			—			190.0
	Liabilities of discontinued operations			1.6									1.6						1.6
		Total current liabilities		379.7			(30.4	)		(157.7	)		191.6			—			191.6
Long-term accrued liabilities				228.8						2.6	(k)		231.4						231.4
Long-term debt				159.7						219.8	(c)		240.1						240.1
										(139.4	)(h)
		Total liabilities		768.2			(30.4	)		(74.7	)		663.1			—			663.1
Shareholders’ equity (deficit)
	6% Series B Convertible Preferred Stock									114.4	(i)		114.0			(36.9	)(n)		77.1
										(0.4	)(j)
	4% Cumulative Preferred shares			6.0									6.0						6.0
	Common shares			34.8			15.0	(a)		(15.0	)(i)		0.3			0.2	(m)		0.5
										(34.5	)(l)
	Capital in excess of par value of common shares			291.0			13.0	(a)		(19.6	)(i)		318.9			30.7	(m)		349.6
										34.5	(l)
	Contingent warrants									2.6	(i)		2.6						2.6
	Accumulated deficit			(268.6	)		(6.4	)(b)		(1.5	)(e)		(306.3	)		5.4	(n)		(300.9	)
										(6.1	)(h)
										(6.3	)(k)
										(18.0	)(i)
										0.6	(j)
	Accumulated other comprehensive loss			(106.6	)								(106.6	)					(106.6	)
		Total shareholders’ equity (deficit)		(43.4	)		21.6			50.7			28.9			(0.6)			28.3
Total liabilities and shareholders’ equity (deficit)			$	724.8		$	(8.8	)	$	(24.0)		$	692.0		$	(0.6)		$	691.4

42

(a)	These adjustments reflect the conversion of $30.0 million principal amount of the Series A Notes into 15.0 million common shares of the company and the reclassification to equity of $2.4 million of deferred financing fees and a $.4 million debt premium related to the Series A Notes.
(b)	This adjustment represents the write-off of a financial asset related to the Series A Notes. The asset results from a beneficial conversion feature that allowed the holders of the Series A Notes to acquire common shares of the company at an effective conversion price of $1.96 per common share compared to a fair value of $2.40 per common share on March 12, 2004 when the Series A Notes were issued.
(c)	These adjustments reflect an issuance of $225.0 million principal amount of 11 1/2% Senior Secured Notes due 2011, net of a discount at issuance of $5.2 million.
(d)	These adjustments reflect the recording of the estimated transaction fees and expenses attributable to the issuance of the 11 1/2% Senior Secured Notes due 2011 as a deferred charge that will be amortized as interest expense over their seven-year term.
(e)	These adjustments reflect the repayment of the loans under the revolving A facility and the term loan B facility entered into on March 12, 2004, as follows:

Revolving A facility		$	7.5
Term loan B facility			75.0
	Total debt repayments		82.5
Prepayment penalty related to term loan B facility			1.5
Total payments		$	84.0

(f)	These adjustments reflect the initial proceeds of borrowings under the asset based facility entered into on June 10, 2004 as if such borrowings had been made on March 31, 2004.
(g)	These adjustments reflect the recording of the estimated expenses attributable to the asset based facility as a deferred charge that will be amortized as interest expense over its three-year term.
(h)	These adjustments reflect the repayment of €114,990,000 of the €115 million aggregate principal amount of the Eurobonds, including a 4% tender premium of $5.6 million and accrued interest of $10.5 million and the write-off of deferred financing fees related thereto.
(i)	These adjustments reflect the exchange of (i) $70.0 million principal amount of Series B Notes and (ii) the 15.0 million common shares into which the Series A Notes were converted for 500,000 shares of Series B Preferred Stock which are convertible into 50.0 million common shares and (iii) the issuance to the holders of the Series A Notes and Series B Notes of contingent warrants to purchase 1.0 million additional common shares at $.01 per share. The warrants will become exercisable only if a test based on the company’s 2005 financial performance is not satisfied. These adjustments also reflect the reclassification to equity of $5.6 million of deferred financing fees related to the Series B Notes and the recording of an $18.0 million beneficial conversion feature related to the Series B Preferred Stock. The beneficial conversion feature is based on the ability of the holders of the Series B Preferred Stock to acquire common shares of the company at an effective conversion price of $2.04 per common share compared to a fair value of $2.40 per common share on March 12, 2004 when the Series A Notes and the Series B Notes were issued.
(j)	These adjustments reflect (i) the elimination of $2.8 million of derivative assets related to the Series A Notes and the Series B Notes and a $2.5 million debt premium on the Series B Notes that results from the Series B Notes derivative asset and (ii) the reset of the interest rate on the Series A Notes and Series B Notes retroactive to the date of issuance of March 12, 2004. The derivative assets relate to the required increase or decrease in the interest rate on the Series A Notes and Series B Notes depending on whether the Refinancing Transactions were approved. Based on the fact that approval was obtained, the debt premium on the Series B Notes has been applied to reduce interest expense and accrued interest payable to the 6% rate.

43

(k) These adjustments reflect the recording of expenses arising from the Refinancing Transactions as follows:

Expense related to the early vesting of 1,090,310 shares of restricted stock due to a change in control provision	$	2.6
Write-off of deferred financing fees related to the revolving A facility and the term loan B facility		3.7
	$	6.3

(l)	These adjustments reflect a change in the par value of approximately 34.5 million common shares from $1.00 per share to $.01 per share.
(m)	These adjustments reflect the estimated proceeds from a rights offering to existing common shareholders after the issuance of the Series B Preferred Stock but before any such Series B Preferred Stock is converted into common shares. Under the terms of the rights offering, each common shareholder will be granted the right to purchase .452 additional shares of common stock for each share owned at an offering price of $2.00 per share. Participation in the rights offering is assumed to be 100%. Based on the approximately 34.8 million common shares outstanding as of March 31, 2004, this would result in gross proceeds of $31.5 million before deducting estimated transaction fees and expenses of $0.6 million and the issuance of 15.7 million additional common shares. The actual number of common shares outstanding as of the record date for the rights offering is expected to be higher, with the increase being due primarily to grants of restricted stock under the 2004 Long Term Incentive Plan approved by the company’s shareholders on June 9, 2004. Based on the approximately 35.7 million common shares outstanding as of June 18, 2004 and assuming full subscription of the rights offering (without giving effect to rounding up of any fractional rights), the rights offering would yield approximately $32.2 million in gross proceeds and result in the issuance of approximately 16.1 million additional common shares.
(n)	These adjustments reflect the redemption of 150,000 shares of Series B Preferred Stock at a price of $210.00 per share using the proceeds of the rights offering. These adjustments also give effect to the reversal of $5.4 million, or 30%, of the beneficial conversion feature related to the Series B Preferred Stock reflecting the fact that the Series B Preferred Stock shares that are redeemed will no longer be convertible into common shares at a favorable price (see adjustment (i)).

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      You should read the following discussion in connection with our consolidated financial statements and related notes included elsewhere in this prospectus.

Executive Summary

Company Overview

      We are 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.

      We have 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.

Plastics Markets — Background and Recent History

      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, we benefited from a strong, growing economy. Our plastics technologies sales were approaching $1 billion with good profitability. In 2000, for example, on sales of $874 million, our plastics technologies businesses generated over $125 million in operating earnings before depreciation and amortization and approximately $97 million in operating earnings. 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

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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 of approximately $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 of plant closings, head-count reductions and a lowering of fixed costs by over $60 million annually, the sales volume declines resulted in three loss years in 2001, 2002 and 2003.

      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.

Industrial Fluids — Background and Recent History

      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 15% to 20% of sales.

Refinancing Activities in 2004

      Our most important accomplishment in the first quarter of 2004 was the refinancing of approximately $200 million of debt and other obligations that were maturing in the quarter. Specifically, we entered into an agreement with Glencore and Mizuho whereby they jointly provided us with $100 million in new capital in the form of exchangeable securities. This new capital, together with existing cash balances, was used to repay our outstanding $115 million in senior U.S. notes. In addition, we also reached a separate agreement with Credit Suisse First Boston for a $140 million credit facility consisting of a $65 million revolving facility and a $75 million term loan facility. At close, $84 million of this new facility was drawn to retire our previous revolving bank credit facility and to terminate our receivables purchase program.

      When we released our first quarter results on April 26, 2004, we also announced the second step in our plan to revitalize our capital structure: our intention to refinance the $75 million term loan with Credit Suisse First Boston and to retire our €115 million in Eurobonds due in 2005. The following day, April 27, we launched a tender offer for the Eurobonds. We repaid in full all outstanding loans and terminated all commitments under the credit facility with Credit Suisse First Boston on June 10, 2004 in connection with our issuance of the 11 1/2% Senior Secured Notes and the establishment of a $75 million asset based credit facility with JPMorgan Chase Bank as administrative agent and collateral agent. The tender offer for the Eurobonds expired on June 7, 2004 with 99.99% of the Eurobonds validly tendered, accepted and not withdrawn. The tendered Eurobonds were repaid on June 10, 2004.

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Consolidated First Quarter 2004 Results

      We posted a net loss on sales roughly comparable to those of the first quarter a year ago. Our sales in 2004 were $189 million compared to $190 million in 2003 and were within the range of guidance we had issued in February. Absent favorable currency effects, however, sales would have decreased by 6% due in large part to uncertainties regarding our refinancing plans that were not announced until near the end of the quarter. Our segment earnings and primary working capital changes were also within the range of our guidance. During the quarter we experienced improving operating efficiencies as a result of restructuring actions taken in 2003 and our ongoing implementation of Lean manufacturing techniques.

Consolidated 2003 Results

      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 noncash 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.

Opportunities and Challenges

      Entering 2004 there are many positive developments bolstering our 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 aftermarket 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 in “Liquidity and Sources of Capital — March 12 Transactions.”

      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.

Acquisitions

      As described more fully in the Notes to Consolidated Financial Statements, in the years 2001 through 2003 we completed a total of five acquisitions of smaller companies that are now included in our 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.

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Presence Outside the U.S.

      Beginning with the acquisition of Ferromatik in 1993, we have significantly expanded our presence outside the U.S. and have 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 the first quarter of 2004, the weighted-average exchange rate of the euro was stronger in relation to the U.S. dollar than in the comparable period of 2003. As a result, we experienced favorable currency translation effects on sales and new orders of approximately $10 million and $9 million, respectively. The effect on earnings was not significant. 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, we 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. Between December 31, 2003 and March 31, 2004, the euro weakened against the U.S. dollar by approximately 2%. If the euro should weaken further against the U.S. dollar in future periods, we could experience a negative effect in translating our non-U.S. sales, orders and earnings when compared to historical results.

Significant Accounting Policies and Judgments

      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 our reported financial position and results of operations. Additional accounting policies are described in the note captioned “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in this prospectus, 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.

Deferred Tax Assets and Valuation Allowances

      At December 31, 2003, we 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 writedown 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 we operate, and the effect of potential economic changes on our various operations.

      At December 31, 2003, we 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

48

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, we 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 conversion of the Series A Notes into newly issued common stock, and the exchange of such common stock and the Series B Notes for Series B Preferred Stock, triggered an “ownership change” for U.S. federal income tax purposes. As a consequence of this ownership change, the timing of our utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

      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 our 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 determined that valuation allowances were required for at least a portion of the U.S. deferred tax assets. This conclusion was based on the expectation that a recovery in the U.S. plastics industry and our 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, we 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 our 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.

      U.S. deferred tax assets and valuation allowances were both increased by an additional $6 million in the first quarter of 2004. As a result, no U.S. tax benefit was recorded with respect to the loss incurred for the quarter. The provision for income taxes for the quarter relates to operations in profitable non-U.S. jurisdictions.

      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

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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.

Accounts Receivable, Inventory and Warranty Reserves

      Our internal accounting policies require that each of our operations maintain appropriate reserves for uncollectible receivables, inventory obsolescence and warranty costs in accordance with generally accepted accounting principles. Because of the diversity of our customers and product lines, the specific procedures used to calculate these reserves vary by location but in all cases must conform to our 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 our continuing operations have averaged $2.8 million during the last three years. While management believes that our reserves for doubtful accounts are reasonable in the circumstances, adverse changes in general economic conditions or in the financial condition of our 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, our 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 our reserves are appropriate in light of our historical results and our 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.

      Our 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, our continuing operations accrued warranty reserves totaling $4.9 million and incurred warranty-related costs totaling $3.0 million. While management believes that our 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.

Impairment of Goodwill and Long-Lived Assets

      In years prior to 2002, we 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 we 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

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($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. We conducted our 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.

      We currently review the carrying values of our long-lived assets other than goodwill annually. These reviews are conducted by comparing the estimates of undiscounted future cash flows that are included in our 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, we reviewed the aggregate carrying values of selected groups of our 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.

Insurance Reserves

      Through our wholly-owned insurance subsidiary, Milacron Assurance Ltd. (MAL), we are 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 us. 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 coverages totaling approximately $22.9 million. The majority of this amount is included in long-term accrued liabilities in the Consolidated Balance Sheet at that date.

      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.

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Pensions

      We maintain 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, we recorded pension income of $9.4 million related to this plan in 2002. In 2003, however, pension income decreased to $0.6 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 approximately $7 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, we used an expected long-term rate of return of 9 1/2%. However, we 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 our 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 $0.8 million.

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      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, we 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.

Results of Operations

      In an effort to help readers better understand the composition of our 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 under the caption “Comparative Operating Results,” (ii) the Consolidated Condensed Financial Statements and notes thereto that are included in this prospectus and (iii) the Consolidated Financial Statements and notes thereto that are included in this prospectus.

Discontinued Operations

      As discussed more fully in the Notes to Consolidated Financial Statements, in the third quarter of 2002 we completed the sales of our Valenite, Widia and Werkö metalcutting tools businesses and began to explore strategic alternatives for the sale of our 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 was sold on April 30, 2004. All of these businesses are reported as discontinued operations in the Consolidated Financial Statements and the Consolidated Condensed Financial Statements. The comparisons of results of operations that follow exclude these businesses and relate solely to our continuing operations unless otherwise indicated.

Pension Income and Expense

      In 2002 and prior years, we recorded significant amounts of income related to our 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, pension income related to continuing operations decreased to $0.5 million in 2003. For 2004, we currently expect to record pension expense of approximately $7 million, substantially all of which will be charged to continuing operations. See “Significant Accounting Policies and Judgments — Pensions.” As discussed further below, the fluctuation between years has negatively affected margins, selling and administrative expense and earnings.

Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

New Orders and Sales

      In the first quarters of both 2004 and 2003, consolidated new orders totaled $187 million. Consolidated sales were $189 million in 2004, virtually unchanged from $190 million in 2003. In 2004, new orders and sales benefited from favorable currency effects of $9 million and $10 million, respectively. Absent these effects, new orders and sales would have decreased by 5% and 6%, respectively. Order and shipment levels were penalized by a number of factors, including uncertainties regarding our refinancing plans and continued low levels of capital spending for plastics processing machinery in North America.

      Export orders were $17 million in the first quarter of 2004 compared to $18 million in 2003. Export sales totaled $19 million in 2004 and $18 million in 2003. Sales of all segments to non-U.S. markets, including exports, totaled $92 million in the first quarter of 2004 compared to $80 million in 2003 with the increase being due principally to favorable foreign currency translation effects. For the first quarters of 2004 and 2003,

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products sold outside the U.S. were approximately 49% and 42% of sales, respectively, while products manufactured outside the U.S. represented 43% and 38% of sales, respectively.

      Our backlog of unfilled orders at March 31, 2004 was $90 million compared to $92 million at December 31, 2003 and $75 million at March 31, 2003.

Margins, Costs and Expenses

      The consolidated manufacturing margin was 17.4% in the first quarter of 2004 compared to 16.7% in the first quarter of 2003. Margins remained low in relation to historical levels due to reduced sales volume and the related underabsorption of manufacturing costs and were penalized by higher insurance costs but benefited from our recent restructuring initiatives and process improvements. The margin improvement was achieved despite an increase in pension expense included in cost of products sold from $0.2 million in 2003 to $1.2 million in 2004.

      Total selling and administrative expense increased modestly in dollar amount in the first quarter of 2004 due principally to currency effects and $0.4 million of incremental pension expense. As a percentage of sales, selling expense increased from 12.6% to 13.1%. Administrative expense was essentially unchanged as the benefits of our cost-cutting initiatives were offset by currency effects.

      Interest expense increased from $5.2 million in the first quarter of 2003 to $7.9 million in the comparable period of 2004. The increase was due principally to higher borrowing costs (including amortization of deferred financing fees) related to the new financing arrangements entered into on March 12, 2004 (which are described in detail in the Liquidity and Sources of Capital section that follows). Currency effects and reduced allocation of interest cost to discontinued operations also contributed to the increase.

Refinancing Costs

      During the first quarter of 2004, we charged to expense $6.4 million of refinancing costs incurred in pursuing various alternatives to the March 12, 2004 refinancing of approximately $200 million in debt and other obligations. Our refinancing costs for the second quarter will be approximately $15 million, including the tender premium and costs related to the tender offer for the 7 5/8% Eurobonds due 2005 and the write-off of the remaining deferred financing fees related thereto. The second quarter costs will also include (i) the write-off of deferred financing fees related to the credit facility entered into with Credit Suisse First Boston on March 12, 2004 and a prepayment penalty related to the facility and (ii) expense related to the early vesting of 1,090,310 shares of restricted stock due to a change in control provision.

Restructuring Costs

      As discussed more fully in the Notes to Consolidated Condensed Financial Statements, in November 2002, we announced additional restructuring initiatives intended to improve operating efficiency and customer service. One of these actions involved the transfer of all manufacture 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 has also been moved to a smaller, more cost-effective location near Manchester. 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. The restructuring has resulted in the elimination of approximately 35 positions at Magenta and restructuring expense of $4.0 million. Cash cost will total approximately $0.9 million, a large majority of which was spent in 2003.

      In the third quarter of 2003, we began to implement additional restructuring initiatives that focus on further overhead cost reductions in each of our plastics technologies segments and at the corporate office. These actions, which involved the relocation of production, closure of sales offices, voluntary early retirement programs and general overhead reductions, have resulted in the elimination of approximately 300 positions

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worldwide and restructuring costs of $11.2 million that were recorded in the second half of 2003. Cash costs related to these initiatives will be approximately $8 million, of which $3.4 million was spent in 2003. An additional $2.3 million was spent in the first quarter of 2004.

      The total annualized cost savings from all of the 2002 and 2003 actions that are discussed above is expected to be approximately $32 million. A portion of this amount was realized in 2003 and an incremental $20 million of savings is expected to be realized in 2004. Of the $32 million of cost savings, approximately $7 million (which includes savings related to corporate costs) was realized in the first quarter of 2004. Including actions that were initiated in 2001, the pretax cost savings we expect to realize in 2004 will be $69 million.

      In total, the actions initiated in 2002 and 2003 that are discussed above resulted in pretax restructuring costs of $5.5 million in the first quarter of 2003 and $1.1 million in the comparable period of 2004. Cash costs totaled $4.1 million in the first quarter of 2003 and $3.2 million in 2004. For the first quarter of 2003, restructuring costs also include $0.5 million related to the integration of EOC and Reform, two businesses acquired in 2001, with our existing mold base and components business in Europe.

Results by Segment

      The following sections discuss the operating results of our business segments which are presented in tabular form in the Notes to Consolidated Condensed Financial Statements in this prospectus.

      Machinery Technologies — North America — The machinery technologies — North America segment had new orders of $79 million in the first quarter of 2004, a decrease of $6 million, or 7%, in relation to orders of $85 million in 2003. Sales totaled $77 million and $88 million in the first quarters of 2004 and 2003, respectively. Uncertainties regarding our refinancing plans that were not announced until March 12 had a negative effect on orders and shipments for much of the quarter. In both years, depressed capital spending in the U.S. plastics processing industry also kept orders and shipments at low levels in comparison to pre-recession levels. Capacity utilization in the plastics processing industry increased in the fourth quarter of 2003 and in the first quarter of 2004 but based on historical trends, significant increases in capital spending can be expected to trail increases in capacity utilization by 2 to 3 quarters. Due to lower shipment levels, higher insurance costs, continued price discounting and a $1.3 million increase in pension expense, the segment had an operating loss excluding restructuring costs of $0.6 million in 2004 compared to earnings excluding restructuring costs of $2.1 million in 2003. The decrease occurred despite incremental benefits of $2 million related to the restructuring and cost-cutting initiatives that were undertaken in 2002 and 2003. The segment’s restructuring costs totaled $0.8 million in 2004 and $2.8 million in 2003.

      Machinery Technologies — Europe — The machinery technologies — Europe segment had new orders and sales of $40 million and $43 million, respectively, in the first quarter of 2004 compared to new orders and sales of $33 million and $35 million, respectively, in 2003. Currency effects contributed approximately $5 million of incremental sales and new orders in 2004. However, orders and sales also increased as measured in local currencies for both injection molding machines and blow molding systems. The restructuring actions begun in 2003 resulted in more than $1 million of savings in 2004 in relation to the first quarter of 2003. As a result of the restructuring actions, the segment had an operating profit of $1.1 million in the first quarter of 2004 compared to a loss of $0.7 million in 2003. Both amounts exclude restructuring costs of $0.1 million in 2004 and $2.2 million in 2003.

      Mold Technologies — Despite favorable currency effects of $2 million, new orders in the mold technologies segment decreased from $45 million in the first quarter of 2003 to $43 million in 2004. Sales also decreased from $45 million to $43 million despite $2 million of favorable currency effects. Orders and sales in North America were essentially flat in relation to 2003 but declined in Europe. Despite lower sales volume, the segment had an operating profit of $1.4 million in the first quarter of 2004 compared to earnings of $0.3 million in 2003, in both cases excluding restructuring costs which were $0.2 million in 2004 and $1.0 million in 2003. The improvement in 2004 was due in large part to the benefits derived from these restructuring actions which totaled more than $3 million.

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      Industrial Fluids — The industrial fluids segment had new orders and sales of $26 million each in the first quarter of 2004 compared to $25 million in 2003 with the increases being due entirely to favorable currency effects. The segment’s operating profit was $2.5 million in 2004 compared to $3.5 million in 2003. The reduction in profitability was due principally to higher pension and insurance costs.

Loss Before Income Taxes

      Our pretax loss for the first quarter of 2004 was $14.9 million which includes refinancing costs of $6.4 million and restructuring costs of $1.1 million. In the comparable period of 2003, our pretax loss was $10.3 million which includes restructuring costs of $6.0 million. The pretax loss for 2004 includes incremental savings of $7 million from the 2003 restructuring actions, partially offset by expense related to the principal pension plan for U.S. employees of $1.6 million. In 2003, pension expense related to this plan was $0.2 million.

Income Taxes

      As was previously discussed (see Significant Accounting Policies and Judgments — Deferred Tax Assets and Valuation Allowances), we recorded a $71 million charge to the second quarter of 2003 provision for income taxes to establish valuation allowances against a portion of our 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, results for the first quarter of 2004 include expense related to operations in profitable non-U.S. jurisdictions. This resulted in a first quarter provision for income taxes of $1.1 million despite a pretax loss of $14.9 million in 2004. In the first quarter of 2003, the effective tax benefit rate was 26%. This effective rate is less than the U.S. federal statutory rate adjusted for state and local income losses due to the establishment of valuation allowances related to loss carryforwards in certain non-U.S. jurisdictions.

Loss From Continuing Operations

      Our loss from continuing operations in the first quarter of 2004 was $16.0 million, or $0.47 per share, compared to a loss of $7.6 million, or $0.23 per share, in 2003. The loss for 2004 includes refinancing costs of $6.4 million and restructuring costs of $1.1 million, in both cases, with no tax benefit. The amount for 2003 includes after-tax restructuring costs of $4.8 million.

Discontinued Operations

      In 2004, the loss from discontinued operations represents the operating results of our grinding wheels business. In 2003, the loss from discontinued operations includes the grinding wheels business as well as the round metalcutting tools business. The divestiture of the round tools business was completed in the third quarter of 2003 and the grinding wheels business was sold on April 30, 2004.

Net Loss

      Including refinancing costs, restructuring costs and the results of discontinued operations, we had a net loss of $16.6 million, or $0.49 per share, in the first quarter of 2004. In the first quarter of 2003, we had a net loss including restructuring costs and discontinued operations of $8.3 million, or $0.25 per share.

2003 Compared to 2002

New Orders and Sales

      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.

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      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.

Margins, Costs and Expenses

      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.

Restructuring Costs

      As discussed more fully in the Notes to 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 and beyond. This is in addition to the savings we realized from the restructuring actions that were initiated in 2001.

      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 has also been moved to a smaller, more cost-effective location near Manchester. 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

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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 our plastics technologies segments and at our 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 our existing mold base and components business in Europe and costs associated with initiatives announced in 2001 and 2002 to consolidate manufacturing operations and reduce our cost structure.

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

Restructuring Actions

			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	$	—		$	—	$	0.7		$	—	$	—
	Blow molding machinery and mold making relocations	2002		3.9		3.4			—		3.4			0.4		—
	Southwest Ohio reorganization	2002		—		0.6			—		—			0.1		—
	Injection molding and extrusion early retirement program and general overhead reductions	2001		—		2.3			0.8		—			0.6		0.4
	Injection molding and blow molding facilities and product line rationalization	2001		—		0.4			4.8		—			0.2		3.6
	Other 2001 actions	2001		—		—			1.2		—			0.2		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		—			—		0.7			—		—
	Injection molding sales office and employment reductions	2003		2.0		—			—		0.5			—		—
	Injection molding and blow molding overhead reductions	2001		—		(0.4	)		6.9		1.3			4.0		0.6
				6.5		(0.4	)		6.9		2.5			4.0		0.6
Mold technologies
	Mahlberg plant closure	2003		5.7		—			—		2.8			—		—
	North American employment reductions	2003		1.0		—			—		0.6			—		—
	European sales reorganization	2003		3.6		—			—		1.3			—		—
	Monterey Park plant closure	2002		0.5		0.9			—		(0.2	)		—		—
	EOC and Reform integration	2001		1.8		4.6			3.4		0.2			7.8		1.0
	North American overhead and general employment reductions	2001 & 2002		—		0.9			0.1		—			0.3		—
				12.6		6.4			3.5		4.7			8.1		1.0

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			Restructuring Costs						Cash Costs
		Year Initiated	2003		2002		2001		2003		2002		2001
			(In millions)
Industrial fluids and corporate
	Early retirement program and general overhead reductions	2003		0.3		—		—		0.1		—		—
	Early retirement program and general overhead reductions	2001 & 2002		—		1.2		0.3		0.2		0.3		—
				0.3		1.2		0.3		0.3		0.3		—
			$	27.1	$	13.9	$	17.5	$	11.6	$	13.9	$	6.6

      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.

Restructuring Actions

									Cost Savings
									Expected		Total
			Headcount						Incremental		Expected
		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		0.8		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		—		0.4		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

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									Cost Savings
									Expected		Total
			Headcount						Incremental		Expected
		Year Initiated	Reductions		2002		2003		2004		2004
			(In millions)
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		—		0.1		4.3		4.4
	Monterey Park plant closure	2002		12		—		0.6		0.2		0.8
	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		—		0.5		0.9		1.4
	Early retirement program and general overhead reductions	2001 & 2002		16		0.5		1.0		—		1.0
				27		0.5		1.5		0.9		2.4
				1,197	$	30.5	$	49.1	$	20.1	$	69.2

Goodwill Impairment Charge

      In 2003, we 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.

Results by Segment

      The following sections discuss the operating results of our business segments which are presented in tabular form in the Notes to Consolidated Financial Statements in this prospectus. As presented, 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.

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      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 $0.9 million reduction in pension income.

Loss Before Income Taxes

      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.

Income Taxes

      As was previously discussed in “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 our 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

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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.

Loss from Continuing Operations

      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 $0.56 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 $0.5 million in 2003 compared to $4.9 million in 2002.

Discontinued Operations

      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 was sold on April 30, 2004. In 2002, discontinued operations also include 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 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 $0.8 million to adjust sale-related accruals and reserves to reflect current expectations.

Cumulative Effect of Change in Method of Accounting

      Effective January 1, 2002, we recorded a pretax goodwill impairment charge of $247.5 million ($187.7 million 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 our container blow molding and round metalcutting tools businesses, the latter of which was sold in 2003.

Net Loss

      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.

2002 Compared to 2001

New Orders and Sales

      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

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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.

      Our 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.

Margins, Costs and Expenses

      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.

Restructuring Costs

      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 our 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, we 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 our 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 has also been moved to a smaller, more cost-effective location near Manchester. 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

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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.

Results by Segment

      The following sections discuss the operating results of our business segments which are presented in tabular form in the Notes to Consolidated Financial Statements in this prospectus. As presented, 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 with the segment’s existing European mold base business. See “Executive Summary — Acquisitions.” 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 $0.3 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 $0.3 million.

Loss Before Income Taxes

      Our 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.

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Income Taxes

      During 2002, we 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 our 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.

      We 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.

Loss from Continuing Operations

      Our 2002 loss from continuing operations was $18.4 million, or $0.56 per share, compared to a loss of $28.7 million, or $0.87 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.

Discontinued Operations

      Our discontinued operations — Valenite, Widia, Werkö, grinding wheels and round metalcutting tools — had combined losses from operations of $25.2 million, or $0.75 per share, in 2002 compared to losses of $7.0 million, or $0.21 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 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.

Cumulative Effect of Change in Method of Accounting

      Effective January 1, 2002, we recorded a pretax goodwill impairment charge of $247.5 million ($187.7 million 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 our container blow molding and round metalcutting tools businesses, the latter of which is now reported as a discontinued operation.

Net Loss

      Including the effects of discontinued operations and the change in method of accounting, we 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

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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.

Comparative Operating Results

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

	Three Months Ended						Year Ended
	March 31,						December 31,
	2004			2003			2003			2002			2001
	(In millions)
Machinery Technologies — North America
Segment operating earnings (loss) as reported	$	(0.6	)	$	2.1		$	6.7		$	8.0		$	(13.5	)
Restructuring costs		(0.8	)		(2.8	)		(7.7	)		(6.7	)		(6.8	)
Adjusted operating earnings (loss)	$	(1.4	)	$	(0.7	)	$	(1.0	)	$	1.3		$	(20.3	)

	Three Months Ended						Year Ended
	March 31,						December 31,
	2004			2003			2003			2002			2001
	(In millions)
Machinery Technologies — Europe
Segment operating earnings (loss) as reported	$	1.1		$	(0.7	)	$	(1.4	)	$	(8.1	)	$	(9.1	)
Restructuring costs		(0.1	)		(2.2	)		(6.5	)		0.4			(6.9	)
Adjusted operating earnings (loss)	$	1.0		$	(2.9	)	$	(7.9	)	$	(7.7	)	$	(16.0	)

	Three Months Ended						Year Ended
	March 31,						December 31,
	2004			2003			2003			2002			2001
	(In millions)
Mold Technologies
Segment operating earnings as reported	$	1.4		$	0.3		$	1.8		$	5.3		$	12.1
Restructuring costs		(0.2	)		(1.0	)		(12.6	)		(6.4	)		(3.5	)
Adjusted operating earnings (loss)	$	1.2		$	(0.7	)	$	(10.8	)	$	(1.1	)	$	8.6

	Year Ended
	December 31,
	2003		2002		2001
	(In millions)
Industrial Fluids
Segment operating earnings as reported	$	15.7	$	14.4	$	18.1
Restructuring costs		—		—		(0.3	)
Adjusted operating earnings	$	15.7	$	14.4	$	17.8

      The industrial fluids segment had no restructuring costs in the first quarter of 2004 or in 2003.

Market Risk

Foreign Currency Exchange Rate Risk

      We use foreign currency forward exchange contracts to hedge our exposure to adverse changes in foreign currency exchange rates related to firm commitments arising from international transactions. We do not hold or issue derivative instruments for trading purposes. At March 31, 2004, we had outstanding forward contracts

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totaling $2.0 million. Forward contracts totaled $4.7 million at December 31, 2003, $3.8 million at March 31, 2003 and $5.0 million at December 31, 2002. The annual potential loss from a hypothetical 10% adverse change in foreign currency rates on our foreign exchange contracts at March 31, 2004, December 31, 2003, March 31, 2003 or December 31, 2002 would not materially affect our consolidated financial position, results of operations or cash flows.

Interest Rate Risk

      At March 31, 2004, we had fixed interest rate debt of $254 million, including $103 million related to the transactions entered into on March 12, 2004 and €115 million ($139.4 million) of the Eurobonds. We also had floating rate debt totaling $94 million, with interest fluctuating based primarily on changes in LIBOR. At March 31, 2003, fixed rate debt totaled $251 million, and floating rate debt totaled $53 million. The potential annual loss on floating rate debt from a 10% increase in interest rates would not be significant.

      At December 31, 2003, our 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 the Eurobonds. 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 $0.3 million at December 31, 2003, and $0.4 million at December 31, 2002 under the arrangements in effect at those dates.

      On March 12, 2004, we entered into two financing agreements to repay our 8 3/8% Notes due March 15, 2004, the outstanding debt under our then-existing revolving credit facility which was terminated on March 12, 2004, and our obligations under our then-existing receivables purchase agreement which was terminated on March 12, 2004. See “Liquidity and Sources of Capital — March 12 Transactions.” On June 10, 2004, we entered into an asset-based revolving credit facility and terminated the senior secured credit facility entered into on March 12, 2004 and exchanged the outstanding debt under the other financing agreement entered into on March 12, 2004 for our Series B Preferred Stock. Effective as of June 10, 2004, our interest rate risk, including our exposure to floating interest rates, is based on the financing arrangements entered into on June 10, 2004. See “Liquidity and Sources of Capital — The Refinancing Transactions.”

Off-Balance Sheet Arrangements

Sales of Accounts Receivable

      As discussed more fully in the Notes to Consolidated Financial Statements, we had 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 we were 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 and terminated. See “Liquidity and Sources of Capital — March 12 Transactions.”

      Certain of our 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 March 31, 2004 and December 31, 2003, the gross amount of receivables sold totaled $7.2 million and $3.8 million, respectively. The average amount sold during 2003 was approximately $5 million. Financing fees related to these arrangements were not material.

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Sales of Notes and Guarantees

      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, we guaranteed the repayment of all or a portion of notes payable from our 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 we retain potential obligations under earlier arrangements. In the event a customer fails to repay a note, we generally regain title to the machinery. At March 31, 2004 and December 31, 2003, our maximum exposure under these U.S. guarantees, as well as certain guarantees by certain of our non-U.S. subsidiaries, totaled $8.2 million and $11.6 million. Losses related to sales of notes and guarantees have not been material in the past.

Contractual Obligations

      Our contractual obligations for the remainder of 2004 and beyond are shown as of March 31, 2004 in the table that follows.

Contractual Obligations

						2005-		2007-		Beyond
		Total		2004		2006		2008		2008
		(In millions)
Revolving A credit facility due 2005		$	7.5	$	—	$	7.5	$	—	$	—
Term loan B facility due 2005			75.0		—		75.0		—		—
20% Secured Step-Up Series A Notes due 2007(a)			30.0		—		—		30.0		—
20% Secured Step-Up Series B Notes due 2007(b)			70.0		—		—		70.0		—
7 5/8% Eurobonds due 2005(c)			139.4		—		139.4		—		—
Other long-term debt			6.0		0.6		4.6		0.5		0.3
Capital lease obligations			16.6		1.2		3.7		4.2		7.5
Other long-term liabilities(d)
	Pension plan contributions		41.8		3.1		5.4		30.2		3.1
	Unfunded pension benefits(e)		77.9		2.2		5.8		6.2		63.7
	Postretirement medical benefits		47.9		2.3		5.2		4.7		35.7
	Insurance reserves		22.5		5.4		5.8		4.2		7.1
Total		$	534.6	$	14.8	$	252.4	$	150.0	$	117.4

(a)	On April 15, 2004, the 20% Secured Step-Up Series A Notes due 2007 were converted at the option of the holders into 15.0 million of our common shares. The common stock into which the Series A Notes had been converted was exchanged on June 10, 2004 for Series B Preferred Stock. Also on June 10, 2004, the interest rate on the Series A Notes was retroactively reset to 6% per annum from the date of issuance.
(b)	On June 10, 2004, the 20% Secured Step-Up Series B Notes were exchanged for Series B Preferred Stock and the interest rate was retroactively reset to 6% per annum from the date of issuance.
(c)	On April 27, 2004, we commenced a cash tender offer to repurchase all of the €115 million ($139.4 million) of 7 5/8% Eurobonds due 2005. The tender offer expired on June 7, 2004 with 99.99% of the tendered Eurobonds validly tendered, accepted and not withdrawn. The tendered Eurobonds were repaid on June 10, 2004.
(d)	We will be required to make contributions to our 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.
(e)	Represents liabilities related to unfunded pension plans in U.S. and Germany.

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      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 following pro forma contractual obligations table gives effect to the June 10 Transactions as if they had occurred on March 31, 2004. The pro forma information is presented for illustrative purposes only and does not purport to represent what our actual contractual obligations would have been had the June 10 Transactions been completed on such date and is not necessarily indicative of our future financial position or results of operations.

						2005-		2007-		Beyond
		Total		2004		2006		2008		2008
		(In millions)
Pro Forma Contractual Obligations
Asset based facility		$	8.4	$	—	$	—	$	8.4	$	—
11 1/2% senior secured notes			225.0		—		—		—		225.0
7 5/8% Eurobonds due 2005(a)			—		—		—		—		—
Capital lease obligations			16.6		1.2		3.7		4.2		7.5
Other long-term debt			6.0		0.6		4.6		0.5		0.3
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)		77.9		2.2		5.8		6.2		63.7
	Other postretirement benefits		47.9		2.3		5.2		4.7		35.7
	Insurance reserves		22.5		5.4		5.8		4.2		7.1
Total		$	446.1	$	14.8	$	30.5	$	58.4	$	342.4

(a)	We repaid €114,990,000 of the €115 million aggregate principal amount of the Eurobonds at the settlement of a tender offer therefor on June 10, 2004.
(b)	We did not have any significant purchase obligations as of March 31, 2004.
(c)	We will be required to make contributions to our 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.

Liquidity and Sources of Capital

      At March 31, 2004, we had cash and cash equivalents of $62.0 million, a decrease of $30.8 million from December 31, 2003. The decrease was due principally to the repayment of debt and other obligations in connection with the refinancing transactions entered into on March 12, 2004. Of the $62.0 million of cash, a substantial amount was held in foreign accounts in support of our non-U.S. operations. Were this non-U.S. cash to be repatriated, it would trigger withholding taxes in foreign jurisdictions. Approximately $6 million of the non-U.S. cash was being utilized to collateralize sales of certain non-U.S. receivables.

      Operating activities used $42 million of cash in the first quarter of 2004 compared to $5 million of cash used in 2003. The amount for 2004 includes a $33 million use of cash related to the termination and repayment of our receivables purchase program and $3 million of costs incurred in pursuing alternatives to the refinancing actions that are discussed below. Excluding these amounts, operating activities used $6 million of cash in 2004. The $5 million use of cash in 2003 resulted principally from reductions in trade payables and certain other liabilities and from a modest increase in inventories due to the relocation of certain manufacturing operations and work schedule adjustments.

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      In the first quarter of 2004, investing activities resulted in a $1 million use of cash — largely for capital expenditures — compared to a $32 million use of cash in 2003. The amount for 2003 includes $24 million for post-closing adjustments related to 2002 divestitures and $7 million to increase our ownership interest in two affiliates to 100%.

      In the first quarter of 2004, financing activities provided $17 million of cash. In the comparable period of 2003, financing activities used $3 million of cash due to repayments of borrowings under lines of credit. The amount for 2004 reflects $183 million of proceeds from the refinancing transactions entered into on March 12, 2004 (as described below) partially offset by $157 million for the repayment of the 8 3/8% Notes due March 15, 2004 and the revolving credit facility that matured on March 15, 2004 and by $8 million of debt issuance costs related to the new financing arrangements.

      Our current ratio related to continuing operations was 1.0 at March 31, 2004 compared to 1.0 at December 31, 2003 and 1.1 at March 31, 2003.

      Total debt was $348 million at March 31, 2004 compared to $323 million at December 31, 2003. The increase is due principally to the repayment of the off-balance sheet receivables purchase program. The repayment was financed through the issuance of new debt.

      Total shareholders’ equity was a negative $43 million at March 31, 2004, a decrease of $9 million from December 31, 2003.

      At December 31, 2003, we 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.

      Our 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, we 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,

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$54 million of the revolving credit facility was utilized, including outstanding letters of credit of $12 million. The facility had a maturity date of March 15, 2004.

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

      On March 12, 2004, all amounts borrowed under our previous revolving credit facility were repaid and the commitments thereunder were terminated in connection with our agreement to enter into a new $140 million senior secured credit facility. See “Liquidity and Sources of Capital — March 12 Transactions.”

      In addition to the senior secured credit facility, at March 31, 2004, we had other lines of credit with various U.S. and non-U.S. banks totaling approximately $29 million. As of December 31, 2003, we had a number of credit lines in addition to our previous revolving credit facility totaling $29 million, of which approximately $15 million was available for use under various conditions. Under the terms of the previous revolving credit facility, increases in debt were primarily limited to current lines of credit and certain other indebtedness from other sources.

      On June 10, 2004, all amounts borrowed under the $140 million senior secured credit facility were repaid and the commitments thereunder were terminated in connection with the refinancing transactions described below, which include our entering into of a new $75 million asset based revolving credit facility. See “Liquidity and Sources of Capital — June 10 Transactions.”

      Our debt and credit are rated by Standard & Poor’s (S&P) and Moody’s Investors Service (Moody’s). On June 11, 2004, S&P announced that it had raised our corporate credit rating to B- with a “positive” outlook. On June 16, 2004, Moody’s reaffirmed our senior unsecured rating at Caa2 and our senior implied rating at Caa1 and raised the outlook to “positive.”

      None of our 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 us in the future.

      Our accounts receivable purchase program with a third-party financial institution had been another important source of liquidity for the last several years. During the fourth quarter of 2003, the liquidity facility that supported 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 — March 12 Transactions” below.

March 12 Transactions

      On March 12, 2004, we entered into a definitive agreement whereby Glencore and Mizuho purchased $100 million in aggregate principal amount of our new exchangeable debt securities. The proceeds from this transaction, together with existing cash balances, were used to repay our 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 were convertible into shares of our common stock at a conversion price of $2.00 per share. Glencore and Mizuho converted the entire principal amount of the Series A Notes into 15 million shares of common stock on April 15, 2004. The Series A Notes and Series B Notes initially bore a combination of cash and pay-in-kind interest at a total rate of 20% per annum, which rate was retroactively reset on June 10, 2004 to 6% per annum from the date of issuance, payable in cash.

      On March 12, 2004, we also reached a separate agreement with Credit Suisse First Boston for a $140 million senior secured credit facility having a term of approximately one year. This senior secured credit

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facility consisted of a $65 million revolving A facility and a $75 million term loan B facility. On March 12, 2004, we used extensions of credit under the revolving A facility and term loan B facility in an aggregate amount of $84 million to repay and terminate our then-existing revolving credit facility (and to replace or provide credit support for outstanding letters of credit) and our then-existing receivables purchase program.

June 10 Transactions

      On June 10, 2004, the common stock into which the Series A Notes were converted and the Series B Notes were exchanged for 500,000 shares of Series B Preferred Stock, a new series of our convertible preferred stock with a cumulative cash dividend rate of 6%. On June 10, 2004, we also satisfied the conditions to release to us from escrow the proceeds from the private placement of the 11 1/2% Senior Secured Notes and entered into an agreement for a new $75 million asset based revolving credit facility with JPMorgan Chase Bank as administrative agent and collateral agent. Our 11 1/2% Senior Secured Notes were issued at a discount to effectively yield 12% and the proceeds thereof were originally placed in escrow on May 26, 2004.

      On June 10, 2004, we applied the proceeds of the 11 1/2% Senior Secured Notes, together with $7.3 million in borrowings under our asset based facility and approximately $10.3 million of cash on hand, to:

•  purchase €114,990,000 of the €115 million aggregate outstanding principal amount of Milacron Capital Holdings B.V.’s 7 5/8% Guaranteed Bonds due in April 2005 at the settlement of a tender offer therefor;

•  terminate and repay $19 million in amounts outstanding under the revolving A facility (we also used $17.4 million in availability under our asset based facility to replace or provide credit support for the outstanding letters of credit under the revolving A facility);

•  repay the $75 million term loan B facility; and

•  pay transaction expenses.

      As of June 18, 2004, Glencore and Mizuho collectively owned 100% of the shares of our outstanding Series B Preferred Stock, which represents approximately 57% of our outstanding fully diluted equity (on an as-converted basis). Glencore has reported in a Schedule 13D filing with the SEC that it has sold an undivided participation interest in its investment in us to Triage Offshore Funds, Ltd. equivalent to 62,500 shares of Series B Preferred Stock, representing approximately 7.2% of our outstanding equity (on an as-converted basis), with Glencore remaining as the record holder of such shares. After we redeem a portion of Glencore’s and Mizuho’s shares of Series B Preferred Stock with the proceeds of the rights offering, Glencore’s and Mizuho’s collective holdings would represent approximately 43% of our outstanding equity, with Triage’s participation interest in Glencore’s holdings representing approximately 5.0% of our outstanding equity, in each case on an as-converted basis and assuming full subscription in the rights offering. After seven years, the Series B Preferred Stock will 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 is subject to reset to $1.75 per share at the end of the second quarter of 2005 if a test based on our financial performance for 2004 is not satisfied. In addition, as part of the transaction we have issued to holders of the Series B Preferred Stock contingent warrants to purchase an aggregate of one million shares of our common stock, which contingent warrants are exercisable only if a test based on our financial performance for 2005 is not satisfied. Assuming that we do not complete this rights offering to our existing shareholders, and both the conversion price of the Series B Preferred Stock is reset to $1.75 and the contingent warrants are exercised, the holders of the Series B Preferred Stock would own approximately 62.5% of our fully diluted equity (on an as-converted basis).

      The conversion of the Series A Notes into newly issued common stock on April 15, 2004, and the exchange of such common stock and the Series B Notes for Series B Preferred Stock on June 10, 2004, triggered an “ownership change” for U.S. federal income tax purposes. As a consequence of this ownership change, the timing of our utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

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      The holders of the Series B Preferred Stock, voting separately as a class, have the right to elect a number of directors to our Board of Directors in proportion to the percentage of fully diluted common stock represented by the outstanding Series B Preferred Stock (on an as-converted basis), rounded up to the nearest whole number (up to a maximum equal to two-thirds of the total number of directors, less one).

Our Asset Based Facility

      The borrowings under our asset based facility entered into on June 10, 2004 are secured by a first priority security interest, subject to permitted liens, in, among other things, U.S. and Canadian accounts receivable, cash and cash equivalents, inventory and, in the U.S., certain related rights under contracts, licenses and other general intangibles, subject to certain exceptions. Our asset based facility is also secured by a second priority security interest in our assets that secure the 11 1/2% Senior Secured Notes on a first priority basis. The availability of loans under our asset based facility is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory and is subject to other conditions and limitations, including an excess availability reserve of $10 million. As a result, substantially less than the full amount of our asset based facility is currently available to us.

      Based upon the initial evaluation of our accounts receivable and inventory conducted by the agent and the lead arranger for the asset based facility, as of June 10, 2004 and without giving effect to initial borrowings and issuances of letters of credit, we had approximately $59.1 million of borrowing availability, 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 credit judgment, any of which could reduce our borrowing availability at any time. The terms of our asset based facility impose a daily cash “sweep” on cash received in our U.S. bank accounts from collections of our accounts receivable. This daily cash “sweep” is automatically applied to pay down any outstanding borrowings under our asset based facility. The terms of our asset based facility also provide for the administrative agent, at its option and at any time, to impose a daily cash “sweep” on cash received in our Canadian bank accounts from collections of our accounts receivable.

      Our asset based facility contains customary conditions precedent to any borrowings, as well as customary affirmative and negative covenants, including, but not limited to, maintenance of $10.0 million of unused availability under the borrowing base. As of June 10, 2004, after giving effect to initial borrowings and issuances of letters of credit, our availability before deducting the availability reserve was approximately $34.4 million. In addition, our asset based facility contains, for the first five quarters, a financial covenant requiring us to maintain a minimum level of cumulative consolidated EBITDA, to be tested quarterly, and a limit on capital expenditures to be complied with on a quarterly basis, in each case starting with the third quarter of 2004. Thereafter, we will have to comply with a fixed charge coverage ratio to be tested quarterly.

      Borrowings under our asset based facility bear interest, at our option, at either (i) the LIBO Rate plus the applicable margin (as defined below) or (ii) an ABR plus the applicable margin (as defined below). The “applicable margin,” with respect to Eurodollar loans, is between 2.50% per annum and 3.25% per annum and, with respect to ABR loans, is between 0.75% per annum and 1.50% per annum, determined based on a calculation of the trailing average availability levels under our asset based facility. LIBO Rate means the rate at which Eurodollar deposits in the London interbank market are quoted on page 3750 of the Dow Jones Market Service. We may elect Eurodollar loans interest periods of one, two or three months. “ABR” means the higher of (i) the rate of interest publicly announced by the administrative agent as its prime rate in effect at its principal office in New York City and (ii) the federal funds effective rate from time to time plus 0.5%.

      Our asset based facility provides that we will pay a monthly unused line fee equal to 0.50% per annum on the average daily unused portion of our credit commitment, as well as customary loan servicing and letter of credit issuance fees.

      Our asset based facility provides that upon the occurrence and continuance of an event of default under our asset based facility, upon demand by the agent, we will have to pay (x) in the case of revolving credit loans, a rate of interest per annum equal to the rate of interest otherwise in effect (assuming the rate in effect is at the maximum applicable margin) pursuant to the terms of our asset based facility plus 2% and (y) in the

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case of other amounts, a rate of interest per annum equal to the ABR plus the maximum applicable margin plus 2%. The other terms of our asset based facility are described under “Description of Certain Indebtedness — The Asset Based Facility.”

      Since the cash we receive from collection of receivables is subject to an automatic “sweep” to repay the borrowings under our asset based facility on a daily basis, we rely on borrowings under our asset based facility as our primary source of cash for use in our North American operations. The availability of borrowings under our asset based facility is subject to a borrowing base limitation, including an excess availability reserve, which may be adjusted by the administrative agent at its discretion, and the satisfaction of conditions to borrowing. If we have no additional availability or are unable to satisfy the borrowing conditions, our liquidity could be materially adversely affected.

Liquidity Following the Refinancing Transactions

      Completion of the June 10 Transactions reduced our total debt from $362 million after completion of the March 12 Transactions to approximately $252 million. We expect these changes in our capital structure to leave us better-positioned to profit from the anticipated recovery of our markets and to pursue our growth and geographic diversification strategies.

      We expect 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. We believe that our current cash position, cash flow from operations, available credit lines, including the asset based revolving credit facility entered into on June 10, 2004, will be sufficient to meet our operating and capital requirements in 2004.

      However, during the year ended December 31, 2003, on a pro forma basis to give effect to the Refinancing Transactions, our earnings would have been inadequate to cover fixed charges by $122.2 million. We cannot assure you that our business will generate sufficient cash flow from operations to service our indebtedness and pay other expenses, that currently anticipated cost savings and operating improvements will be realized on schedule or at all or that future borrowings will be available to us under our asset based facility in an amount sufficient to enable us to make interest payments on the 11 1/2% Senior Secured Notes and our other indebtedness or to fund our other liquidity needs.

      Our continued viability depends on realizing anticipated cost savings and operating improvements on schedule during 2004 and a significant improvement in demand levels in 2004 and beyond, the latter of which is largely beyond our control. Unless we realize anticipated cost savings and operating improvements on schedule and volume and pricing levels improve significantly, we may need to fund interest payments on the 11 1/2% Senior Secured Notes in part with the proceeds of borrowings under our asset based facility. However, our ability to borrow under our asset based facility is subject to borrowing base limitations, including an excess availability reserve, which may be adjusted from time to time by the administrative agent for the lenders under our asset based facility at its discretion, and our satisfaction of certain conditions to borrowing under our asset based facility, including, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults (including under financial covenants) or any material adverse change in our business or financial condition. If we have no additional availability or are unable to satisfy the borrowing conditions, our liquidity would be impaired and we would need to sell assets, refinance debt or raise equity to service our debt and pay our expenses. We cannot assure you that we would be able to sell assets, refinance debt or raise equity on commercially acceptable terms or at all, which could cause us to default on our obligations under our indebtedness. Our inability to generate sufficient cash flow or draw sufficient amounts under our asset based facility to satisfy our debt obligations and pay our other expenses could cause us to default on our obligations and would have a material adverse effect on our business, financial condition and results of operations. See “Risk Factors — Risks Relating to Our Liquidity and Our Indebtedness.”

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BUSINESS

General

      We are the largest and broadest-line manufacturer and supplier of plastics processing equipment and related supplies in North America and the third largest worldwide. Our equipment, supplies and services are used by a wide range of plastic processors to produce plastic products and parts for consumer, commercial and industrial markets. Plastics processing is one of the largest industries in the world with total shipments of plastic products and parts valued at over $300 billion in 2003 in the U.S. alone. We also believe we are the second largest global manufacturer of synthetic (water-based) industrial fluids used in metalworking applications.

      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 injection molding, blow molding and extrusion machinery, as well as associated tooling and parts and related services. Our Mold Technologies segment manufactures and supplies mold bases and components used with injection molding machinery. Our Industrial Fluids segment produces and sells metalworking fluids for machining, stamping, grinding and cleaning applications. We sell to a variety of end markets on a global basis, including packaging, automotive, industrial components, construction and building materials, consumer goods and medical applications. In 2003, we generated approximately 38% of our sales outside North America.

      In 2003, we generated sales of $739.7 million and a net loss of $191.7 million. Between our fiscal years ending December 31, 1999 and 2002, our sales declined sharply, from $994.3 million to $693.2 million, and our net earnings declined from $70.1 million to a net loss of $222.9 million, as our business was impacted by the general economic downturn and severe manufacturing recession that began in late 2000. This difficult economic environment also significantly impaired our liquidity and access to capital. In response, we reduced our cost structure, exited noncore businesses and entered into the Refinancing Transactions in order to improve our profitability, focus on our core competencies, reduce our indebtedness and increase our financial flexibility.

      We were first incorporated in 1884, and our shares have been traded on the New York Stock Exchange since 1946 (Ticker: MZ).

Strategic Acquisitions and Divestitures

      We have 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.

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      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:

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 Flachstah	2001	Mold bases and components
EOC Normalien	2001	Mold bases and components

      We are committed to growing profitability in each of our business segments and 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 in Asia, and our round metalcutting tool business in Germany. In 2003, we sold our North American round metalcutting tool businesses and on April 30, 2004, we sold our grinding wheels business.

Acquisition	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
Grinding wheels business	2004	Precision grinding wheels

Cost Cutting and Efficiency Initiatives

      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.

      Our 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, we recorded total pretax charges of $8.7 million and estimate 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

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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.

      We are 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.

Segment Information

      Segment and geographic information for the years ended December 31, 2003, 2002 and 2001 are included in the Notes to Consolidated Financial Statements.

Plastics Technologies

      Products and Services. We believe we are 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:

Machinery Technologies — North America

•  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

Machinery Technologies — Europe

•  Injection molding systems, parts and services supplied from Europe

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

Mold Technologies

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

•  MRO-aftermarket parts and supplies worldwide

      We strive 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 our technology innovations, value-added services and comprehensive applications expertise. We are 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 us 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. We are 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.

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      In blow molding, we believe we are 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.

      Our 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.

      We compete 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’ business 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 aftermarket 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, we continue to work with other leading companies to make plastics a part of the solution to the challenges of energy and environmental conservation.

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      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. We maintain 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, we maintain the following principal production facilities:

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
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
Tecumseh, Michigan*	Molds for blow molding
Windsor, Ontario, Canada	Mold bases
Youngwood, Pennsylvania	Mold bases and components

*  Leased

      Competition. The markets for plastics technologies are global and highly competitive and include North American, European and Asian competitors. We believe we have 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.

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Industrial Fluids

      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.

      With 2003 sales of $104 million, our industrial fluids segment consists of:

•  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. Our 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, we place 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. Our 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.

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      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, we maintain the following principal production facilities:

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

*  Leased

      Competition. We believe we hold 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.

Research and Development, New Product Development and Capital Expenditures

      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 research and development in 2003, compared to $15.8 million, or 2.3% of sales, in 2002.

Patents

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

Employees

      The average number of our employees from continuing operations was 3,760 people in 2003. Of these, half were outside the U.S. As of December 31, 2003, the number of our employees from continuing operations was about 3,500 people.

Legal Proceedings

      Various lawsuits arising during the normal course of business are pending against us and our 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 us. We are vigorously defending these claims and believe we have 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 our consolidated financial position or results of operations, the outcome of individual matters cannot be predicted with reasonable certainty at this time.

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MANAGEMENT

      The following table presents the name, age and position of each member of our senior management and each of our directors as of June 18, 2004:

Name	Age		Position(s)
Ronald D. Brown		51	Chairman, President and Chief Executive Officer
Robert P. Lienesch		58	Vice President — Finance and Chief Financial Officer
Hugh C. O’Donnell		53	Vice President, General Counsel and Secretary
Ross A. Anderson		47	Controller
John C. Francy		39	Treasurer
Darryl F. Allen		60	Director
David L. Burner		65	Director
Barbara Hackman Franklin		64	Director
Steven N. Isaacs		40	Director
James E. Perrella		69	Director
Joseph A. Steger		67	Director
Charles F.C. Turner		44	Director

      Ronald D. Brown. Mr. Brown is Chairman of our Board and our President and Chief Executive Officer. Mr. Brown joined us in 1980 and has served as a Director since 1999. His current term expires in 2006. Mr. Brown has served as Chairman and Chief Executive Officer since June 2001. Prior thereto, Mr. Brown served as Chief Operating Officer from September 1999 to June 2001, and Chief Financial Officer from 1993 to 1999. Mr. Brown is also a director of A.O. Smith Corporation.

      Robert P. Lienesch. Mr. Lienesch is our Vice President — Finance and Chief Financial Officer and was elected to this position in 1999. He was elected Vice President and Treasurer in 1998 and served as Treasurer until 2001. Prior to that time, he was Controller from 1989.

      Hugh C. O’Donnell. Mr. O’Donnell is our Vice President, General Counsel and Secretary and was elected to this position in 1999. Prior to that time, he served as Corporate Counsel since 1992.

      Ross A. Anderson. Mr. Anderson is our Controller and was elected to this position in 2002. Prior to that time, he was Group Controller, Plastics Technologies from 1998 and Controller, U.S. Plastics Machinery from 1989.

      John C. Francy. Mr. Francy is our Treasurer and was elected to this position in 2001. Prior to that time, he was Assistant Treasurer from 1998, Director of Treasury Operations from 1997 and Controller of Machine Tool Marketing Worldwide from 1995.

      Darryl F. Allen. Mr. Allen has been a Director since 1993. His current term expires in 2006. Mr. Allen is the retired Chairman, President and Chief Executive Officer of Aeroquip-Vickers, Inc., Maumee, Ohio, a worldwide manufacturer and distributor of engineered components and systems for markets that include industrial, automotive, aerospace and defense. Mr. Allen is also a Director of Fifth Third Bancorp. Mr. Allen is a member of the Audit Committee and the Finance Committee of our Board.

      David L. Burner. Mr. Burner has been a Director since 1998. His current term expires in 2007. Mr. Burner is the retired Chairman and Chief Executive Officer of Goodrich Corporation, Charlotte, North Carolina, a provider of aircraft systems and services. He served in that capacity from July 1997 to October 2003. He was Chief Executive Officer from December 1996 to July 1997 and President from December 1995 to January 1997. Prior to 1997, he was an Executive Vice President of The BFGoodrich Company and the President and Chief Operating Officer of BFGoodrich Aerospace. Mr. Burner is also a Director of Progress Energy, Inc., Briggs & Stratton Corporation, Lance, Inc. and Engelhard Corporation. Mr. Burner is a member of the Audit Committee and the Personnel and Compensation Committee of our Board.

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      Barbara Hackman Franklin. Ms. Franklin has been a Director since 1996. Her current term expires in 2005. Ms. Franklin is President and Chief Executive Officer of Barbara Franklin Enterprises, Washington, D.C., an international consulting and investment firm and has served in that capacity since January 1995. From 1993 to 1995, she was an independent director, consultant and lecturer. In 1992, she served as the 29th U.S. Secretary of Commerce. Ms. Franklin is also a Director of Aetna, Inc., The Dow Chemical Company, MedImmune, Inc. and GenVec, Inc. Ms. Franklin is a member of the Finance Committee and the Nominating and Corporate Governance Committee of our Board.

      Steven N. Isaacs. Mr. Isaacs is the Chairman and Managing Director of Glencore Finance AG, an investment subsidiary of Glencore International AG, a director of Mopani Copper Mines Limited (Zambia) and an alternate director of Minara Resources Limited (Australia). Mr. Isaacs was appointed as a Director effective on April 5, 2004. His current term expires in 2007. Mr. Isaacs was selected for appointment as a Director and selected for nomination for re-election at our July 9, 2004 annual meeting of shareholders by Glencore Finance AG and Mizuho International plc as holders of the Series A Notes pursuant to the agreement governing the sale of such notes. Mr. Isaacs is a member of the Finance Committee of our Board.

      James E. Perrella. Mr. Perrella has been a Director since 1993. His current term expires in 2006. Mr. Perrella is the retired Chairman of Ingersoll-Rand Company, Woodcliff Lake, New Jersey, a worldwide manufacturer of machinery and equipment for automotive, construction, energy and general industries. From 1993 to 1999 he was also President and Chief Executive Officer of Ingersoll-Rand Company. Mr. Perrella is also a Director of Becton, Dickinson and Company, Arvin Meritor, Inc. and Bombardier, Inc. Mr. Perrella is a member of the Personnel and Compensation Committee and the Nominating and Corporate Governance Committee of our Board.

      Dr. Joseph A. Steger. Dr. Steger has been a Director since 1985. His current term expires in 2007. Dr. Steger had served for more than five years, until his retirement in 2003, as President of the University of Cincinnati and now serves as President Emeritus. Dr. Steger is also a Director of Provident Financial Group, Inc. Dr. Steger is a member of the Audit Committee, the Personnel and Compensation Committee and the Nominating and Corporate Governance Committee of our Board.

      Charles F.C. Turner. Mr. Turner has been a Director since 2002. His current term expires in 2005. Prior to his election to the Board in 2002, he had served in various capacities at the company, his last position being Group Director of Information Technology for our Plastics Technologies Group. Mr. Turner has been President of Develin Corporation, a real estate management firm, since 2003. Mr. Turner is a member of the Finance Committee of our Board.

Compensation and Benefits of Directors

      The company compensates non-employee directors by payment of an annual retainer of $35,000. All or a portion of this retainer may be deferred into a company stock and/or cash account under the terms of the company’s Plan for the Deferral of Directors’ Compensation, subject to the requirement that a minimum of $10,000 annually be payable in Company stock and credited to a deferred stock account under the plan. The company also compensates non-employee directors by payment of a fee of $1,500 for each meeting of our Board and each committee meeting attended. Chairpersons of the Audit Committee, Finance Committee, Nominating and Corporate Governance Committee and Personnel and Compensation Committee of our Board also receive an annual retainer of $2,000. In addition, the directors may elect to be covered by $100,000 of group term life insurance.

      Awards of restricted shares and stock options to directors are provided for in the 1997 Long-Term Incentive Plan. Ms. Franklin and Messrs. Burner, Perrella, Steger, and Turner each received a stock option grant of 2,000 shares under the plan in January, 2003. Mr. Allen declined his stock option grant.

      The Retirement Plan for Non-Employee Directors was closed on February 6, 1998, with respect to all non-employee directors beginning their first term on our Board after said date. The non-employee directors who were not beginning their first term after February 6, 1998, were given the election to continue to participate in the Retirement Plan for Non-Employee Directors or receive the current value of their projected

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benefit in a lump sum credited to a deferred stock account under the Company’s Plan for the Deferral of Directors’ Compensation. The Retirement Plan for Non-Employee Directors has a six-year vesting requirement with monthly benefits paid for life. For non-employee directors with ten or more years of vested service, the benefit under the Retirement Plan for Non-Employee Directors is equal to one hundred percent of the director’s base retainer as of the last day of service. A reduced benefit is payable to non-employee directors with less than ten years of vested service.

Retirement Benefits

      The calculation of estimated annual retirement benefits under the company’s regular retirement plan (the “Retirement Plan”) is based upon years of service and average earnings for the five consecutive years of highest compensation during such service. Earnings include all cash compensation, including amounts received or accrued under our Short-Term Management Incentive Program, but exclude benefits or payments received under long-term incentive plans or any other employee benefit plan. The Retirement Plan is non-contributory and limits the individual annual benefit to the maximum level permitted under existing law. The credited years of service under the Retirement Plan for the executive officers named in the Summary Compensation Table set forth below are: 14 for Mr. Anderson, 23 for Mr. Brown, 15 for Mr. Francy, 24 for Mr. Lienesch, and 16 for Mr. O’Donnell. Mr. Faig, former president and COO, retired September 30, 2003 with 35 years of credited service under the Retirement Plan. Directors who are not officers or employees of the company are not eligible to participate in the Retirement Plan.

      The table below shows examples of pension benefits which are computed on a straight life annuity basis before deduction of the offset provided by the Retirement Plan, which depends on length of service and is up to one-half of the primary Social Security benefit:

Highest Consecutive		Estimated Annual Pension for Representative Years of Credited Service
Five-Year Average
Compensation		10		15			20			25			30			35 or more
$	100,000	$	15,000	$	22,500		$	30,000		$	37,500		$	45,000		$	52,500
	250,000		37,500		56,250			75,000			93,750			112,500			131,500
	500,000		75,000		112,500			150,000			187,500	(*)		225,000	(*)		262,500	(*)
	750,000		112,500		168,750	(*)		225,000	(*)		281,250	(*)		337,500	(*)		393,750	(*)
	1,000,000		150,000		225,000	(*)		300,000	(*)		375,000	(*)		450,000	(*)		525,000	(*)

(*)  Under existing law, payments of annual benefits in excess of $165,000 may not be made by the Retirement Plan but may be paid directly by the Company, as described in the following paragraph.

In an effort to attract and retain experienced executives, our Board approved a program wherein certain officers are guaranteed annual pensions of not less than 52.5% and not more than 60% of their highest average pay in a consecutive three-year period. Such pensions include the amount payable under the Retirement Plan and are not subject to the maximum limitation imposed on qualified plans such as the Retirement Plan.

Executive Severance Agreements

      The company has entered into Executive Severance Agreements (the “Severance Agreements”) with Messrs. Anderson, Brown, Francy, Lienesch, and O’Donnell as well as certain other executives (the “Executives”). The Severance Agreements continue through December 31, 2004, and provide that they are to be automatically extended in one-year increments (unless notice by the company is otherwise given) and, in any event, shall continue in effect for a period of two years beyond the term if a Change in Control (as defined below) of the company occurs.

      Generally, a “Change in Control” of the company will be deemed to have occurred if: (i) anyone acquires 20% or more of the outstanding voting stock of the company; (ii) the persons serving as directors of the company as of the date of the agreement, and replacements or additions subsequently approved by at least 60% of the incumbent Board, cease to make up a majority of the Board; (iii) a merger, consolidation, or reorganization occurs after which the holders of the company’s outstanding stock immediately preceding such

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transaction own less than 66 2/3% of the surviving corporation; (iv) the company disposes of all or substantially all of its assets; or (v) the shareholders of the company approve a plan of liquidation or dissolution of the company. The Severance Agreements were amended effective February 10, 2004 to provide that a financial restructuring or recapitalization of the company in 2004 would not trigger certain benefits otherwise payable upon a Change in Control.

      The Severance Agreements provide that the Executives are entitled to certain benefits following a Change in Control of the company, including: (i) the vesting of all equity-based awards, and (ii) cash payments equal to the value of each Executive’s target annual incentive award and any earned but unpaid annual bonus. In the event of a qualifying termination of an Executive following a Change in Control, an Executive is entitled to additional benefits, including: (i) a portion of the Executive’s target annual incentive award then in effect; (ii) a cash payment equal to the value of all outstanding long-term incentive awards, assuming maximum performance, (iii) a cash payment of three or two times (depending upon whether or not a Tier I or Tier II Severance Agreement applies) the sum of the Executive’s base salary and highest bonus award; (iv) special supplemental retirement benefits determined as if the Executive had three or two years additional credited service under the company’s retirement plans; and (v) continuation of all life, disability and accident insurance, and medical plan coverage for a period of three or two years. Due to the February 10, 2004 amendments of the Severance Agreements, awards granted on or after February 10, 2004 will not accelerate and Executives will not be entitled to any cash payments equal to their target annual incentive awards or payment of any earned but unpaid annual bonuses as a result of a restructuring that occurs in 2004. Further, if any of these payments would be subjected to the excise tax imposed on excess parachute payments by the Internal Revenue Code, the Company will “gross-up” the Executive’s compensation for all such excise taxes.

      On the recommendation of independent advisors to the Personnel & Compensation Committee of the Board, in an effort to retain key employees during the uncertainty created by the refinancing process, the company has established a Temporary Enhanced Severance Plan effective November 1, 2003 and extending through December 31, 2005 for certain key employees, including the executive officers named in the Summary Compensation Table. Should a participant experience a qualifying termination during this period he/she would be entitled to certain benefits including severance and outplacement assistance. The benefits provided under this plan would not be cumulative to any other severance benefits to which a participant is entitled. In the event a participant would receive benefits under another company severance plan, then the payments under this plan would be reduced by a like amount.

Compensation Committee Interlocks and Insider Participation

      For 2003, the Personnel and Compensation Committee of the Board was composed of James E. Perrella, Joseph Pichler and Joseph A. Steger, with Mr. Perrella serving as Chairperson. Each member of the Committee was independent, as defined by the SEC and the NYSE. No member of the Board and no employee of the company serves or has served on the compensation committee (or the Board of a corporation lacking a compensation committee) of a corporation employing a member of the Board.

Audit Committee Financial Experts

      The Audit Committee of the Board is currently composed of three non-employee directors. The Board has determined that each of David L. Burner and Darryl F. Allen (i) meets the independence requirements of the SEC and the NYSE, (ii) is financially literate within the meaning of the NYSE rules, and (iii) qualifies as an “audit committee financial expert” as defined by the SEC.

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Summary Compensation Table

		Annual Compensation(1)										Long Term Compensation
												Awards				Payouts
									Other					Shares
									Annual			Restricted		Underlying		LTIP		All Other
Name									Comp.			Stock		Stock		Payouts		Comp.
Principal Position		Year		Salary ($)		Bonus ($)			($)			($)(2)		Options (#)		($)		($)
R. D. Brown			2003		600,000		0			2,238			465,040		0		0		0
	Chairman, President and		2002		562,585		196,230			10,984			621,450		100,000		0		0
	Chief Executive Officer		2001		488,338		0			17,146			282,140		100,000		0		0
H. J. Faig			2003		352,920		0			73,183			18,480		0		0		0
	President and Chief		2002		369,950		85,084			17,266			276,200		88,000		0		0
	Operating Officer(3)		2001		363,670		0			15,803			101,700		44,000		0		0
R. P. Lienesch			2003		270,000		0			52,194	(7)		139,088		0		0		0
	Vice President — Finance		2002		253,800		60,861			11,777			248,580		58,000		0		0
	and Chief Financial Officer		2001		255,670		0			11,720			61,020		29,000		0		0
H. C. O’Donnell			2003		230,004		11,500	(6)		6,335			137,240		0		0		0
	Vice President, General		2002		216,207		51,846			3,267			165,720		44,000		0		0
	Counsel and Secretary		2001		217,670		0			4,332			40,680		22,000		0		0
R. A. Anderson			2003		157,764		1,315	(6)		31			96,992		0		0		0
	Controller(4)		2002		132,411		32,107			—			0		7,875		0		0
J. C. Francy			2003		142,608		7,130	(6)		1,461			96,992		0		0		0
	Treasurer(5)		2002		134,058		37,992			2,035			96,670		10,000		0		0
			2001		114,916		0			1,860			40,680		5,000		0		0

(1)

Includes amounts earned in fiscal year.

(2)

Performance Share Awards: On February 9, 2001, July 26, 2001, February 12, 2002, and February 11, 2003, the Personnel and Compensation Committee of the Board awarded performance share grants in the form of restricted stock under the 1997 Long-Term Incentive Plan. This restricted stock will vest only if certain performance targets are met during the three-year performance period. Mr. Brown was awarded 15,000 shares in 2001 (7,000 shares on February 9, 2001 and 8,000 shares on July 26, 2001), 15,000 shares in 2002 and 12,000 shares in 2003; Mr. Faig was awarded 5,000 shares in each of 2001 and 2002 and 4,000 shares in 2003; Mr. Lienesch was awarded 3,000 shares in each of 2001 and 2002 and 2,400 shares in 2003; Mr. O’Donnell was awarded 2,000 shares in each of 2001, 2002 and 2003; Mr. Anderson was awarded no shares in each of 2001 and 2002 and 1,600 shares in 2003; Mr. Francy was awarded 2,000 shares in each of 2001 and 2002 and 1,600 shares in 2003.

In accordance with the terms of the Long-Term Incentive Plan, upon his retirement on September 30, 2003, Mr. Faig forfeited performance share grants as follows: from the 5,000 shares awarded him in 2001, 421 shares were forfeited; from the 5,000 shares awarded him in 2002, 2,087 shares were forfeited; and all 4,000 shares awarded him in 2003 were forfeited.

The performance share grants awarded in 2001 were to vest only if the compounded annual growth rate of the company’s basic earnings per common share over the three-year performance period commencing January 1, 2001 was at least 10%. If the compounded annual growth rate of basic earnings per common share over the performance period was at least 12%, the awards were to be increased by a cash payment equal to 50% of the value of the associated performance share grant at the end of the performance period, and the cash payment was to be increased to 100% of the value of the associated performance share grant if that compounded annual growth rate was at least 15%. On February 9, 2004, all of the performance share grants awarded in 2001 were forfeited because the targeted annual growth rate in earnings per share was not attained.

The performance share grants awarded in 2002 will vest only if the company’s basic earnings per common share over the three-year performance period commencing January 1, 2002 are at least $1.00. These grants will be increased by a cash payment equal to 50% of the value of the associated performance share grant at the end of the performance period if basic earnings per share over the performance period are at

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least $1.35, and the cash payment will be increased to 100% of the value of the associated performance share grant if those basic earnings per share are at least $1.75.

The performance share grants awarded in 2003 will vest only if the company’s basic earnings per common share over the three-year performance period commencing January 1, 2003 are at least $0.75. These grants will be increased by a cash payment equal to 50% of the value of the associated performance share grant at the end of the performance period if basic earnings per share over the performance period are at least $1.15, and the cash payment will be increased to 100% of the value of the associated performance share grant if those basic earnings per share are at least $1.50.

Restricted Stock Awards: On February 9, 2001, February 12, 2002 and November 6, 2003, the Personnel and Compensation Committee also awarded restricted stock under the 1994 and 1997 Long-Term Incentive Plans which vests at the end of 3 years (2 years in the case of 50% of each grant made in 2003) if the executive is still employed by the company or has retired from the company, but is not subject to other performance targets, as follows: Mr. Brown, 30,000 shares in 2002 and 160,000 shares in 2003; Mr. Faig, 15,000 shares in 2002; Mr. Lienesch, 15,000 shares in 2002 and 50,000 shares in 2003; Mr. O’Donnell, 10,000 shares in 2002 and 50,000 shares in 2003; Mr. Anderson, 1,000 shares in 2001 and 35,000 shares in 2003; and Mr. Francy, 5,000 shares in 2002 and 35,000 shares in 2003.

The values of the awards under the Long-Term Incentive Plans shown in the table are based on the closing prices of $20.34 and $17.47 (for the February 9, 2001 and July 26, 2001 awards, respectively), $13.81 (for the February 12, 2002 awards), and $4.62 and $2.56 (for the February 11, 2003 and November 6, 2003 awards, respectively).

Dividends are paid on all restricted stock granted under the Long-Term Incentive Plans at the same time and the same rate as dividends are paid to the shareholders on unrestricted stock.

Upon a change in control of the company, all outstanding performance and restricted share awards immediately vest, and payments are made with respect to the performance shares as if maximum performance targets were attained. All outstanding restricted share awards vested and payments became due with respect to all outstanding performance shares on either April 15, 2004 or June 10, 2004 as a result of a change of control in connection with the Refinancing Transaction.

NOTE: The total number of shares of restricted stock held, subject to vesting restrictions, by the listed officers and the aggregate market value at the end of the company’s fiscal year are as follows: Mr. Brown held 232,000 restricted shares valued at $967,440.00 in the aggregate; Mr. Faig held 22,492 restricted shares valued at $93,791.64 in the aggregate; Mr. Lienesch held 73,400 shares valued at $306,078.00 in the aggregate; Mr. O’Donnell held 66,000 shares valued at $275,220.00 in the aggregate; Mr. Anderson held 37,600 shares valued at $156,792.00 in the aggregate; and Mr. Francy held 45,600 shares valued at $190,152.00 in the aggregate. Aggregate market value is based on the closing price of $4.17 at December 31, 2003.

(3)	Mr. Faig retired on September 30, 2003.
(4)	Mr. Anderson became an executive officer of the company on October 1, 2002.
(5)	Mr. Francy became an executive officer of the company on February 9, 2001.
(6)	The Board approved bonuses to certain officers, at the discretion of the CEO, in recognition of extraordinary job demands required during the company’s refinancing process.
(7)	Includes $20,834 for supplemental health care benefits received by Mr. Lienesch, which was the only perquisite or other personal benefit received by him that exceeded 25% of the total of all perquisites and other personal benefits received by him.

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Aggregated Option Exercises In Last Year and Fiscal Year-End Option Values

					Number of Securities
					Underlying Unexercised				Value (1) of Unexercised, In-the-
	Number of				Options at Fiscal				Money Options Held at Fiscal
	Shares		Value		Year-End (#)(2)				Year-End ($)
	Acquired on		Realized
Name	Exercise (#)		($)		Exercisable		Unexercisable		Exercisable ($)		Unexercisable ($)
R. D. Brown		0	$	0		105,000		155,000	$	0	$	0
H. J. Faig		0	$	0		64,000		108,000	$	0	$	0
R. P. Lienesch		0	$	0		42,000		71,000	$	0	$	0
H. C. O’Donnell		0	$	0		31,500		53,500	$	0	$	0
R. A. Anderson		0	$	0		3,968		7,907	$	0	$	0
J. C. Francy		0	$	0		5,000		10,000	$	0	$	0

(1)

Based on a fair market value (average of high and new low market prices) of company stock on December 31, 2003, of $4.18.

(2)

As set forth below under the heading “Share Ownership of Directors and Executive Officers,” on April 21, 2003 Messrs. Anderson, Brown, Faig, Francy, Lienesch and O’Donnell voluntarily waived all right and interest to options to purchase 8,600 shares, 174,800 shares, 141,000 shares, 8,000 shares, 86,600 shares and 18,100 shares, respectively, none of which were in-the-money options. These waivers were made without any promise of future options being offered to these officers. The purpose of these waivers was to allow the Company to make future grants to participants under the company’s long-term incentive plans without increasing shareholder dilution, by making the shares related to the waivers available for such future grants.

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Report of the Personnel and Compensation Committee*

To Our Shareholders

      The Personnel and Compensation Committee of the Board (the “Committee”) annually reviews and recommends to the full Board compensation levels for the officers of the company. The Committee consists entirely of independent, non-employee directors.

      The Committee’s primary objective in establishing compensation opportunities for the company’s officers is to support the company’s goal of maximizing the shareholders’ value. To achieve this objective, the Committee believes it is critical to hire, develop, reward, and retain the most competent executives, and to establish total compensation opportunities for executives based upon competitive market conditions and the overall strategy of the company.

      The Committee reviews the compensation for all corporate officers, including the individuals whose compensation is detailed in this Proxy Statement. This review is designed to ensure consistency throughout the compensation process. The Committee makes all decisions pertaining to the determination of the company’s executive compensation plans that promote the above objective. The Committee believes that the company’s current compensation programs support the company’s business mission and contribute to the company’s financial success. The Committee considers total compensation when establishing each component of pay.

      The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue Code of 1986, as amended. Section 162(m) generally denies a publicly held corporation, such as the company, a federal income tax deduction for compensation in excess of $1 million per year paid or accrued for each of its chief executive officer and four other most highly compensated executive officers. Certain “performance based” compensation is not subject to the limitation of deductibility provided that certain shareholder approval and independent director requirements are met. The Committee takes into account Section 162(m) of the Internal Revenue Code while reviewing its policies with respect to the qualifying compensation paid to its executive officers.

Base Salary

      The Committee annually reviews each officer’s base salary. The factors which influence Committee determinations regarding base salary include job performance, level of responsibilities, breadth of knowledge, prior experience, comparable levels of pay among executives at national market competitors, and internal pay equity considerations. Base pay data is compared with survey information compiled by independent compensation consulting firms. In 2003 the Committee retained Towers Perrin to conduct an independent compensation review to assist the Committee in establishing total compensation, including base pay and short and long-term compensation, for the company’s officers, including the CEO, and other key executives. Increases in salary levels are driven by individual performance. Base salaries are targeted at the market median, after adjusting for company size. Based on this independent review, the Committee determined that the current base salaries of the company’s officers are within acceptable competitive ranges.

      Due to depressed economic and business conditions, the officers, including the CEO, elected to reduce their base salary by 8% throughout most of 2001 and 2002. Furthermore, after the 8% reduction was restored in October of 2002, the officers’ base salary remained frozen throughout 2003.

Annual Incentive Compensation

      The company’s officers, including the CEO, are eligible for an annual cash bonus under its 2002 Short-Term Incentive Plan. The corporate and business unit performance measures for bonus payments are based on earning a return on capital in excess of the cost of capital (“EVA”) and meeting or exceeding predetermined Critical Success Factors, and thereby enhancing shareholder value at the corporate and/or

* This report is reproduced from our Proxy Statement dated April 28, 2004 for our annual meeting of shareholders held on June 9, 2004.

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business unit levels. The Critical Success Factor for 2003 was a reduction of average working capital as a percentage of sales. The Committee establishes the target performance goals and relative weighting for both the EVA and the Critical Success Factor measurement.

      The 2002 Short-Term Incentive Plan provides a balance between the short-term financial goals and long-term objectives of the company. Annual incentive compensation is targeted to the market median, after adjusting for company size. No bonus under the 2002 Short-Term Incentive Plan was paid to any of the officers named in the Summary Compensation Table for the 2003 plan year.

Long-Term Incentive Compensation

      The 1997 Long-Term Incentive Plan was approved by shareholders in 1997 and gives the Committee the authority and discretion to award stock options, restricted stock and performance share awards (collectively referred to as “Awards”) to the company’s key employees. Awards are granted during the life of the Plan and are designed to align the interests of executives with those of the shareholders. Under the 1997 Long-Term Incentive Plan, Awards were granted to the company’s key employees, including its officers. Stock options have an exercise price equal to the market price of the company’s Common Stock on the date of the grant, and vest over a four-year period commencing on the first anniversary of the date of the grant. Stock options granted on or after February 19, 2002, have a life span of five years from the grant date and those granted prior thereto have a life span of 10 years from the date of the grant. There were no stock options granted in 2003 to any executive officer or employee of the company. On April 21, 2003, all named executive officers in the Summary Compensation Table voluntarily waived all right and interest to options to purchase 437,100 shares of Common Stock, none of which were in-the-money options. These waivers were made without any promise of future options being offered to these officers. The purpose of these waivers was to allow the company to make future grants to participants under the company’s long-term incentive plans without increasing shareholder dilution, by making shares related to the waivers available for such future grants.

      Restricted stock may not be sold or transferred for a period of three years and, as a general rule, the restricted stock is forfeited if the recipient does not remain in the employ of the company during the entire three-year term.

      Performance share grants are awarded in the form of restricted shares which may be forfeited or increased, with any increase paid in cash, depending on the growth of basic earnings per share of the company’s Common Stock during the three-year measurement period. Performance share grants awarded in 2001 for the 2001-2003 Performance Period were forfeited when the basic earnings per share growth target of 10% was not attained. Performance share grants awarded in 2002 for the 2002-2004 Performance Period will vest only if a basic earnings per share target of at least $1.00 is achieved, and will be increased by 50% or 100% if basic earnings per common share of at least $1.35 or $1.75, respectively, is achieved. Performance Share grants awarded in 2003 for the 2003-2005 Performance Period will vest only if a basic earnings per share target of at least $.75 per share is achieved, and will be increased by 50% or 100% if basic earnings per share of $1.15 or $1.50, respectively, is achieved. This approach to long-term incentives was designed to focus executives on the creation of shareholder value over the long term since the full breadth of the compensation package cannot be realized unless basic earnings per common share and the price of Common Stock increase over a number of years.

CEO Compensation

      The compensation of the CEO reflects the same elements as those used in determining the compensation of other corporate officers. The Committee also considers the leadership and effectiveness of the CEO in offering direction and strategic planning for the company and in dealing with major corporate challenges and opportunities.

      The CEO’s base salary of $600,000 was established upon Mr. Brown’s promotion to Chairman and CEO in June of 2001. Due to depressed economic and business conditions, the CEO elected to reduce his base salary by 8% throughout most of 2001 and 2002 and after restoring the reduction of 8% in October of 2002, kept his base salary frozen throughout 2003.

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      In accordance with the terms of the 2002 Short-Term Incentive Plan, no bonus was paid for the 2003 plan year.

      During fiscal 2003, Mr. Brown was granted 12,000 performance shares under the 1997 Long-Term Incentive Plan and 160,000 shares of restricted stock under the 1994 Long-Term Incentive Plan. No stock options were granted in 2003.

      Mr. Brown’s performance share grant is subject to the same performance targets outlined above. The restricted stock grant was made on the basis of market practice as determined by independent consultants, as described above.

The Personnel and Compensation Committee

James E. Perrella, Chairperson

Joseph A. Pichler

Joseph A. Steger

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PRINCIPAL HOLDERS OF VOTING SECURITIES

      The following table sets forth information, unless otherwise indicated, as of June 18, 2004, concerning the beneficial owners of more than five percent of the Company’s outstanding shares of the company’s Common Stock, Series B Preferred Stock and 4% Cumulative Preferred Stock. Unless otherwise noted, the individuals or entities named in the table have sole voting and investment power.

Common Stock

			Percent of		Percent of
			Class		Voting Power
Beneficial Owner		Shares	Outstanding		Outstanding(1)
Putnam, LLC d/b/a Putnam Investments(2)		3,378,794		9.5		3.9
	One Post Office Square
	Boston, MA 02109
Dimensional Fund Advisors, Inc.(3)		2,466,953		6.9		2.8
	1299 Ocean Avenue, 11th Floor
	Santa Monica, CA 90401
U.S. Trust Corp., United States Trust Company of New York and U.S. Trust Company, N.A.(4)		2,466,139		6.9		2.8
	114 W. 47th Street
	New York, NY 10036
Boston Safe Deposit and Trust Company		2,288,883		6.4		2.9	(8)
	c/o Mellon Bank N.A
	525 William Penn Place, Suite 3148
	Pittsburgh, PA 15259
Trustee — Milacron Employee Benefit Plans

Series B Preferred Stock

			Percent of		Percent of
			Class		Voting Power
Beneficial Owner		Shares	Outstanding		Outstanding(1)
Glencore Finance AG(5)		350,000		70.0		40.2
	Baarermattstrasse 3
	CH-6341 Baar
	Switzerland
Mizuho International plc(6)		150,000		30.0		17.2
	Bracken House
	One Friday Street
	London EC4M 9JA
	United Kingdom
Triage Offshore Fund, Ltd.(7)		62,500		12.5		7.2
	c/o International Fund Administration, Ltd.
	48 Par-la-Ville Road, Suite 464
	Hamilton, HM11 Bermuda

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4% Cumulative Preferred Stock

			Percent of		Percent of
			Class		Voting Power
Beneficial Owner		Shares	Outstanding		Outstanding(1)
Boston Safe Deposit and Trust Company		11,126		18.5		2.9	(8)
	c/o Mellon Bank N.A.
	525 William Penn Place, Suite 3148
	Pittsburgh, PA 15259
Trustee — Milacron Employee Benefit Plans
Empire & Co.		7,154		11.9		0.2
	Box 328A
	Exchange Place Station
	69 Montgomery Street
	Jersey City, NJ 07303-0328
JPMorgan Chase Bank		7,004		11.7		0.2
	c/o JP Morgan Investor Services
	14201 Dallas Parkway, 12th Floor
	Dallas, TX 75254
Bank of New York		4,403		7.3		0.1
	One Wall Street
	New York, NY 10286
Milacron Geier Foundation		3,913		6.5		0.1
	2090 Florence Avenue, Cincinnati, OH 45206
	(R. D. Brown, J. A. Steger,
	and C. F.C. Turner, Trustees)

(1)	See “Description of Capital Stock — Voting Power” for a chart setting forth the percentage of voting power of (a) the holders of our common stock, (b) the holders of our Series B Preferred Stock and (c) the holders of our 4% Cumulative Preferred Stock, giving effect to the rights offering, the reset of the conversion price of the Series B Preferred Stock, the exercise of the contingent warrants and payment of pay-in-kind dividends on the Series B Preferred Stock through to its mandatory conversion date.
(2)	As reported in an Amendment to Schedule 13G dated February 9, 2004 filed with the SEC by Putnam, LLC (“Putnam”), a subsidiary of Marsh & McLennan Companies, Inc. (“MMc”), on behalf of MMc, on its own behalf and on behalf of its two registered investment advisory subsidiaries, Putnam Investment Management, LLC (advisor to the Putnam family of mutual funds) and The Putnam Advisory Company, LLC (advisor to Putnam’s institutional clients), with respect to 1,916,864 shares of Common Stock as to which Putnam and Putnam Investment Management, LLC reported shared dispositive power and with respect to 1,461,930 shares of Common Stock as to which Putnam and The Putnam Advisory Company, LLC reported shared dispositive power. Putnam and The Putnam Advisory Company, LLC also reported shared voting power with respect to 1,110,440 of the shares of Common Stock as to which they reported shared dispositive power.
(3)	As reported in an Amendment to Schedule 13G dated February 6, 2004 filed with the SEC by Dimensional Fund Advisors Inc., a registered investment advisor, with respect to shares of Common Stock held by funds as to which it serves as investment advisor or manager.
(4)	As reported in Schedule 13G dated February 17, 2004 filed with the SEC by U.S. Trust Corp., United States Trust Company of New York and U.S. Trust Company, N.A. with respect to 2,446,139 shares of Common Stock as to which they also report shared dispositive power.
(5)	As reported in an Amendment to Schedule 13D dated June 21, 2004 filed with the SEC by Glencore Finance AG on behalf of (i) Glencore Finance AG, Glencore International AG and Glencore Holding AG and (ii) Mizuho International and Mizuho Securities Co., Ltd. (Glencore has disclaimed beneficial ownership of the shares of Series B Preferred Stock held by Mizuho). In the Amendment to Schedule 13D, Glencore Finance AG also reported the sale on March 16, 2004 of an undivided 17.8571428% participation interest in its holdings of our then outstanding Series A Notes and Series B Notes to Triage Offshore Fund, Ltd. Glencore states in the amended Schedule 13D that, as of the date

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	thereof, Triage Offshore Fund, Ltd.’s participation interest is equivalent to 62,500 shares of Series B Preferred Stock. This interest is reflected in the holdings of both Glencore and Triage in the table above.
(6)	As reported in an Amendment to Schedule 13D dated June 21, 2004 filed with the SEC by Glencore Finance AG on behalf of Glencore and Mizuho (Mizuho has disclaimed beneficial ownership of the shares of Series B Preferred Stock held by Glencore).
(7)	As reported in Schedule 13D dated June 21, 2004 filed with the SEC by Triage Advisors, L.L.C., TRIAGE Management LLC, Triage Capital Management, L.P., Triage Capital Management B, L.P., Triage Offshore Fund, Ltd., and Leonid Frenkel (collectively, “Triage”), with respect to Triage Offshore Fund, Ltd.’s purchase of an undivided 17.8571428% participation interest from Glencore Finance AG in its holdings of our then outstanding Series A Notes and Series B Notes. Triage states in the Schedule 13D that as of the date thereof, its participation interest is equivalent to 62,500 shares of Series B Preferred Stock. This interest is reflected in the holdings of both Glencore Finance AG and Triage in the table above (Triage has disclaimed any group for purposes of Section 13(d) among itself, Glencore and Mizuho that may be found as a result of the participation agreement entered into March 16, 2004 between Triage Offshore Fund, Ltd. and Glencore Finance AG).
(8)	Includes both the 2,288,833 shares of Common Stock and the 11,126 shares of 4% Cumulative Preferred Stock beneficially owned by Boston Safe Deposit and Trust Company.

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SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

      The following table sets forth the beneficial ownership of Common Stock, Series B Preferred Stock and 4% Cumulative Preferred Stock as of June 18, 2004, for each of the directors and for each of the executive officers named in the Summary Compensation Table.

			Percent of					Percent of				Percent of
	Common		Class			Series B		Class		4% Cumulative		Class
Name	Stock(1)		Outstanding			Preferred Stock		Outstanding		Preferred Stock		Outstanding
Darryl F. Allen(2)		17,000		0.0	5		0		0		0		0
Ronald D. Brown(3)		430,883		1.2			0		0		0		0
David L. Burner(2)		12,500		0.0	4		0		0		0		0
Barbara Hackman Franklin(2)		19,105		0.0	5		0		0		0		0
Steven N. Isaacs(4)		0		0.0			350,000		70.0		0		0
James E. Perrella(2)		22,000		0.0	6		0		0		0		0
Joseph A. Steger(2)		19,146		0.0	5		0		0		0		0
Charles F. C. Turner(2)		5,870		0.0	2		0		0		342		0.6
Ross A. Anderson		36,765		0.1			0		0		0		0
Harold J. Faig(5)		206,995		0.6			0		0		0		0
John C. Francy		41,806		0.1			0		0		0		0
Robert P. Lienesch		172,203		0.5			0		0		0		0
Hugh C. O’Donnell		127,931		0.4			0		0		0		0
All directors and executive officers as a Group(6)		1,112,204		3.1			350,000		70.0		342		0.6

(1)	The amounts shown include (a) the following shares that may be acquired within 60 days pursuant to outstanding option grants: Mr. Anderson 11,875 shares, Mr. Brown 260,000 shares, Mr. Faig 172,000 shares, Mr. Francy 15,000 shares, Mr. Lienesch 113,000 shares, Mr. O’Donnell 85,000 shares, 16,000 shares each for Messrs. Perrella and Steger, 14,000 shares for Mr. Allen, and Ms. Franklin, 10,000 shares for Mr. Burner, 3,000 shares for Mr. Turner, and 729,875 shares for all directors and executive officers as a group; (b) the following shares allocated to participant accounts under the Milacron Retirement Savings Plan, according to information furnished by the Plan Trustee: Mr. Anderson 1,319 shares, Mr. Brown 2,173 shares, Mr. Francy 857 shares, Mr. Lienesch 2,732 shares, Mr. O’Donnell 1,849 shares, and 8,930 shares for all directors and executive officers as a group; and (c) the following shares held by certain members of the individuals’ families as to which beneficial ownership is disclaimed: Mr. Brown 100 shares, and Mr. Turner 25 shares. On April 21, 2003, Messrs. Anderson, Brown, Faig, Francy, Lienesch and O’Donnell voluntarily waived all right and interest to options to purchase 8,600 shares, 174,800 shares, 141,000 shares, 8,000 shares, 86,600 shares and 18,100 shares, respectively, none of which were in-the-money options. These waivers were made without any promise of future options being offered to these officers. The purpose of these waivers was to allow the Company to make future grants to participants under the Company’s long-term incentive plans without increasing shareholder dilution, by making the shares related to the waivers available for such future grants.
(2)	The amounts shown do not include credits of stock units under the Company’s deferred compensation plan for non-employee directors as follows: Mr. Allen 50,243 units, Mr. Burner 34,956 units, Ms. Franklin 7,070 units, Mr. Perrella 49,144 units, Mr. Steger 13,258 units, and Mr. Turner 4,661 units.
(3)	The amounts shown do not include 3,913 shares of Existing Preferred Stock held by the Milacron Geier Foundation (of which Messrs. Brown, Steger and Turner are Trustees), as to which shares beneficial ownership is disclaimed.
(4)	The amount shown, which is 70.0% of the outstanding Series B Preferred Stock, represents the shares owned by Glencore of which Mr. Isaacs has the right to direct dispositions and voting (Mr. Isaacs has disclaimed beneficial ownership to the 150,000 shares owned by Mizuho which were acquired in the same

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	transaction in which Glencore acquired its shares). See footnotes 4 and 6 to the “Principal Holders of Voting Securities” table for information about Glencore’s sale of a participation interest in its investment in the Series B Preferred Stock to a third party.
(5)	The amount shown for Mr. Faig is based on his ownership as of April 15, 2004, adjusted to include options which have since become exercisable within 60 days.
(6)	Directors’ and executive officers’ beneficial ownership as a group is 2.9% of the outstanding Common Stock (12 persons) and 0.6% of the outstanding 4% Cumulative Preferred Stock (1 person).

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Equity Compensation Plan Information

					Number of Securities
					Remaining Available for
	Number of Securities				Future Issuance Under
	to be Issued		Weighted-Average		Equity Compensation
	Upon Exercise of		Exercise Price of		Plans (Excluding
	Outstanding Options,		Outstanding Options,		Securities Reflected in
Plan Category	Warrants and Rights(1)		Warrants and Rights		Column(a))(1)
	(a)		(b)		(c)
Equity compensation plans not approved by security holders		—		—		—
Equity compensation plans approved by security holders		3,855,950		19.75		276,737
Total		3,855,950		19.75		276,737

(1)  Amounts shown do not reflect securities which were issued or became available for issuance after December 31, 2003. Our shareholders approved a new long-term incentive plan on June 9, 2004. We granted awards of 1,110,000 of the 7,000,000 shares available for issuance under this plan on June 11, 2004. As of June 18, 2004, 5,890,000 shares remain available for issuance under this new long-term incentive plan.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      During 2003 and through March 15, 2004, we had outstanding loans in excess of $60,000 to one executive officer under our employee stock loan program for the purposes of exercising stock options and purchasing stock, and for paying related withholding taxes due as a result of such actions or the lapse of restrictions on restricted stock, all under our long-term incentive plans. Mr. Brown had loans with interest rates ranging from 5.17% to 7.38%, with the largest aggregate amount of indebtedness outstanding at any time during such period being $167,709.04 and the principal balance of all such loans outstanding at the end of the period being $142,730.23. In 2002, we discontinued the employee stock loan program, allowing for the repayment of existing loans in accordance with their respective terms. Pursuant to the employee stock loan program, the loans are to be repaid on terms of regular payments of not more than ten years unless the related stock is divested by the employee prior to such time, in which case all amounts owing become payable. The interest rate for each loan was the Applicable Federal Rate in effect under Section 1274(d) of the Internal Revenue Code of 1986, as amended, as of the day on which the loan was made.

      On March 12, 2004, we sold $70 million in aggregate principal amount of Series A Notes and Series B Notes to Glencore, of which Mr. Isaacs, a Director, is the Chairman and Managing Director. In addition, Glencore has informed us that it held $7.5 million of our 8 3/8% Notes due March 15, 2004, prior to their repayment, and €11.0 million of Eurobonds, prior to consummation of the tender offer. On April 15, 2004, Glencore converted its Series A Notes into 10,500,000 shares of our common stock. On June 10, 2004, the common stock into which the Series A Notes were converted and the Series B Notes held by Glencore were exchanged for 350,000 shares of our Series B Preferred Stock, which represents approximately 40% of our outstanding equity (on an as-converted basis). See footnotes 4 and 6 to the “Principal Holders of Voting Securities” table for information about Glencore’s sale of a participation interest in its investment in the Series B Preferred Stock to a third party. Mr. Isaacs was selected for nomination as a Director by Glencore and Mizuho as holders of the Series A Notes pursuant to the agreement governing the sale of such notes. For more information on this transaction, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Sources of Capital — March 12 Transactions” and “— June 10 Transactions.” In addition, Glencore purchased $9 million in principal amount of the $225 million aggregate principal amount of our 11 1/2% Senior Secured Notes sold in a private placement on May 26, 2004.

      In addition, Mizuho, a holder of 150,000 shares of our Series B Preferred Stock, which represents approximately 17% of our outstanding equity (on an as-converted basis), purchased $2 million in principal amount of the $225 million aggregate principal amount of our 11 1/2% Senior Secured Notes.

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PERFORMANCE GRAPH

Comparison of 5-Year Cumulative Total Shareholder Return⁽¹⁾

Milacron Inc., Russell 2000 Index, S&P SmallCap 600 Indl Machinery Index and S&P 500 Index:⁽²⁾

(1)	Total Shareholder Return assumes $100.00 invested on December 31, 1998 and reinvestment of dividends on a quarterly basis.
(2)	The S&P 500 Index (which was included in this graph in prior years) is being replaced with the S&P SmallCap 600 Industrial Machinery Index, which now includes the company and is more reflective of the company’s market capitalization.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

      The following is a summary of certain of our outstanding indebtedness.

The Asset Based Facility

      On June 10, 2004, we entered into an asset based revolving credit facility for which JPMorgan Chase Bank acts as administrative agent (the “Agent”), collateral agent and a lender.

      Set forth below is a summary of the terms and conditions of our asset based facility. This summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the credit agreement governing the asset based facility.

      We and certain of our wholly-owned U.S. subsidiaries are joint and several borrowers under our asset based facility. Our asset based facility consists of a revolving line of credit in a maximum amount of up to $75.0 million (including up to $25.0 million of letters of credit) and matures on June 10, 2008. Our asset based facility provides that no letter of credit will have an expiration date later than the earlier of one year after its date of issuance or ten business days prior to the final maturity of our asset based facility, provided that any letter of credit may extend beyond the final maturity of our asset based facility if we provide cash collateral equal to at least 105% of the undrawn portion of such letter of credit on or prior to the tenth business day prior to the final maturity of our asset based facility.

     Borrowing Availability

      Our ability to borrow, repay and reborrow loans and have letters of credit issued for our accounts is limited to a borrowing base equal to specified percentages of eligible U.S. and Canadian accounts receivable and U.S. inventory and is subject to other conditions to borrowing and limitations, including an excess availability reserve of $10.0 million, other reserve requirements, a limitation on inventory value, a $5 million limitation on the value of eligible Canadian accounts receivable and compliance with financial covenants.

      Based upon the initial evaluation of our accounts receivable and inventory conducted by the Agent and the Lead Arranger, we have approximately $59 million of borrowing availability under our asset based facility, 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 credit judgment, any of which could reduce our borrowing availability at any time.

     Cash Sweep

      The terms of our asset based facility impose a daily cash “sweep” on cash received in our U.S. bank accounts from collections of our accounts receivable. This daily cash “sweep” is automatically applied to pay down any outstanding borrowings under our asset based facility. The terms of our asset based facility also provide for the administrative agent, at its option and at any time, to impose a daily cash “sweep” on cash received in our Canadian bank accounts from collections of our accounts receivable.

     Prepayments

      We have the ability to prepay our asset based facility, in whole or in part, at any time without penalty (other than a fee of 1.0% of the facility amount if we terminate or are deemed to have terminated our asset based facility prior to June 10, 2005). Our asset based facility provides for mandatory prepayments (subject to exceptions), in general, of (i) 100% of the net cash proceeds received by us, another loan party under the credit agreement or any of our U.S. subsidiaries from non-ordinary course of business asset sales, (ii) 100% of the net cash proceeds received by us, another loan party under our asset based facility or any of our U.S. subsidiaries from casualty events which are not reinvested in accordance with the provisions of our asset based facility and (iii) 100% of the net cash proceeds received by us, another loan party under our asset based facility or any of our U.S. subsidiaries from any issuances of debt or equity, subject to limited exceptions to permit specified redemptions of preferred stock and the 11 1/2% Senior Secured Notes with proceeds of equity issuances. The credit agreement provides for mandatory prepayments in an amount equal to (i) any

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repayment required to be made by us to Milacron Assurance Ltd. in connection with our self-insurance program, (ii) any cash payment made by any borrower or guarantor under our asset based facility in respect of a guarantee by us or another loan party under our asset based facility of a foreign subsidiary obligation and (iii) available cash in excess of $4 million.

     Use of Proceeds

      Our asset based facility provides that funds drawn under our asset based facility can be used (i) to refinance existing indebtedness and to pay fees and expenses related thereto and (ii) for general corporate purposes.

     Security

      Our obligations under our asset based facility are secured by (i) a first priority security interest in, subject to permitted liens, among other things, U.S. and Canadian cash, cash equivalents, deposit accounts, chattel paper, accounts receivable, inventory and, in the U.S., certain rights under contracts, licenses and other general intangibles relating to the foregoing, subject to certain exceptions, and (ii) a second priority security interest in substantially all other tangible and intangible property of the loan parties at any time owned or acquired in each case but only to the extent subject to a lien securing the 11 1/2% Senior Secured Notes.

     Guarantors

      Each of our existing and future material U.S. and Canadian subsidiaries that are not co-borrowers under our asset based facility and Milacron Capital Holdings B.V. guarantee our obligations under our asset based facility. We have the right to have Milacron Capital Holdings B.V. released from its guarantee at any time.

     Representations and Warranties

      Our asset based facility contains representations and warranties (subject to materiality thresholds and other exceptions) customary for this type of financing including, among other things, those relating to: absence of litigation or commercial tort claims, absence of a material adverse change, compliance with laws, pension and benefit matters, taxes, nature of our business, absence of adverse agreements, compliance with permits, ownership of property, operating lease obligations, environmental matters, insurance, use of proceeds, intellectual property, material contracts, employee and labor matters, customers and suppliers, location of collateral, priority of the lenders’ liens and collateral matters.

     Covenants and Conditions

      Our asset based facility contains customary conditions precedent to any borrowings, as well as customary affirmative and negative covenants. Such covenants include, among other things: delivery requirements of financial statements and borrowing base certificates, field examination and inspection rights, additional guarantees and collateral, compliance with pension, environmental and other laws, maintenance of our properties and insurance, collateral matters, use of proceeds of loans and restrictions on our and our guarantors’ ability to do the following:

•  incur liens;

•  incur additional indebtedness;

•  engage in mergers or dissolutions or sell or transfer our assets;

•  change the nature of our business;

•  enter into capital or operating leases;

•  make capital expenditures;

•  make loans, advances, guarantees or investments (including officer loans);

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•  pay dividends or make distributions or other restricted payments on our stock;

•  enter into transactions with affiliates;

•  create dividend or other payment restrictions affecting our subsidiaries;

•  issue or sell our stock;

•  amend or modify terms of certain indebtedness, organizational documents or other agreements;

•  adjust accounts receivable; and

•  engage in certain environmental and ERISA-related activities.

      In addition, our asset based facility contains, for the first five quarters, a financial covenant requiring us to maintain a minimum level of cumulative consolidated EBITDA, to be tested quarterly, and a limit on capital expenditures to be complied with on a quarterly basis, in each case starting with the first full quarter after the closing. Thereafter, we are subject to a fixed charge coverage ratio to be tested quarterly.

     Events of Default

      Our asset based facility contains customary events of default, which are subject to customary grace periods and materiality standards, including, among others, events of default upon the occurrence of (i) nonpayment of any amounts payable under our asset based facility when due, (ii) any representation or warranty made by any borrower or guarantor under our asset based facility being incorrect in any material respect when made or deemed made, (iii) a breach by any borrower or guarantor of covenants or agreements under our asset based facility, (iv) failure to pay when due any other material indebtedness, or the occurrence of events or conditions that permit holders of other material indebtedness to cause it to become due, or any other material indebtedness is declared to be due or is required to be prepaid or repurchased prior to its stated maturity, (v) voluntary bankruptcy, insolvency or reorganization of any borrower, guarantor or any of their subsidiaries, (vi) involuntary bankruptcy, insolvency or reorganization of any borrower, guarantor or any of their subsidiaries that remains undismissed or unstayed for a period of 30 days, (vii) any term or provision of our asset based facility ceasing to be valid and binding on or enforceable against any borrower or guarantor or being contested against any party to our asset based facility, or any proceeding commenced by any borrower or guarantor or governmental authority seeking to establish the invalidity or unenforceability of any term or provision of our asset based facility, (viii) any security agreement or document under our asset based facility ceasing to create a lien on any assets securing our asset based facility, (ix) any judgment, order or award for the payment of money exceeding $2.5 million that is in effect for more than a specified period, (x) certain pension and benefit events, (xi) a “change of control,” as such term is defined under our asset based facility, or (xii) an event or development occurring which could reasonably be expected to have a “material adverse effect,” as such term is defined in the agreement governing our asset based facility.

     Interest Rate and Fees

      Borrowings under our asset based facility bear interest, at our option, at either (i) the LIBO Rate plus the applicable margin (as defined below) or (ii) an ABR plus the applicable margin (as defined below). The “applicable margin,” with respect to Eurodollar loans, is between 2.50% per annum and 3.25% per annum and, with respect to ABR loans, is between 0.75% per annum and 1.50% per annum, determined based on a calculation of the trailing average availability levels under our asset based facility. LIBO Rate means the rate at which Eurodollar deposits in the London interbank market are quoted on page 3750 of the Dow Jones Market Service. We are able to elect Eurodollar loans interest periods of one, two or three months. “ABR” means the higher of (i) the rate of interest publicly announced by the Agent as its prime rate in effect at its principal office in New York City and (ii) the federal funds effective rate from time to time plus 0.5%.

      Our asset based facility provides that we will pay a monthly unused line fee equal to 0.50% per annum on the average daily unused portion of our credit commitment, as well as customary loan servicing and letter of credit issuance fees.

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      Our asset based facility provides that upon the occurrence and continuance of an event of default under our asset based facility, upon demand by the Agent, we will have to pay (x) in the case of revolving credit loans, a rate of interest per annum equal to the rate of interest otherwise in effect (assuming the rate in effect is at the maximum applicable margin) pursuant to the terms of our asset based facility plus 2% and (y) in the case of other amounts, a rate of interest per annum equal to the ABR plus the maximum applicable margin plus 2%.

11 1/2% Senior Secured Notes due 2011

      On June 10, 2004, we satisfied the conditions to release of the proceeds of a private placement of $225 million in aggregate principal amount of 11 1/2% Senior Secured Notes due May 15, 2011 from escrow. For purposes of this section, we refer to the 11 1/2% Senior Secured Notes as the “notes.”

     Interest

      Interest accrues on the notes at a rate of 11 1/2% per annum, and will be payable semiannually in arrears on May 15 and November 15 of each year, commencing on November 15, 2004.

Guarantors

      The notes are jointly and severally guaranteed on a senior secured basis by all of our existing U.S. restricted subsidiaries that are not immaterial subsidiaries and any additional restricted subsidiaries that guarantee our other indebtedness, which additional subsidiaries currently consist of Canadian restricted subsidiaries and Milacron Capital Holdings B.V. (a Dutch subsidiary that guarantees the notes on a senior unsecured basis).

Security

      The notes and the guarantees are secured by a first priority security interest in certain of our U.S. assets other than those securing our asset based facility on a first priority basis, as well as certain subsidiary capital stock, and by a second priority security interest in all of our assets securing our asset based facility on a first priority basis, including, among other things, U.S. and Canadian accounts receivable, cash and cash equivalents, inventory and, in the U.S., certain related rights under contracts, licenses and other general intangibles, subject to certain exceptions.

Optional Redemption

      We can redeem all or a portion of the notes at a price equal to 100% plus a “make-whole” premium.

      At any time before May 15, 2007, on one or more occasions, we can choose to redeem up to 35% of the outstanding principal amount of the notes, with the net cash proceeds of certain equity offerings, so long as:

•  we pay holders of the notes a redemption price of 111.5% of the principal amount of the notes we redeem, plus accrued and unpaid interest, if any;

•  we redeem the notes within 90 days of any such equity offering; and

•  at least 65% of the aggregate principal amount of notes initially issued under the indenture remains outstanding immediately after such redemption.

Change of Control

      Upon a change of control, we will be required to make an offer to purchase the 11 1/2% Senior Secured Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase.

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Covenants

      Subject to a number of important limitations, exceptions and qualifications, the indenture governing the 11 1/2% Senior Secured Notes contains covenants that limit our ability and the ability of our restricted subsidiaries to:

•  incur additional indebtedness;

•  create liens;

•  engage in sale-leaseback transactions;

•  pay dividends or make other equity distributions;

•  purchase or redeem capital stock;

•  make investments;

•  sell assets;

•  engage in transactions with affiliates; or

•  effect a consolidation or merger.

Events of Default

      Each of the following is an event of default under the indenture governing the 11 1/2% Senior Secured Notes: (i) default for 30 days on the payment when due of interest on, or “liquidated damages,” as such term is defined in the indenture, with respect to the notes, (ii) default in payment when due of the principal of, or premium, if any, on the notes, (iii) failure to comply with our obligations under the covenants in the indenture regarding change of control, asset sales, or merger, consolidation or sale of assets, (iv) failure, for 30 days after receipt of a written notice, to comply with our obligations under the covenants in the indenture regarding restricted payments or incurrence of indebtedness or preferred stock, (v) failure, for 60 days after receipt of a written notice, to comply with any of the other agreements in the indenture, the notes, or the security documents related to the notes, (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any “indebtedness,” as such term is defined in the indenture, for money borrowed or guaranteed by us or any of our “restricted subsidiaries,” as such term is defined in the indenture, if such default is a “payment default,” as defined in the indenture, or results in the acceleration of such indebtedness prior to its express maturity and, in each case, the principal amount of any such indebtedness, together with any other such indebtedness under which there has been a payment default or the maturity has been so accelerated, aggregates $15 million or more, (vii) failure to pay final, non-appealable judgments aggregating in excess of $15 million, (viii) any security document or any lien purported to be granted on any one or more items of “collateral,” as defined in the indenture, having an aggregate fair market value in excess of $15 million ceases to be fully enforceable and perfected, (ix) we or any guarantor of the Senior Secured Notes denies or disaffirms, in writing in any pleading in any court of competent jurisdiction, any of our or such guarantor’s obligations set forth in or arising under any security document, (x) except as permitted by the indenture, any guarantee of the Senior Secured Notes shall cease to be in full force and effect and such default continues for 10 days after notice or any guarantor of the Senior Secured Notes shall deny or disaffirm its obligations under its guarantee in writing, or (xi) certain events of bankruptcy or insolvency described in the indenture with respect to us or any of our “restricted subsidiaries,” as defined in the indenture, that are “significant subsidiaries,” as defined in the indenture.

Lines of Credit

      As of December 31, 2003, we had lines of credit with various U.S. and non-U.S. banks of approximately $29 million (excluding the then-existing senior credit facility) of which $14 million was outstanding (excluding the then-existing senior credit facility). These credit facilities support letters of credit and leases in addition to provide borrowings under varying terms. The weighted average interest rate on borrowings under lines of credit outstanding as of December 31, 2003 was 4.8%.

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THE RIGHTS OFFERING

      Before exercising any rights, you should read carefully the information set forth under the caption “Risk Factors” in this prospectus.

Background of the Rights Offering

      On June 10, 2004, we issued 500,000 shares of Series B Preferred Stock to Glencore and Mizuho. The terms of the Series B Preferred Stock provide us with an option to redeem up to 150,000 shares of Series B Preferred Stock with the proceeds of a rights offering. We intend to exercise this optional redemption and are conducting this rights offering for such purpose. Pursuant to this rights offering we are offering to holders of our common stock (other than any common stock received upon conversion of Series B Preferred Stock) of record as of 5:00 p.m., New York City time, on                     , 2004, the right to purchase additional shares of common stock at a per share purchase price of $2.00, which is equal to the initial conversion price per share of the Series B Preferred Stock.

      The rights offering allows each holder of our common stock (other than any common stock received upon conversion of Series B Preferred Stock) to purchase 0.452 shares of our common stock for each share of common stock (other than any common stock received upon conversion of Series B Preferred Stock) held as of 5:00 p.m., New York City time, on                     , 2004, subject to the rounding up of fractional rights to the nearest whole number after aggregating all rights to which the shareholder is entitled. If you fully exercise your subscription right, then you will own a higher percentage of our fully diluted equity than you currently own because your percentage of our fully diluted equity will increase relative to the fully diluted equity held by Glencore and Mizuho following the redemption of their shares of Series B Preferred Stock with the proceeds of the rights offering. As of June 18, 2004, Glencore and Mizuho collectively held an amount of Series B Preferred Stock representing approximately 57% of our fully diluted equity (on an as-converted basis). Glencore has reported in a Schedule 13D filing with the SEC that it has sold an undivided participation interest in its investment in us to Triage Offshore Fund, Ltd. equivalent to 62,500 shares of Series B Preferred Stock, representing approximately 7.2% of our outstanding equity (on an as-converted basis), with Glencore remaining as the record holder of such shares. Assuming all rights are subscribed for, the collective holdings of Glencore and Mizuho will represent approximately 43% of our outstanding equity, with Triage’s participation interest in Glencore’s holdings representing approximately 5.0% of our outstanding equity, in each case on an as-converted basis, after the rights offering and redemption of their shares of Series B Preferred Stock.

The Rights

      We are granting, at no charge, to holders of our shares of common stock (other than any common stock received upon conversion of Series B Preferred Stock) as of 5:00 p.m., New York City time, on the record date,                     , 2004, 0.452 non-transferable subscription rights for every share of common stock (other than any common stock received upon conversion of Series B Preferred Stock) owned at that time. Each right entitles you to purchase one share of common stock for $2.00 per share. We will not grant fractional subscription rights but, instead, we will round your number of subscription rights up to the nearest whole number after aggregating all rights to which you are entitled.

      Because the number of rights granted to each shareholder will be rounded up to the nearest whole number, beneficial holders of common stock who are also the record holders of such shares will be granted more rights under certain circumstances than beneficial holders of common stock who are not the record holder of their shares and who do not obtain (or cause the record owner of their shares of common stock to obtain) a separate subscription certificate with respect to the shares beneficially owned by them. To the extent that record holders of common stock or beneficial owners of common stock who obtain a separate subscription certificate are granted more rights, they will be able to subscribe for more shares pursuant to the subscription privilege.

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Record Date

      As of 5:00 p.m., New York City time, on                     , 2004. We will grant rights to subscribe for shares of our common stock only to holders of our common stock (other than any common stock received upon conversion of Series B Preferred Stock) as of the record date.

Subscription Price

      The subscription price is $2.00 per share, payable in cash. All payments must be cleared on or before the expiration date.

Subscription Privilege

      You are entitled to purchase one share of common stock at the subscription price for each right exercised.

Method of Offering

      This rights offering is being made directly by us. We will not pay any underwriting discounts or commissions, finder’s fees or other remuneration in connection with the granting of the rights offered by this prospectus other than the fees and expenses paid to the subscription agent and the information agent. We estimate that the expenses of the offering will total approximately $                    .

Treatment of Fractional Rights

      No fractional rights or cash in lieu of fractional rights will be issued or paid. Instead, the number of rights issued to a holder will be rounded up to the nearest whole number after aggregating all rights to which the holder is entitled.

Reasons for the Offering

      The issuance of the Series B Preferred Stock to Glencore and Mizuho was highly dilutive to existing shareholders. We are offering the rights to give each holder of our common stock (other than any common stock received upon conversion of Series B Preferred Stock) the opportunity to buy more shares of our common stock at a price equal to the initial conversion price of the Series B Preferred Stock. Please note that a number of important terms and conditions applicable to the transaction with Glencore and Mizuho pursuant to which the Series B Preferred Stock was issued are not being made available or do not apply to shareholders who participate in this rights offering. For example, the conversion price of the Series B Preferred Stock is subject to a reset to $1.75 if a test based on our financial performance for 2004 is not satisfied, and Glencore and Mizuho received contingent warrants exercisable to purchase an aggregate of one million shares of our common stock if we do not satisfy a financial performance test for 2005. The subscription price per share in this rights offering is not subject to any reset, nor are any contingent warrants being offered to shareholders in this rights offering, which provide existing common shareholders with any similar benefits. In addition, holders of the Series B Preferred Stock have certain information and approval rights that holders of our common stock do not have. See “Description of Capital Stock — Series B Preferred Stock.”

The Board Makes No Investment Recommendations to Shareholders

      Our Board has approved this offering but does not make any recommendation to you about whether you should exercise any of your rights. In making the decision to exercise or not exercise your rights, you must consider your own best interests.

      If you choose not to exercise your subscription rights in full, your relative ownership interest in us will be diluted. If you exercise your rights, you risk an immediate loss on your investment because the trading price of our common stock may decline below the subscription price before the offering is completed. We cannot assure you that the subscription price will remain below any trading price for our common stock or that its trading price will not decline to below the subscription price during or after this offering. For a summary of some of the risks a new investment would entail, see “Risk Factors” in this prospectus.

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Expiration Date

      The rights will expire at 5:00 p.m., New York City time, on                     , 2004, subject to extension at our discretion. We do not currently contemplate any extensions. We will not be obligated to honor any purported exercise of rights received by the subscription agent after the expiration date, regardless of when the documents relating to that exercise were sent.

Extension, Withdrawal and Amendment

      We have the option of extending the period for exercising your rights, although we do not intend to do so at this time. We also reserve the right to withdraw or terminate this offering at any time and for any reason. In the event that this offering is withdrawn or terminated, all funds received from subscriptions will be returned promptly. We will not pay interest on any returned funds. We will notify shareholders if we extend, withdraw or terminate this offering by issuing a press release and filing that press release with the SEC as an exhibit to a Current Report on Form 8-K.

      We reserve the right to amend the terms of this offering. If we make an amendment that we consider material, we will:

•  mail notice of the amendment to all shareholders of record as of the record date;

•  extend the expiration date by at least ten days; and

•  offer all subscribers no less than ten days to revoke any subscription already submitted.

      The extension of the expiration date will not, in and of itself, be treated as a significant amendment for these purposes.

Mailing of Subscription Certificates and Record Holders

      We are sending a subscription certificate to each record holder of our common stock (other than any common stock issued upon conversion of Series B Preferred Stock), together with this prospectus and related instructions to exercise the rights. In order to exercise rights, you must fill out and sign the subscription certificate and timely deliver it to the subscription agent, together with full payment for the shares to be purchased. Only the holders of record of our common stock as of 5:00 p.m., New York City time, on the record date may exercise rights.

      A depository bank, trust company or securities broker or dealer which is a record holder for more than one beneficial owner of shares may divide or consolidate subscription certificates to represent shares held as of the record date by their beneficial owners, upon providing the subscription agent with certain required information.

      If you own shares held in a brokerage, bank or other custodial or nominee account, in order to exercise your rights you must promptly send the proper instruction form to the nominee holding your shares. Your broker, dealer, trustee, depository for securities, custodian bank or other nominee holding your shares is the record holder of your shares and will have to act on your behalf in order for you to exercise your rights. We have asked brokers, dealers, trustees, depositories for securities, custodian banks and other nominee holders of our common stock to contact the beneficial owner(s) thereof and provide them with instructions concerning the rights the beneficial owner(s) they represent are entitled to exercise.

      If you are a participant in our 401(k) plan, you will not receive a subscription certificate, but you will be notified on a form entitled “401(k) Plan Participant Election Form” of the number of subscription rights that have been granted to you. Please refer to the information set out under “— Special Instructions for Participants in Our 401(k) Plan.”

Right to Block Exercise Due to Regulatory Issues

      We reserve the right to refuse the exercise of rights by any holder of rights who would, in our opinion, be required to obtain prior clearance or approval from any state, federal or non-U.S. regulatory authority for the

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exercise of rights or ownership of additional shares if, at the expiration date, this clearance or approval has not been obtained. We are not undertaking to advise you of any such required clearance or approval, nor to pay any expenses incurred in seeking such clearance or approval.

      We are not offering or selling, or soliciting any purchase of, shares in any state or other jurisdiction in which this offering is not permitted. We reserve the right to delay the commencement of this offering in certain states or other jurisdictions if necessary to comply with local laws. We may elect not to offer shares to residents of any state or other jurisdiction whose laws would require a change in this offering in order to carry out this offering in such state or jurisdiction.

Procedure to Exercise Rights

      Rights holders may exercise their rights by delivering to the subscription agent, at one of the addresses specified below, at or prior to 5:00 p.m., New York City time, on the expiration date, the properly completed and executed subscription certificate or certificates evidencing those rights, with any signatures guaranteed as required, together with payment in full of the subscription price for each share of common stock being purchased. Except as provided below, a right will not be deemed exercised until the subscription agent receives both payment of the subscription price and a duly executed subscription certificate at or prior to 5:00 p.m., New York City time, on the expiration date.

      Payment may be made only by check or bank draft drawn upon a U.S. bank, or postal, telegraphic or express money order, payable to “Mellon Investor Services LLC.”

      The subscription price will be deemed to have been received by the subscription agent only upon:

•  clearance of any uncertified check or

•  receipt by the subscription agent of any certified check or bank draft drawn upon a U.S. bank or any postal, telegraphic or express money order.

      Uncertified personal checks used to pay the subscription price must be received by the subscription agent at least five business days before the expiration date to allow sufficient time for the check to clear. Rights holders who wish to pay the subscription price by means of uncertified personal check are urged to consider, in the alternative, payment by means of certified check, bank draft or money order.

      All funds received in payment of the subscription price shall be held by the subscription agent.

      The subscription certificates and payment of the subscription price must be delivered by mail, overnight courier or hand to the subscription agent at one of the following addresses:

By Mail:	By Overnight Courier:	By Hand:
Milacron Inc.	Milacron Inc.	Milacron Inc.
c/o Mellon Investor Services LLC	c/o Mellon Investor Services LLC	c/o Mellon Investor Services LLC
Attn: Reorganization Dept.	Attn: Reorganization Dept.	Attn: Reorganization Dept.
P.O. Box 3301	85 Challenger Road	120 Broadway, 13th Floor
South Hackensack, NJ 07606	Mail Drop-Reorg	New York, NY 10271
	Ridgefield Park, NJ 07660

      Delivery to an address or by a method other than those set forth above does not constitute valid delivery.

      We will pay the fees and expenses of the subscription agent and have also agreed to indemnify the subscription agent from certain liabilities which it may incur in connection with the offering.

      If an exercising rights holder does not indicate the number of rights being exercised, or does not forward full payment of the aggregate subscription price for the number of rights that the rights holder indicates are being exercised, then the rights holder will be deemed to have exercised its rights with respect to the maximum number of rights that may be exercised for the aggregate payment delivered by the rights holder. If the aggregate payment delivered by the rights holder exceeds the product of the subscription price multiplied by the number of rights evidenced by the subscription certificate or certificates delivered by the rights holder,

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any amount remaining after application of the foregoing procedures shall be returned to the rights holder promptly by mail without interest or deduction.

      If you are a participant in our 401(k) plan, all subscription payments received by the subscription agent from the trustee on your behalf and not applied to the purchase of shares of our common stock will be returned to your Putnam Money Market Fund account established under the 401(k) plan, without interest or deduction, where the funds will remain subject to your further investment directions in accordance with the terms of the 401(k) plan.

      As soon as practicable after the completion of the offering, shares of common stock subscribed for and issued pursuant to exercise of the rights will be delivered to subscribers. Such shares will be issued in the same form, certificated or book-entry, as the shares of common stock held by the subscriber exercising rights for such shares.

      Unless a subscription certificate either provides that the shares to be issued pursuant to the exercise of the rights represented thereby are to be issued to the holder of such rights or is submitted for the account of an eligible institution, signatures on each subscription certificate must be guaranteed by an eligible institution.

      Persons who hold shares of common stock for the account of others, such as brokers, dealers, trustees, depositories for securities, custodian banks or other nominees should contact the respective beneficial owners of such shares as soon as possible to ascertain these beneficial owners’ intentions and to obtain instructions with respect to their rights. If a beneficial owner so instructs, the record date holder of that beneficial owners’ rights should complete appropriate subscription certificates and submit them to the subscription agent with the proper payment. In addition, beneficial owners of rights through such a nominee holder should contact the nominee holder and request the nominee holder to effect transactions in accordance with the beneficial owners’ instructions. If a beneficial owner wishes to obtain a separate subscription certificate, the beneficial owner should contact the nominee as soon as possible and request that a separate subscription certificate be issued. A nominee may request any subscription certificate held by the nominee to be split into such smaller denominations as the nominee wishes, provided that the subscription certificate is received by the subscription agent, properly endorsed, at or prior to 5:00 p.m., New York City time, on the expiration date.

      The instructions accompanying the subscription certificates should be read carefully and followed in detail. Subscription certificates should be sent with payment to the subscription agent.

      The method of delivery of subscription certificates and payment of the subscription price to the subscription agent will be at your election and risk. If subscription certificates and payments are sent by mail, you are urged to send such materials by registered mail, properly insured, with return receipt requested, and you are urged to allow a sufficient number of days to ensure delivery to the subscription agent and clearance of payment at or prior to 5:00 p.m., New York City time, on the expiration date. Because uncertified checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified check, bank draft or money order.

      All questions concerning the timeliness, validity, and eligibility of any exercise of rights will be determined by us, and our determination will be final and binding. We may, in our sole discretion, waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right. Subscription certificates will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine, in our sole discretion. Neither we nor the subscription agent will be under any duty to give notification of any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failure to give such notification. We reserve the right to reject any exercise if such exercise is not in accordance with the terms of the offering or not in proper form or if the acceptance thereof or the issuance of the common stock pursuant thereto could be deemed unlawful.

Special Instructions for Participants in Our 401(k) Plan

      Our common stock is one of the investments available under our 401(k) plan. Subscription rights will be allocated to 401(k) plan participants for whose account the 401(k) plan holds shares of common stock as of

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5:00 p.m., New York City time, on the record date in proportion to the number of such shares held on their behalf under the 401(k) plan as of that date. Those participants will have the ability to direct the trustee of the 401(k) plan to exercise some or all of the rights allocable to them.

      If shares of our common stock are held by our 401(k) plan for your account under our 401(k) plan as of 5:00 p.m., New York City time, on the record date, you will be notified by us of the rights offering and the number of rights that have been allocated to your account under our 401(k) plan. If you wish to exercise your rights, in whole or in part, you will need to notify the trustee of the 401(k) plan of your decision and the trustee will act for you. To indicate your decision, you should complete and return to the trustee the form entitled “401(k) Plan Participant Election Form.” You should receive this form with the other rights offering materials. If you do not receive this form, you should contact the information agent if you believe you are entitled to participate in the rights offering with respect to shares you hold under the 401(k) plan.

      The trustee must receive your completed 401(k) Plan Participant Election Form at least five business days before the expiration date, so that the trustee can exercise the subscription rights on your behalf prior to the expiration date.

      If you elect to exercise some or all of your rights, you must ensure that the total amount of the funds required for such exercise has been allocated to an account created by you, or that you currently maintain, in the Putnam Money Market Fund (an existing investment election under the 401(k) plan) five business days before the expiration date. The trustee, to exercise rights on your behalf in the rights offering, will transfer funds from your Putnam Money Market Fund account one business day before the expiration date. DO NOT SEND YOUR SUBSCRIPTION PRICE PAYMENT TO US, THE SUBSCRIPTION AGENT OR THE INFORMATION AGENT. To the extent you do not already have sufficient funds invested in a Putnam Money Market Fund account to exercise your rights, you will need to liquidate a portion of your investments in one or more of your other investment funds under the 401(k) plan and transfer such funds into your existing or newly created Putnam Money Market Fund account at least five business days before the expiration date, in an amount sufficient to exercise your rights in accordance with your election. If the amount that you have invested in your Putnam Money Market Fund account five business days before the expiration date is insufficient to exercise all of your subscription rights in accordance with your election, the subscription rights will be exercised to the maximum extent possible with the amount you have invested in the Putnam Money Market Fund account.

      Any shares of our common stock purchased upon exercise of the rights you hold under the 401(k) plan will be allocated to the Company Stock Fund established under the 401(k) plan (which is the fund that holds newly-acquired shares of our common stock), where they will remain subject to your further investment directions in accordance with the terms of the 401(k) plan.

      Once you send to the trustee the form entitled “401(k) Plan Participant Election Form,” you may not revoke your exercise instructions. If you elect to exercise your rights, you should be aware that the market value of our common stock may go up or down during the period after you submit your 401(k) Plan Participant Election Form to the trustee and before the time that common stock is purchased pursuant to the rights and allocated to your account under the 401(k) plan. See “Risk Factors — Once you exercise your rights, you may not revoke your exercise.”

      If you terminate employment and request a distribution from the 401(k) plan effective before the expiration of the rights offering, you will forfeit any rights allocated to your account.

      Neither we, the subscription agent, the information agent nor the 401(k) plan trustee has any obligation to notify you of any defect or irregularity in connection with your submission of the 401(k) Plan Participant Election Form, and we will not be liable for failure to notify you of any defect or irregularity with respect to the completion of such form. We reserve the right to reject your exercise of rights if your exercise is not in accordance with the terms of the rights offering or in proper form. We will also not accept the exercise of your subscription rights if the issuance of shares of our common stock to you could be deemed unlawful under applicable law.

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      The 401(k) Plan Participant Election Form must be delivered to Putnam Fiduciary Trust Company, the trustee of the 401(k) plan, care of Innisfree M&A Incorporated, the information agent, at the address set forth below:

By Mail, Hand Delivery or Overnight Courier:

Putnam Fiduciary Trust Company

c/o Innisfree M&A Incorporated

Re: Milacron Rights Offering

501 Madison Avenue, 20th Floor

New York, NY 10022

      Delivery to an address or by a method other than those set forth above does not constitute valid delivery.

Information Agent

      Innisfree M&A Incorporated will act as our information agent to respond to any questions you may have regarding the mechanics of exercising your subscription rights for this offering. All questions or requests for assistance concerning the method of exercising rights or requests for additional copies of this prospectus or the ancillary documents should be directed to the information agent at the address and telephone numbers set forth below:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

      If you are a shareholder in the U.S. or Canada, you should call 1-877-825-8631 (toll-free). If you are a shareholder outside the U.S. and Canada, you should call 1-646-822-7426. Banks and brokers should call 1-212-750-5833 collect.

      We will pay the fees and expenses of the information agent.

No Revocation

      Once you send in your subscription certificate and payment (or, in the case of a 401(k) plan participant, once you send to the trustee the form entitled “401(k) Plan Participant Election Form”), you cannot revoke the exercise of your rights.

Transferability of Rights

      The rights are not transferable and may be exercised only by the persons to whom they are issued. Any attempt to transfer rights will render them null and void.

Procedures for DTC Participants

      It is anticipated that the rights will be eligible for transfer through, and that the exercise of the rights may be effected through, the facilities of The Depository Trust Company (sometimes referred to by its initials, DTC).

      Rights which a rights holder exercises through DTC are referred to as DTC rights. In the case of rights that are held of record through DTC, exercises of the rights may be effected by instructing DTC to transfer DTC rights from the DTC account of a rights holder to the DTC account of the subscription agent, together with payment of the subscription price for each share of common stock subscribed for.

Determination of Subscription Price

      We chose the $2.00 per share subscription price for rights offering subscribers because this is equal to the initial conversion price of the Series B Preferred Stock. Our Board wanted our existing common shareholders to have the opportunity to purchase shares at a price per share equal to the initial conversion price of the

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Series B Preferred Stock. In considering and approving the rights offering and the subscription price, our Board considered a number of factors, including:

•  the anti-dilutive effect on our existing shareholders, relative ownership of conducting a rights offering and redeeming up to 30% of the Series B Preferred Stock initially issued;

•  the opportunity the rights offering presents to existing shareholders to invest in our common stock at the same price per share as the initial conversion price of the Series B Preferred Stock; and

•  the availability and relative benefits of other capital markets or strategic transactions.

      There can be no assurance that the market price of our common stock will not decline to less than $2.00 per share during or after the subscription period. Similarly, there can be no assurance that a subscribing rights holder will be able to sell shares of common stock purchased in the offering at a per share price equal to or greater than the subscription price.

Shareholders Outside the United States and Canada and Certain Other Shareholders

      Subscription certificates will not be mailed to record date holders whose addresses are outside the United States and Canada or who have an APO or FPO address, but will be held by the subscription agent for such record date holders’ account. To exercise their rights, such persons must request from the subscription agent a subscription certificate sufficiently in time for the completed certificate to be received by the subscription agent at or prior to 5:00 p.m., New York City time, on the expiration date. Such holders’ rights expire at the expiration date.

Effect of Rights Offering on Outstanding Convertible Securities

      The rights offering will not affect the conversion price of our outstanding convertible securities.

Effect of Rights Offering on Stock Options and Other Awards Outstanding under Our Employee Benefits Plans

      The rights offering will not result in any substitutions or adjustments to any stock options, shares of restricted stock, performance grants or deferred shares outstanding under any of our long-term incentive plans.

Outstanding Stock

      As of June 18, 2004, there were 35,659,859 shares of common stock outstanding, the holders of all of which are being offered rights as described in this prospectus. Holders of convertible preferred stock and options to purchase shares of common stock are not being granted rights to purchase common stock. Based on the number of shares outstanding as of June 18, 2004, and assuming full subscription of the rights offering, a total of 16,118,257 additional shares of common stock will be issued, and there will be 51,778,116 shares of common stock outstanding after the rights offering (without giving effect to any rounding up of fractional rights).

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PLAN OF DISTRIBUTION

      We intend to grant rights and distribute copies of this prospectus to those persons who were holders of common stock (other than any common stock issued upon conversion of Series B Preferred Stock) as of 5:00 p.m., New York City time, on                     , 2004 (the record date) promptly following the effective date of the registration statement of which this prospectus forms a part.

      We will pay the fees and expenses of Mellon Bank, N.A., the subscription agent, which are estimated to be approximately $          . We will also pay the fees and expenses of Innisfree M&A Incorporated, the information agent, which are estimated to be approximately $          . We estimate that our total expenses in connection with the rights offering, including fees and expenses of the subscription agent and information agent, will be $                    .

      Certain of our employees, officers or directors may solicit responses from you to the rights offering, but such individuals will not receive any commissions or compensation for such services other than their normal employment compensation.

      We have not engaged any financial advisor for solicitation of the exercise of rights or to provide advice to our Board regarding terms, structure or timing of the rights offering. We have not agreed to enter into any standby or other arrangements to purchase any rights or any shares of common stock. In addition, we have not entered into any agreements regarding stabilization activities with respect to our securities.

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DESCRIPTION OF CAPITAL STOCK

General

      Milacron Inc. has 175,060,000 authorized shares of capital stock, consisting of (1) 60,000 shares of 4% Cumulative Preferred Stock (the “4% Preferred Stock”), par value $100 per share, (2) 10,000,000 shares of Serial Preference Stock (the “Serial Preference Stock”), par value $0.01 per share and (3) 165,000,000 shares of common stock, par value $0.01 per share. As of June 18, 2004, there were 60,000 shares of 4% Preferred Stock outstanding, 35,659,859 shares of common stock outstanding and 500,000 shares of Serial Preference Stock designated as 6.0% Series B Convertible Preferred Stock outstanding.

      The following is a summary of certain provisions of Delaware law, our Restated Certificate of Incorporation as of June 9, 2004 (“Certificate of Incorporation”), our By-laws as amended and restated on April 23, 2004 (“By-laws”) and the shareholders’ rights agreement described below. This summary does not purport to be complete and is qualified in its entirety by reference to the corporate law of Delaware, our Certificate of Incorporation and By-laws and the shareholders’ rights agreement.

      Our Certificate of Incorporation, By-laws and shareholders’ rights agreement contain provisions that could have the effect of discouraging transactions that might lead to a change of control of our company.

Common Stock

      A holder of common stock is entitled to exercise one vote for each share held of record on all matters submitted to a vote of the shareholders. Subject to certain limitations in our Certificate of Incorporation and to the preference that may be applicable to any outstanding 4% Preferred Stock and Serial Preference Stock, the holders of common stock will be entitled to receive ratably such dividends as may be declared by the Board out of funds legally available therefor. See “Price Range of Common Stock and Dividend Policy” above. In the event of a liquidation, dissolution or winding up of Milacron Inc., holders of the common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any outstanding 4% Preferred Stock and Serial Preference Stock. Holders of common stock have no preemptive rights and no right to convert their common stock into any other securities. The outstanding shares of common stock are fully paid and non-assessable.

4% Preferred Stock

      Except as otherwise required by law or our Certificate of Incorporation, the holders of our 4% Preferred Stock vote together with the holders of shares of the common stock and the holders of Series B Preferred Stock as a single class, with holders of shares of 4% Preferred Stock having 24 votes per share. Holders of our 4% Preferred Stock are entitled to receive quarterly dividends in cash out of the net assets legally available for the payment of dividends, at a rate of $4 per annum on the $100 par value thereof, and no more. These dividends are cumulative, and they shall be paid prior to the purchase or redemption by us of any 4% Preferred Stock, any Serial Preferred Stock or any common stock. They shall also be paid prior to any distribution in respect of the common stock or the Serial Preference Stock. In addition, dividends or distributions on our common stock or any Serial Preference Stock (other than the Series B Preferred Stock) may not be made unless our “consolidated net current assets,” as defined in our certificate of incorporation, and our “consolidated net tangible assets,” as defined in our certificate of incorporation, exceed certain amounts per share of 4% Preferred Stock. In the event of any liquidation, dissolution or winding up of Milacron Inc., the holders of the 4% Preferred Stock are entitled to receive out of the assets available for distribution to its shareholders an amount equal to $105 per share if the action is voluntary and $100 per share if it is not voluntary, in each case in addition to an amount equal to all accrued dividends in arrears at the date of the distribution, before any distributions of assets shall be made to the holders of Serial Preference Stock or common stock. The holders of the Serial Preference Stock and the common stock shall be entitled to share in any assets then remaining to the exclusion of the holders of 4% Preferred Stock.

      The 4% Preferred Stock may be redeemed by us at our election, by resolution of our Board, upon not less than 30 nor more than 60 days’ notice, for a redemption price of $105 per share plus all accrued and unpaid dividends to the date of redemption. At meetings of shareholders of Milacron Inc., each shareholder of 4%

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Preferred Stock is entitled to 24 votes for each share of 4% Preferred Stock held by that shareholder; except that, in the event that a default in dividends on the 4% Preferred Stock shall be deemed to have occurred, the holders of the 4% Preferred Stock, voting separately as a class, shall have the right at each shareholders’ meeting thereafter at which 35% of the 4% Preferred Stock is represented to elect one-third of the members of the Board to be elected at such meeting. A default in preferred dividends shall be deemed to have occurred if at any time dividends accrued or in arrears upon 4% Preferred Stock shall amount to $4 per share or more.

      A two-thirds vote of the holders of 4% Preferred Stock is required to amend, alter or repeal the terms of the 4% Preferred Stock in any material respect; to increase the authorized amount of 4% Preferred Stock or authorize a new class of stock having preference over or being in parity with the 4% Preferred Stock as to dividends or assets, to create any obligation or security of Milacron Inc. which is convertible into shares of any class having parity with, or a preference over, the 4% Preferred Stock as to dividend and assets; or to sell or transfer all or substantially all of the assets of Milacron Inc. or merge or consolidate Milacron Inc. with any corporation other than a wholly-owned subsidiary of Milacron Inc.

Series B Preferred Stock

      We have issued 500,000 shares of Serial Preference Stock designated as 6.0% Series B Convertible Preferred Stock with a liquidation preference of $200 per share. The holders of shares of Series B Preferred Stock are entitled to receive quarterly cumulative cash dividends out of our assets legally available therefor, at a rate per annum of $12.00 per share. If we are prohibited on any dividend payment date by the terms of our financing agreements or our Certificate of Incorporation from paying dividends in cash, we may elect to pay dividends out of our assets legally available therefor 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 to be so issued to holders of Series B Preferred Stock is the number obtained by dividing (a) the total dollar amount of cumulative dividends due and payable on the applicable dividend payment date by (b) $200. Dividends on the Series B Preferred Stock shall be paid prior to any dividend or distribution in respect of common stock or any other Serial Preference Stock that is not designated as senior to or on parity with the Series B Preferred Stock.

      A holder of shares of Series B Preferred Stock may convert such shares at any time, unless previously redeemed, for shares of common stock. For the purposes of the conversion, each share of Series B Preferred Stock is valued at an amount equal to $200, which amount will be divided by the conversion price (initially $2.00) in effect on the date of exchange to determine the number of shares of common stock issuable upon conversion. The conversion price is subject to adjustment upon the occurrence of certain events, including a reclassification or a subdivision of the common stock; the issuance of common stock as a dividend or distribution on any class of our capital stock; the issuance of rights, options or warrants to all of the holders of common stock (other than pursuant to this 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 of common stock on the date fixed for the determination of shareholders entitled to receive such rights, options or warrants; and distributions, by dividend or otherwise, to all of the holders of common stock of evidences of our indebtedness, shares of any class of capital stock, cash or assets. In addition, the initial conversion price of $2.00 is subject to a one-time adjustment to $1.75 effective on June 30, 2005 if our Consolidated Cash Flow (as defined in the certificate of designation for the Series B Preferred Stock) for the fiscal year ending December 31, 2004 is less than $50 million.

      Each share of Series B Preferred Stock not previously converted will automatically be converted for shares of common stock on June 10, 2011, or if the Board determines that there are not assets legally available for the payment of dividends in respect of all accrued and unpaid dividends on the Series B Preferred Stock on such date or that payment of such dividends would not be permitted under our Certificate of Incorporation, then the Board may defer the date of mandatory conversion to a later date. For the purposes of such conversion, each share of Series B Preferred Stock shall be valued at an amount equal to $200, which amount shall be divided by the conversion price in effect on the date of mandatory conversion to determine the number of shares of common stock issuable upon conversion of such share of Series B Preferred Stock. On the date of mandatory conversion the holders of shares of Series B Preferred Stock will be entitled to receive, in addition to the number of shares of common stock determined pursuant to the foregoing sentence, an amount equal to

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accrued and unpaid dividends, if any, on such shares, payable in cash, except that, if we are prohibited on the mandatory conversion date by the terms of our financing agreements or our Certificate of Incorporation from paying dividends in cash, we may pay such accrued and unpaid dividends with shares of common stock.

      During any 365-day period beginning on June 10, 2008 and each June 10 thereafter, a number of shares of Series B Preferred Stock 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 converted at the option of holders during the portion of such period elapsing prior to the applicable record date) may be redeemed for cash at our option at a premium above the liquidation preference. The premium above the liquidation preference will initially be set at 12% and will decline by 2% on each of June 10, 2009 and June 10, 2010.

      Up to 150,000 shares of the Series B Preferred Stock may be redeemed for cash, with the proceeds of this rights offering, at our option, on or before March 7, 2005, 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.

      Upon the occurrence of a “Change of Control,” each holder of Series B Preferred Stock shall have the option to require us to redeem all, or any portion, of such holder’s shares of Series B Preferred Stock at a premium above the liquidation preference, together with an amount equal to accumulated and unpaid dividends, if any, to the special redemption date. The premium above the liquidation preference has initially been set at 20% and will decline by 2% each year on June 10, from June 10, 2005 to June 10, 2010.

      “Change of Control” for this purpose means the occurrence of either of the following events:

      (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than one or both of Glencore or Mizuho, is or becomes the “beneficial owner” (as such term is defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the total voting power of the outstanding voting stock of Milacron Inc.; or

      (ii) the merger or consolidation of Milacron Inc. with or into another person, or the sale of all or substantially all the assets of Milacron Inc. (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 Milacron Inc. or (b) in the case of a merger or consolidation transaction, a transaction following which holders of the outstanding voting stock of Milacron Inc. 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.

      We shall not be required to redeem any shares of Series B Preferred Stock if we do not have funds legally available for such purpose or if redemption is not permitted by our Certificate of Incorporation.

      Except as otherwise required by law or by our Certificate of Incorporation or expressly provided for in the Series B Preferred Stock Certificate of Designation, the holders of record of shares of the Series B Preferred Stock have full voting rights and powers, and are entitled to vote on all matters put to a vote or consent of our shareholders, voting together with the holders of the common stock and the 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 as of the record date for the vote or consent which is being taken.

      The holders of record of shares of the Series B Preferred Stock 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 NYSE 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

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rules of the NYSE. 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 our option to redeem shares of the Series B Preferred Stock. Any directors selected to be nominated or appointed to the Board by the holders of Series A Notes (and/or any common stock into which Series A Notes have been converted) will be deemed to be Series B Directors elected by the holders of Series B Preferred Stock pursuant to the terms of the Series B Preferred Stock and shall reduce the number of directors that holders of shares of Series B Preferred Stock would otherwise have the right to elect. Notwithstanding the foregoing, one officer or employee of each of Glencore and Mizuho will be exempted from the requirement that Series B Directors be “independent” under the rules of the NYSE.

      If an event of default exists with respect to our 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, 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, 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.

      At each meeting called for the purpose of electing directors, the holders of Series B Preferred Stock, subject to the next sentence, 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; provided, that if the number of directors which the holders of Series B Preferred Stock are so entitled to elect 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, 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 description of voting rights, the holders of Series B Preferred Stock shall not have the right to elect any directors which the holders of the Preferred Stock, voting separately as a class, have a right to elect under Section A(VI) of Article FOURTH of the Certificate of Incorporation.

      We shall not, without either (i) the affirmative vote of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding (with shares held by us or any of our affiliates (other than Mizuho or Glencore) not being considered to be outstanding for this purpose) voting as one class or (ii) the consent of the holders of all shares of Series B Preferred Stock then outstanding (with shares held by us or any of our affiliates (other than Mizuho or Glencore) not being considered to be outstanding for this purpose) authorize or create (by way of reclassification or otherwise) any Parity Securities (as defined in the Series B Preferred Stock Certificate of Designation) or Senior Securities (as defined in the Series B Preferred Stock Certificate of Designation); amend, waive or otherwise alter any provision of the Series B Preferred Stock Certificate of Designation (including the voting provisions) in a manner materially adverse to the interests of the holders of Series B Preferred Stock; or amend or otherwise alter the By-laws of Milacron Inc. or the Certificate of Incorporation in a manner materially adverse to the interests of the holders of the Series B Preferred Stock.

      We shall not, without either (i) the affirmative vote of holders of at least a majority of the shares of Series B Preferred Stock 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 all of the shares of Series B Preferred Stock held by holders of Series B Preferred Stock who own at least 50,000 shares of Series B Preferred Stock issue any equity interests, subject to certain exemptions; declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment (as defined in the Series B Preferred Stock Certificate of Designation), subject to certain exemptions, including exemptions for (i) the redemption of all, or any portion, of the 4% Preferred Stock, (ii) the declaration and payment of dividends on the 4% Preferred Stock and (iii) dividends on common stock not to exceed $5,000,000 in any fiscal year; create, incur or assume any Indebtedness (as defined in the Series B Preferred Stock Certificate of Designation), other than certain exemptions; 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 4% Preferred Stock; or 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 our assets, other than any transaction involving $50,000,000 or less in value.

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      Pursuant to the Registration Rights Agreement dated as of March 12, 2004 among Milacron Inc., Glencore Finance AG and Mizuho International plc, as amended, holders of the Series B Preferred Stock will have the right, at any time after March 7, 2005, to request that we effect a registration of the Series B Preferred Stock and the common stock issued on conversion of such Series B Preferred Stock. In addition, subject to certain limitations, the holders of Series B Preferred Stock and common stock issued on conversion of Series B Preferred Stock will also have the right to include their shares of Series B Preferred Stock and common stock issued upon conversion of the Series B Preferred Stock in the securities covered by registration statements filed by us relating to public offerings of securities for cash.

Warrants

      On June 10, 2004, we issued contingent warrants to Glencore and Mizuho exercisable to purchase an aggregate of one million shares of common stock at an exercise price of $0.01 per share of common stock if, but only if, our Consolidated Cash Flow (as defined in the contingent warrant agreement) for 2005 is less than $60 million. If our Consolidated Cash Flow for 2005 is less than $60 million, the contingent warrants will be exercisable until March 25, 2011. If our Consolidated Cash Flow for 2005 is $60 million or more, the contingent warrants shall immediately terminate and shall not be exercisable.

Voting Power

      The following chart sets forth the percentage of voting power of (a) the holders of our common stock, (b) the holders of our Series B Preferred Stock and (c) the holders of our 4% Preferred Stock, giving effect solely to the rights offering, the reset of the conversion price of the Series B Preferred Stock, the exercise of the contingent warrants and payment of pay-in-kind dividends on the Series B Preferred Stock through to its mandatory conversion date (and without giving effect to any other transactions that we may enter into during the applicable periods that would result in additional dilution).

													On Series B Preferred
													Stock mandatory
													conversion date
													(June 10, 2011)
				Following									assuming payment of
				Rights Offering			Following Reset of						cumulative pay-in-
				and Redemption			Conversion Price of			Following			kind dividends on
	As of			of Series B			Series B Preferred			Exercise of			Series B Preferred
	June 18,			Preferred			Stock to			Contingent			Stock until such
	2004			Stock(c)(d)			$1.75(c)(e)			Warrants(c)(f)			date(g)
Holders of Common Stock(a)		40.9	%		58.7	%		55.6	%		55.0	%		41.8	%
Holders of Series B Preferred Stock		57.4	%		39.7	%		42.9	%		43.5	%		57.0	%
Holders of 4% Preferred Stock(b)		1.7	%		1.6	%		1.5	%		1.5	%		1.2	%

(a)  Each holder of common stock is entitled to one vote for each such share of common stock held. In this chart the voting power of common stock issued upon exercise of contingent warrants is attributed to holders of Series B Preferred Stock.

(b)  Each holder of 4% Preferred Stock is entitled to 24 votes for each such share of 4% Preferred Stock held.

(c)  Assumes no pay-in-kind dividends on the Series B Preferred Stock have been paid.

(d)  Assumes full subscription of the rights offering based on the 35,659,859 shares of our common stock outstanding as of June 18, 2004 and redemption of 150,000 shares of Series B Preferred Stock with the proceeds from the rights offering.

(e)  The initial $2.00 per share conversion price of the Series B Preferred Stock is subject to a reset of $1.75 per share at the end of the second quarter of 2005 if a test contained in the Series B Preferred Stock based on our financial performance for 2004 is not satisfied.

(f)  Assumes that all contingent warrants and common stock issued upon exercise thereof continue to be held by holders of Series B Preferred Stock. The voting power of common stock issued upon exercise of the contingent warrants is attributed to holders of Series B Preferred Stock. The contingent warrants will be exercisable only if a test contained in the contingent warrants based on our financial performance for 2005 is not satisfied.

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(g)  Assumes rights offering and redemption of Series B Preferred Stock occurred before September 1, 2004, reset of the Series B Preferred Stock conversion price to $1.75, exercise of the contingent warrants and that all contingent warrants and common stock issued upon exercise thereof continue to be held by holders of Series B Preferred Stock.

Rights Agreement

      In February 1999, our Board adopted a rights agreement. Under this agreement, one stock purchase right was distributed in February 1999 with respect to each outstanding share of our common stock. The rights agreement provides that, unless the rights have been redeemed, one right will be granted for each additional share of our common stock issued after February 5, 1999 and prior to the earlier of the time the rights become exercisable or expire on February 5, 2009 (the “Expiration Date”).

      The rights are not currently exercisable and trade in tandem with the common stock. The rights become exercisable and trade separately from the common stock upon the earlier of (i) such time as we learn that a person or group (including any affiliate or associate of such person or group) has acquired, or has obtained the right to acquire, beneficial ownership of more than 15% of the outstanding shares of common stock (such person or group being an “Acquiring Person”) and (ii) such date, if any, as may be designated by our Board following the commencement of, or first public disclosure of an intention to commence, a tender or exchange offer for outstanding shares of common stock which could result in such person or group becoming the beneficial owner of more than 15% of the outstanding shares of common stock (the earlier of such dates being called the “Distribution Date”). Upon their becoming exercisable, each right entitles the holder to purchase one one-thousandth (1/ 1000) of a share of Series A Participating Cumulative Preferred Stock at a price of $70 (the “Purchase Price”), subject to adjustment. Each one one-thousandth (1/ 1000) of a share of Series A Participating Cumulative Preferred Stock carries voting power equal to one share of common stock.

      The rights agreement provides that at such time as there is an Acquiring Person, proper provision shall be made so that the holder of each right will thereafter have the right to receive, upon exercise thereof, for the Purchase Price, that number of one one-thousandth (1/ 1000) of a share of Series A Participating Cumulative Preferred Stock equal to the number of shares of common stock which at the time of such transaction would have a market value of twice the Purchase Price. The rights agreement further provides that in the event Milacron Inc. is acquired in a merger or other business combination by an Acquiring Person that is a publicly traded corporation or 50% or more of our assets or assets representing 50% or more of our earning power are sold, leased, exchanged or otherwise transferred (in one or more transactions) to an Acquiring Person that is a publicly traded corporation, each right will entitle its holder to purchase, for the Purchase Price, that number of common shares of such corporation which at the time of the transaction would have a market value of twice the Purchase Price. In the event Milacron Inc. is acquired in a merger or other business combination by an Acquiring Person that is not a publicly traded entity or 50% or more of our assets or assets representing 50% or more of our earning power are sold, leased, exchanged or otherwise transferred (in one or more transactions) to an Acquiring Person that is not a publicly traded entity, each right will entitle its holder to purchase, for the Purchase Price, at such holder’s option, (i) that number of shares of the surviving corporation in the transaction with such entity (which surviving corporation could be Milacron Inc.) which at the time of the transaction would have a book value of twice the Purchase Price, (ii) that number of shares of such entity which at the time of the transaction would have a book value of twice the Purchase Price or (iii) if such entity has an affiliate which has publicly traded common shares, that number of common shares of such affiliate which at the time of the transaction would have a market value of twice the Purchase Price. Any rights that are at any time beneficially owned by an Acquiring Person (or any affiliate or associate of an Acquiring Person) will be null and void and nontransferable and any holder of any such right (including any purported transferee or subsequent holder) will be unable to exercise or transfer any such right. At any time prior to the earlier of (i) such time as there is an Acquiring Person and (ii) the Expiration Date, the Board of Milacron Inc. may redeem the rights at a redemption price of $.01 per right.

      On March 11, 2004, we amended our rights agreement to exempt the acquisition by Glencore and Mizuho of securities issued by us in connection with the March 12 Transactions from triggering the rights under the plan.

118

      The summary description of the rights set forth above does not purport to be complete and is qualified in its entirety by reference to the rights agreement dated as of February 5, 1999, between Milacron Inc. and ChaseMellon Shareholder Services, L.L.C., as rights agent, the first amendment to the rights agreement dated as of March 11, 2004, between Milacron Inc. and Mellon Investor Services LLC, as rights agent, and the second amendment to the rights agreement dated as of June 9, 2004, between Milacron Inc. and Mellon Investor Services LLC, as rights agent.

Other Provisions of Our Certificate of Incorporation and By-laws

      Our Certificate of Incorporation and By-laws:

•  establish a classified Board, which is divided into three classes with staggered three-year terms;

•  provide that any director may be removed by the holders of a majority of the votes entitled to be cast at an election of directors, but shareholders may effect such removal only for cause;

•  provide for all vacancies on the Board to be filled by the remaining directors, provided there is no default in the payment of dividends to holders of 4% Preferred Stock;

•  provide that, except for action which may be taken solely upon the vote or consent of holders of the 4% Preferred Stock, shareholder action by written consent is only available where signatures are obtained from all the shareholders of Milacron Inc. who would be entitled to notice of a meeting regarding such action;

•  require that shareholders provide advance notice of any shareholder nominations of directors or any proposal of new business to be considered at any meeting of shareholders;

•  do not allow the common stock shareholders, or any percent thereof, to call a special meeting; and

•  grant to the Board the authority to issue one or more series of Serial Preference Stock, and with respect to each such series to fix by resolution or resolutions providing for the issue of such series the powers, preferences or rights, or any qualifications, limitations or restrictions thereof.

Provisions of Delaware Law Governing Business Combinations

      We are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware regulating “business combinations” (generally defined to include a broad range of transactions) between Delaware corporations and “interested shareholders” (defined as persons who have acquired at least 15% of a corporation’s stock). Under Section 203, a corporation may not engage in any business combination with any interested shareholder for a period of three years after the date such person became an interested shareholder unless certain conditions are satisfied. Section 203 contains provisions enabling a corporation to avoid the statute’s restrictions. We have not sought to “elect out” of the statute and therefore the restrictions imposed by such statute will apply to us.

Liability and Indemnification of Directors and Officers

      The General Corporation Law of the State of Delaware permits Delaware corporations to limit or eliminate the monetary liability of directors for breach of fiduciary duty as a director subject to certain limitations. Our Certificate of Incorporation limits the liability of directors to the fullest extent permitted by Delaware law. In addition, the General Corporation Law of the State of Delaware provides for indemnification of directors and officers subject to certain limitations. Our By-laws provide for the indemnification of our directors and officers to the maximum extent permitted by Delaware law.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors or officers pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

119

SHARES ELIGIBLE FOR FUTURE SALE

      After completion of this rights offering, based on the number of shares outstanding on June 18, 2004 and assuming full subscription (without giving effect to any rounding up of fractional rights), we will have 51,778,116 shares of common stock outstanding. All of these shares are freely transferable without restriction under the Securities Act unless owned or purchased by our “affiliates” (as such term is used under the Securities Act and the regulations promulgated thereunder). We also have 500,000 shares of Series B Preferred Stock outstanding, which are initially convertible into an aggregate of 50,000,000 shares of common stock. We intend to redeem up to 150,000 shares of the outstanding Series B Preferred Stock with the proceeds of this rights offering, which would reduce the number of shares into which the outstanding Series B Preferred Stock would initially be convertible down to an aggregate of 35,000,000 shares. However, if the initial conversion price of the Series B Preferred Stock is reset from $2.00 per share to $1.75 per share based upon our failure to meet a financial performance test for 2004 and/ or we elect to pay dividends on the Series B Preferred Stock with additional shares of Series B Preferred Stock under certain circumstances, then the outstanding shares of Series B Preferred Stock would be convertible into a greater number of shares of our common stock. The holders of the Series B Preferred Stock also hold contingent warrants exercisable at $0.01 per share for an aggregate of 1,000,000 shares of our common stock if we fail to meet a financial performance test for 2005. The outstanding shares of Series B Preferred Stock were initially issued on June 10, 2004 with 350,000 shares being issued to Glencore and 150,000 shares being issued to Mizuho, both of whom are our affiliates. Shares of Series B Preferred Stock and the contingent warrants are deemed “restricted” securities within the meaning of Rule 144 of the Securities Act and may not be resold unless registered under the Securities Act or pursuant to an exemption from registration, including exemptions provided by Rule 144 under the Securities Act. Any shares of common stock issued upon conversion of such shares of Series B Preferred Stock or exercise of such contingent warrants would also be deemed “restricted” securities. The holders of the Series B Preferred Stock have certain rights to request, after March 7, 2005, that we register under the Securities Act sales of Series B Preferred Stock and any common stock issued upon conversion of such Series B Preferred Stock.

      We cannot predict the effect, if any, of future sales of shares of Series B Preferred Stock, contingent warrants and/or common stock issued upon conversion of Series B Preferred Stock or exercise of contingent warrants, or the availability of such shares for sale, on the market price for our common stock prevailing from time to time. Sales of Series B Preferred Stock, contingent warrants and/or common stock issued upon conversion of Series B Preferred Stock or exercise of contingent warrants in the public market, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.

Registration Rights

      Holders of the Series B Preferred Stock have the right, at any time after March 7, 2005, to request that we effect a registration under the Securities Act of their shares of Series B Preferred Stock and any common stock issued upon conversion of such Series B Preferred Stock. In addition, subject to certain limitations, the holders of Series B Preferred Stock and any common stock issued upon conversion of Series B Preferred Stock will also have the right to include such shares with the securities covered by registration statements filed by us relating to public offerings of securities for cash.

      See “Risk Factors — Risks Relating to Our Common Stock and Our Preferred Stock — Our share price may decline due to eligibility for future sale of shares of Series B Preferred Stock, contingent warrants and/or common stock issued upon conversion of Series B Preferred Stock or exercise of contingent warrants.”

120

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

      The following discussion is a summary of certain U.S. federal income tax consequences of the rights offering to holders of Milacron common stock that hold such stock as a capital asset for United States federal income tax purposes. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), regulations thereunder, rulings and decisions in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion applies only if you are a U.S. person as defined under the Code and does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances or to holders who may be subject to special tax treatment under the Code, including, without limitation, holders who are dealers in securities or foreign currency, foreign persons, insurance companies, tax-exempt organizations, banks, financial institutions, broker-dealers, holders who hold common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.

      Moreover, this summary does not address the tax consequences of the rights offering under state, local or foreign tax laws. ACCORDINGLY, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE RIGHTS OFFERING TO YOU.

Issuance of the Rights

      Milacron believes that the granting of rights to you pursuant to this rights offering should not be taxable to you, and Milacron will take this position for tax reporting purposes. However, the tax consequences to you of the rights offering are unclear, and it is possible the IRS would take the position that you would be subject to tax upon receipt of the rights, as discussed below.

      In general, a distribution by a corporation to its stockholders of rights to acquire more of its stock is not a taxable event. An exception to this general rule applies in the case of a “disproportionate distribution” with respect to any class or classes of stock of the corporation. A distribution of stock rights constitutes a “disproportionate distribution” if it is a part of a distribution or a series of distributions that has the effect of (1) the receipt of property (including cash) by some stockholders and (2) an increase in the proportionate interests of other stockholders in the assets or earnings and profits of the distributing corporation. In this case, no adjustment will be made to the conversion ratio of the Series B Preferred Stock to reflect the granting of the rights. Milacron will be distributing cash dividends to holders of the Series B Preferred Stock and common stockholders will be granted rights to increase their percentage ownership interests of Milacron common stock.

      Milacron’s position that the granting of rights should not be taxable is based on the following factors: (1) the purpose of the rights offering is not to increase the proportionate interests of the common stockholders, but rather to mitigate the reduction of your interests that would arise from the conversion of the Series B Preferred Stock into common stock, (2) the Series A Notes and Series B Notes, which were intended to be converted into Series B Preferred Stock, were issued as part of the same plan as the granting of rights and (3) it was only because of non-tax law reasons that the rights were not issued at the same time as the Series A Notes and the Series B Notes, and had Milacron been able to issue both at the same time, the granting of rights should be non-taxable.

      If the Internal Revenue Service were to treat the granting of rights as a taxable distribution, you would recognize a dividend, taxable as ordinary income, in an amount equal to the fair market value of the right granted, but only to the extent of Milacron’s current and accumulated earnings and profits, if any. To the extent the distribution exceeds such current and accumulated earnings and profits, any excess would be treated first as a nontaxable recovery of adjusted tax basis in your Milacron common stock with respect to which the right was distributed and then as gain from the sale or exchange of your Milacron common stock. Your tax basis in a right received in a taxable distribution would equal the fair market value of the right as of the date of distribution of the right. Your holding period in the right would begin on the day following the date of granting of the right. For purposes of these rules, you probably will be considered to have received your rights and to have exercised them on the first date on which Milacron no longer can terminate or withdraw the rights offering. Non-U.S. holders should consult their tax advisors as to any consequences to them.

121

      The following discussion assumes that the granting of the rights will be treated as a nontaxable distribution. You probably will be considered to have received your rights and to have exercised them on the first date on which Milacron no longer can terminate or withdraw the rights offering.

Basis and Holding Period of the Rights

      Generally, your basis in the rights granted to you will be zero. If, however, (1) the fair market value of the rights on the date they are issued is 15% or more of the fair market value (on that same date) of Milacron common stock, or (2) you properly elect under Section 307 of the Code in your federal income tax return to allocate part of the basis of your Milacron common stock to the rights, then, if you exercise your rights, your basis in your shares of Milacron common stock will be allocated between your Milacron common stock and the rights in proportion to the fair market values of each on the date the rights are issued. Milacron has not obtained an independent appraisal of the valuation of the rights and, therefore, you must determine how Code Section 307 will apply in your particular situation.

      The holding period of your rights will include your holding period (as of the date of issuance) of the Milacron common stock with respect to which the rights were granted to you.

Expiration of the Rights

      If you do not exercise your rights, you will not recognize any loss and your existing basis in your Milacron common stock will remain unchanged.

Exercise of the Rights, Basis and Holding Period of Acquired Shares

      You will not recognize any gain or loss upon the exercise of your rights. Your basis in each share of Milacron common stock you acquire through exercise of your rights will equal the sum of the price you paid to exercise your rights and your basis, if any, in the rights (determined as described above). Your holding period for the Milacron common stock you acquire through exercise of your rights will begin on the date you exercise your rights.

Sale or Exchange of Common Stock

      If you sell or exchange shares of Milacron common stock, you will generally recognize gain or loss on the transaction. The gain or loss you recognize will be equal to the difference between the amount you realize on the transaction and your basis in the shares you sell. Such gain or loss generally will be capital gain or loss so long as you held the shares as a capital asset at the time of the sale or exchange. Gain or loss from a capital asset held for more than one year will generally be taxable as long term capital gain or loss.

      THIS SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE CONSEQUENCES OF THE RIGHTS OFFERING TO YOUR PARTICULAR TAX SITUATION, INCLUDING FOREIGN, STATE AND LOCAL INCOME AND OTHER TAX LAWS.

122

LEGAL MATTERS

      Certain legal matters with respect to the securities offered hereby will be passed upon for us by Cravath, Swaine & Moore LLP, New York, New York.

INDEPENDENT AUDITORS

      The consolidated financial statements of the company for the years ended December 31, 2001, 2002 and 2003, included in this prospectus have been audited by Ernst & Young LLP independent auditors, as stated in their report appearing herein.

123

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Consolidated Condensed Financial Statements
Consolidated Condensed Statements of Operations for the Three Months Ended March 31, 2004 and March 31, 2003	F-2
Consolidated Condensed Balance Sheets as of March 31, 2004 and December 31, 2003	F-3
Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2004 and March 31, 2003	F-4
Notes to Consolidated Condensed Financial Statements	F-5
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-27
Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001	F-28
Consolidated Balance Sheets as of December 31, 2003 and 2002	F-29
Consolidated Statements of Comprehensive Income and Shareholders’ Equity (Deficit) for the years ended December 31, 2003, 2002 and 2001	F-30
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001	F-31
Notes to Consolidated Financial Statements	F-32
Supplementary Financial Information	F-77

F-1

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

			Three Months Ended
			March 31,
			2004			2003
			(In millions, except
			share and per-share
			amounts)
Sales			$	188.9		$	190.2
Cost of products sold				156.1			158.4
	Manufacturing margins			32.8			31.8
Other costs and expenses
	Selling and administrative			30.9			30.2
	Refinancing costs			6.4			—
	Restructuring costs			1.1			6.0
	Other expense — net			1.4			.7
		Total other costs and expenses		39.8			36.9
Operating loss				(7.0	)		(5.1	)
Interest
	Income			.4			.8
	Expense			(8.3	)		(6.0	)
		Interest — net		(7.9	)		(5.2	)
Loss from continuing operations before income taxes				(14.9	)		(10.3	)
Provision (benefit) for income taxes				1.1			(2.7	)
Loss from continuing operations				(16.0	)		(7.6	)
Discontinued operations net of income taxes				(.6	)		(.7	)
Net loss			$	(16.6	)	$	(8.3	)
Loss per common share — basic and diluted
	Continuing operations		$	(.47	)	$	(.23	)
	Discontinued operations			(.02	)		(.02	)
		Net loss	$	(.49	)	$	(.25	)
Dividends per common share			$	—		$	.01
Weighted-average common shares outstanding assuming dilution (in thousands)				33,880			33,567

See notes to consolidated condensed financial statements.

F-2

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

				Mar. 31,			Dec. 31,
				2004			2003
				(In millions, except
				par value)
ASSETS
Current assets
	Cash and cash equivalents			$	62.0		$	92.8
	Notes and accounts receivable, less allowances of $14.3 in 2004 and $15.1 in 2003				123.0			93.8
	Inventories
		Raw materials			7.6			8.1
		Work-in-process and finished parts			59.0			57.1
		Finished products			64.5			67.1
			Total inventories		131.1			132.3
	Other current assets				71.2			45.2
		Current assets of continuing operations			387.3			364.1
	Assets of discontinued operations				9.9			7.2
		Total current assets			397.2			371.3
Property, plant and equipment — net					135.3			140.8
Goodwill					83.3			83.8
Other noncurrent assets					109.0			115.6
Total assets				$	724.8		$	711.5
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Short-term borrowings			$	186.1		$	42.6
	Long-term debt and capital lease obligations due within one year				2.3			117.3
	Trade accounts payable				65.4			67.9
	Advance billings and deposits				16.6			15.2
	Accrued and other current liabilities				107.7			109.3
		Current liabilities of continuing operations			378.1			352.3
	Liabilities of discontinued operations				1.6			1.8
		Total current liabilities			379.7			354.1
Long-term accrued liabilities					228.8			227.8
Long-term debt					159.7			163.5
		Total liabilities			768.2			745.4
Commitments and contingencies					—			—
Shareholders’ equity (deficit)
	4% Cumulative Preferred shares				6.0			6.0
	Common shares, $1 par value (outstanding: 34.8 in 2004 and 2003)				34.8			34.8
	Capital in excess of par value				291.0			284.0
	Accumulated deficit				(268.6	)		(252.0	)
	Accumulated other comprehensive loss				(106.6	)		(106.7	)
Total shareholders’ equity (deficit)					(43.4	)		(33.9	)
Total liabilities and shareholders’ equity (deficit)				$	724.8		$	711.5

See notes to consolidated condensed financial statements.

F-3

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

					Three Months
					Ended March 31,
					2004			2003
					(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net loss			$	(16.6	)	$	(8.3	)
		Operating activities providing (using) cash
			Loss from discontinued operations			.6			.7
			Depreciation and amortization			5.3			5.7
			Refinancing costs			6.4			—
			Restructuring costs			1.1			6.0
			Deferred income taxes			.6			(2.3	)
			Working capital changes
				Notes and accounts receivable		(30.0	)		1.4
				Inventories		.1			(2.8	)
				Other current assets		(10.8	)		8.6
				Trade accounts payable		(2.1	)		.6
				Other current liabilities		(.1	)		(10.4	)
		Decrease in other noncurrent assets				1.2			.1
		Increase (decrease) in long-term accrued liabilities				1.2			(4.8	)
		Other — net				.9			.5
			Net cash used by operating activities			(42.2	)		(5.0	)
	Investing activities cash flows
		Capital expenditures				(1.5	)		(1.3	)
		Net disposal of property, plant and equipment				.3			.3
		Divestitures				—			(24.4	)
		Acquisitions				—			(6.5	)
			Net cash used by investing activities			(1.2	)		(31.9	)
	Financing activities cash flows
		Repayments of long-term debt				(115.4	)		(.5	)
		Increase (decrease) in short-term borrowings				140.4			(2.0	)
		Debt issuance costs				(8.3	)		—
		Dividends paid				—			(.4	)
			Net cash provided (used) by financing activities			16.7			(2.9	)
Effect of exchange rate fluctuations on cash and cash equivalents						(.6	)		3.5
Cash flows related to discontinued operations						(3.5	)		(3.7	)
Decrease in cash and cash equivalents						(30.8	)		(40.0	)
Cash and cash equivalents at beginning of period						92.8			122.3
Cash and cash equivalents at end of period					$	62.0		$	82.3

See notes to consolidated condensed financial statements.

F-4

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Basis of Presentation

      In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements contain all adjustments, including only normal recurring adjustments except for the matters discussed in the notes captioned “Discontinued Operations,” “Refinancing Costs” and “Restructuring Costs,” necessary to present fairly the company’s financial position, results of operations and cash flows.

      The Consolidated Condensed Balance Sheet at December 31, 2003 has been derived from the audited Consolidated Financial Statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

      The accounting policies followed by the company are set forth in the “Summary of Significant Accounting Policies” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Stock-Based Compensation

      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 prior 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 table that follows 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.” There have been no additional stock options granted in 2004.

Pro Forma Earnings (Loss)

		Three Months
		Ended March 31,
		2004			2003
		(In millions,
		except per-share
		amounts)
Net loss as reported		$	(16.6	)	$	(8.3	)
Effect on reported loss of accounting for stock options at fair value			(.2	)		(.3	)
Pro forma net loss		$	(16.8	)	$	(8.6	)
Loss per common share — basic and diluted
	As reported	$	(.49	)	$	(.25	)
	Pro forma	$	(.50	)	$	(.26	)

Discontinued Operations

      In the third quarter of 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 the Valenite and Widia and Werkö metalcutting tools businesses that had been included in its former metalworking technologies segment and initiated plans for the sale of the round metalcutting tools and grinding wheels businesses. The disposition of the round metalcutting tools businesses was completed in the third quarter of

F-5

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

2003 in two separate transactions that resulted in a combined after-tax loss of $6.9 million. The grinding wheels business was sold on April 30, 2004. The company had previously recorded an estimated loss of $4.2 million on the disposition of the grinding wheels business. The ultimate loss on the sale is not expected to vary materially from this amount.

      The round metalcutting tools and grinding wheels businesses are reported as discontinued operations and the Consolidated Condensed Financial Statements for all prior periods have been adjusted to reflect this presentation. Operating results for these businesses included in discontinued operations are presented in the following table.

Loss From Discontinued Operations

	Three Months
	Ended
	March 31,
	2004			2003
	(In millions)
Sales	$	7.1		$	16.6
Operating loss		(.5	)		(.7	)
Allocated interest expense		(.1	)		(.4	)
Loss before income taxes		(.6	)		(1.1	)
Benefit for income taxes		—			(.4	)
Loss from discontinued operations	$	(.6	)	$	(.7	)

      As reflected in the preceding table, allocated interest expense includes 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.

      The major classes of assets and liabilities of the discontinued grinding wheels business in the Consolidated Condensed Balance Sheets as of March 31, 2004 and December 31, 2003 are as follows:

Assets and Liabilities of Discontinued Operations

		Mar. 31,		Dec. 31,
		2004		2003
		(In millions)
Notes and accounts receivable		$	3.0	$	.4
Inventories			4.1		4.1
Other current assets			.2		.2
Property, plant and equipment — net			2.6		2.5
	Total assets		9.9		7.2
Trade accounts payable and other current liabilities			1.4		1.6
Long-term accrued liabilities			.2		.2
	Total liabilities		1.6		1.8
Net assets		$	8.3	$	5.4

F-6

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

Refinancing Costs

      During the first quarter of 2004, the company charged to expense $6.4 million of refinancing costs incurred in pursuing various alternatives to the March 12, 2004 refinancing of approximately $200 million in debt and other obligations (see Refinancing Transactions). The company’s refinancing costs for the second quarter will be at least $1 million or as much as $15 million if the tender offer for the 7 5/8% Eurobonds due 2005 (see Long-Term Debt) and the issuance of any new debt are completed during the quarter. The additional second quarter costs would include the premium related to the tender offer for the Eurobonds as well as the write-off of financing fees related to the credit facility entered into with Credit Suisse First Boston on March 12, 2004.

Restructuring Costs

      During 2001, the company’s management approved a plan to integrate the operations of EOC and Reform, two businesses that were acquired earlier in that year, with the company’s existing European mold base and components business. The total cost of the integration was $11.0 million, of which $.5 million was charged to expense in the first quarter of 2003.

      In November 2002, the company announced restructuring initiatives intended to improve operating efficiency and customer service. The first action involved the transfer of all manufacture 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 has also been moved to a smaller location near Manchester. In another 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 resulting in incremental restructuring costs of approximately $10.4 million, including $3.3 million in the first quarter of 2003. An additional $.9 million, principally to complete the move of the mold making operation, was expensed in the first quarter of 2004. The net cash cost of these initiatives will be approximately $5 million, the majority of which was spent in 2003, including $2.6 million in the first quarter. An additional $.8 million related to the mold operation move was spent in the first quarter of 2004.

      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, of which $2.2 million was recorded in the first quarter of that year. 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 will be approximately $.9 million, a large majority of which was spent in 2003 including $.2 million in the first quarter.

      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, have resulted in the elimination of approximately 300 positions worldwide. A total of $11.2 million was charged to expense in 2003 in connection with these initiatives and an additional $.7 million is expected to be expensed in 2004 including $.3 million in the first quarter. Cash costs are expected to be approximately $8 million, of which $3.4 million was spent in 2003. An additional $2.3 million was spent in the first quarter of 2004.

F-7

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

      The following table presents the components of the restructuring costs that are included in the Consolidated Condensed Statements of Operations for the first quarters of 2004 and 2003.

Restructuring Costs

		Three Months
		Ended
		March 31,
		2004			2003
		(In millions)
Accruals for termination benefits and facility exit costs		$	—		$	2.2
Other restructuring costs
	Costs charged to expense as incurred		1.2			3.3
	Reserve adjustments		(.1	)		—
			1.1			5.5
Costs related to the EOC and Reform integration			—			.5
Total restructuring costs		$	1.1		$	6.0

      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.

Restructuring Reserves

		Three Months Ended March 31, 2004
		Beginning				Usage and			Ending
		Balance		Additions		Other			Balance
		(In millions)
EOC and Reform integration
	Termination benefits	$	1.3	$	—	$	(.1	)	$	1.2
	Facility exit costs		.3		—		—			.3
			1.6		—		(.1	)		1.5
Restructuring costs
	Termination benefits		4.5		—		(2.0	)		2.5
	Facility exit costs		.4		—		(.3	)		.1
			4.9		—		(2.3	)		2.6
Total reserves related to continuing operations		$	6.5	$	—	$	(2.4	)	$	4.1

F-8

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

		Three Months Ended March 31, 2003
		Beginning				Usage and			Ending
		Balance		Additions		Other			Balance
		(In millions)
EOC and Reform integration
	Termination benefits	$	1.7	$	—	$	(.2	)	$	1.5
Restructuring costs
	Termination benefits		3.1		2.2		(2.1	)		3.2
	Facility exit costs		.6		—		(.3	)		.3
			3.7		2.2		(2.4	)		3.5
Total reserves related to continuing operations		$	5.4	$	2.2	$	(2.6	)	$	5.0

Retirement Benefit Plans

      The table that follows presents the components of pension expense and postretirement health care costs for the first quarters of 2004 and 2003.

Retirement Benefit Costs

							Postretirement
	Pension Expense						Health Care Cost
	Three Months						Three Months
	Ended March 31,						Ended March 31,
	2004			2003			2004			2003
	(In millions)
Service cost	$	1.2		$	1.3		$	—		$	—
Interest cost		8.3			8.6			.4			.4
Expected return on plan assets		(8.7	)		(9.7	)		(.1	)		(.1	)
Amortization of prior service cost		.2			.2			—			—
Amortization of unrecognized gains and losses		1.8			.8			—			—
Expense for the period	$	2.8		$	1.2		$	.3		$	.3

      The company expects to make contributions to the funded pension plan for certain U.S. employees of $3.1 million in 2004.

Income Taxes

      At December 31, 2003, the company 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

F-9

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

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 the ultimate expiration beyond 2023.

      The conversion of the Series A Notes into newly issued common stock and the exchange of such common stock and the Series B Notes for convertible preferred stock triggered an “ownership change” for U.S. federal income tax purposes (see Refinancing Transactions). As a consequence of this ownership change, the timing of the company’s utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

      Accounting principles generally accepted in the U.S. require that valuation allowances be established when it is more likely than not that all or a portion of recorded deferred tax assets will not be realized in the foreseeable future. The company reviews the need for new valuation allowances and the carrying amounts of previously recorded valuation allowances quarterly based on the relative amount of positive and negative evidence available at the time. Factors considered in these evaluations include management’s short-term and long-range operating plans, the current and future utilization of net operating loss carryforwards, the expected future reversal of recorded deferred tax liabilities and the availability of qualified tax planning strategies. Valuation allowances are then established or adjusted as appropriate. The resulting decreases or increases in valuation allowances serve to favorably or unfavorably affect the company’s provision for income taxes and effective tax rate.

      At March 31, 2003, management concluded that no valuation allowances were currently required with respect to the company’s U.S. deferred tax assets. This conclusion was based on the availability of qualified tax planning strategies and the expectation that increased industrial production and capital spending in the U.S. plastics industry combined with the significant reductions in the company’s cost structure that have been achieved in recent years would result in improved operating results in relation to the losses incurred in 2001 and 2002.

      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 (see Restructuring Costs), the company incurred 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 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, U.S. deferred tax assets increased 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. 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. The company continued 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.

      U.S. deferred tax assets and valuation allowances were both increased by an additional $6 million in the first quarter of 2004. As a result, no U.S. tax benefit was recorded with respect to the loss incurred for the quarter. The provision for income taxes for the quarter relates to operations in profitable non-U.S. jurisdictions.

F-10

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

      Management will continue to 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.

      Because of the factors discussed above, the company was unable to record tax benefits with respect to its losses in the U.S. and certain other jurisdictions in the first quarter of 2004. However, results for the quarter include tax expense related to operations in profitable non-U.S. jurisdictions. This resulted in a first quarter provision for income taxes of $1.1 million despite a pretax loss of $14.9 million. In the first quarter of 2003, the effective tax benefit rate was 26%. This effective rate is less than the U.S. federal statutory rate adjusted for state and local income losses due to the establishment of valuation allowances related to losses in certain non-U.S. jurisdictions.

Receivables

      During all of 2003 and through March 12, 2004, the company maintained a receivables purchase agreement with a third-party financial institution. Under this arrangement, the company 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 the company was at risk for credit losses for which the company maintained a reserve for doubtful accounts sufficient to cover estimated expenses. At December 31, 2003, approximately $33 million of accounts receivable related to continuing operations had been sold under this arrangement. This amount is reported as a reduction of accounts receivable in the Consolidated Condensed Balance Sheet at that date. On March 12, 2004, all amounts received under the receivables purchase agreement were repaid using a portion of the proceeds of the refinancing transactions entered into on that date (see Refinancing Transactions). The effect was to increase the use of cash from operating activities for the first quarter of 2004 by $33 million.

      Certain of the company’s non-U.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 March 31, 2004 and December 31, 2003, the gross amounts of accounts receivable that had been sold under these arrangements totaled $7.2 million and $3.8 million, respectively. At March 31, 2004 and December 31, 2003, certain of these amounts were partially collateralized with $6 million and $3 million, respectively, of cash deposits that are included in cash and cash equivalents in the Consolidated Condensed Balance Sheet.

      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 from its customers to third-party lenders. At March 31, 2004 and December 31, 2003, the company’s maximum exposure under these arrangements totaled $8.2 million and $11.6 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 to guarantees have not been material in the past.

Goodwill and Other Intangible Assets

      The carrying value of goodwill totaled $83.3 million and $83.8 million at March 31, 2004 and December 31, 2003, respectively. The company’s other intangible assets, which are included in other noncurrent assets in the Consolidated Condensed Balance Sheets, are not significant.

F-11

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

Other Assets

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

Other Current Assets

	Mar. 31,		Dec. 31,
	2004		2003
	(In millions)
Deferred income taxes	$	27.9	$	27.9
Deferred financing fees and related assets		23.2		—
Refundable income taxes		2.7		2.7
Other		17.4		14.6
	$	71.2	$	45.2

Other Noncurrent Assets

	Mar. 31,		Dec. 31,
	2004		2003
	(In millions)
Deferred income taxes net of valuation allowances	$	69.8	$	70.9
Intangible assets other than goodwill		6.1		6.5
Other		33.1		38.2
	$	109.0	$	115.6

Liabilities

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

Accrued and Other Current Liabilities

	Mar. 31,		Dec. 31,
	2004		2003
	(In millions)
Accrued salaries, wages and other compensation	$	23.7	$	20.9
Reserves for post-closing adjustments and transaction costs on divestitures		12.0		11.8
Accrued and deferred income taxes		7.8		8.0
Other accrued expenses		64.2		68.6
	$	107.7	$	109.3

F-12

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

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

Warranty Reserves

	Three Months
	Ended March 31,
	2004			2003
	(In millions)
Balance at beginning of period	$	8.1		$	5.9
Accruals		1.1			1.1
Payments		(1.8	)		(1.3	)
Warranty expirations		—			—
Foreign currency translation adjustments		(.1	)		.1
Balance at end of period	$	7.3		$	5.8

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

Long-Term Accrued Liabilities

	Mar. 31,		Dec. 31,
	2004		2003
	(In millions)
Accrued pensions and other compensation	$	42.8	$	42.5
Minimum pension liability		106.1		104.3
Accrued postretirement health care benefits		31.0		31.2
Accrued and deferred income taxes		21.5		21.5
Other		27.4		28.3
	$	228.8	$	227.8

Refinancing Transactions

      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. On April 15, 2004, the $30 million of Series A Notes, which initially bore a combination of cash and pay-in-kind interest at a total rate of 20% per annum, were converted into 15.0 million shares of the company’s common stock at a conversion price of $2.00 per share. The $70 million of Series B Notes bore a combination of cash and pay-in-kind interest at a total rate of 20% per annum. The common stock into which the Series A Notes were converted and the Series B Notes were exchanged for a new series of the company’s convertible preferred stock with a cumulative cash dividend rate of 6% per annum (see Subsequent Events).

F-13

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

      The conversion of the Series A Notes into newly issued common stock and the exchange of such common stock and the Series B Notes for convertible preferred stock triggered an “ownership change” for U.S. federal income tax purposes. As a consequence of this ownership change, the timing of the company’s utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

      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 closing, 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.

      The credit facility consisted 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 U.S. subsidiaries were joint and several borrowers under the credit facility, and the entire credit facility was secured by first priority liens, subject to permitted liens, on substantially all of the company’s assets and substantially all of the assets of the company’s U.S. subsidiaries and included pledges of stock of various wholly-owned U.S. subsidiaries and certain foreign subsidiaries.

      Borrowings under the credit facility bore 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, was 3.25% per annum, and with respect to revolver A reference rate loans, was 1.5% per annum. The “applicable margin,” with respect to term loan B LIBOR loans, was 10.5% per annum, and with respect to term loan B reference rate loans, was 8.00% per annum. In no event would the interest rate of (a) revolver A LIBOR loans have been less than 4.75% and (b) revolver A reference rate loans have been less than 5.5%. In no event would the interest rate of term loan B LIBOR loans or term loan B reference rate loans have been less than 12%.

      On March 31, 2004, the financing agreement with Credit Suisse First Boston was amended and restated to clarify certain provisions and add Canadian collateral and borrowers.

      On April 26, 2004, the company announced its intention to refinance the term loan B facility. On April 27, 2004, the company signed a commitment letter to replace the revolving A facility with a similar asset-based facility with a different lender. On June 10, 2004, the company replaced the revolving A facility with a new asset based facility and refinanced the term loan B facility (see Subsequent Events).

F-14

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

Short-Term Borrowings

      The components of short-term borrowings are shown in the table that follows. The terms of certain of these borrowing arrangements are described in detail in the note captioned “Refinancing Transactions.”

Short-Term Borrowings

	Mar. 31,		Dec. 31,
	2004		2003
	(In millions)
Revolving A credit facility due 2005	$	7.5	$	—
Term loan B facility due 2005		75.0		—
20% Secured Step-Up Series A Notes due 2007(a)		30.0		—
20% Secured Step-Up Series B Notes due 2007		70.0		—
Premium on 20% Secured Step-Up Series A and B Notes due 2007(b)		2.9		—
Revolving credit facility due 2004		—		42.0
Borrowings under other lines of credit		.7		.6
	$	186.1	$	42.6

(a)

On April 15, 2004, the 20% Secured Step-Up Series A Notes due 2007 were converted at the option of the holders into 15.0 million common shares of the company.

(b)

Represents a premium on the 20% Secured Step-Up Series A Notes and Series B Notes related to a derivative that is embedded therein. The derivative relates to the required increase or decrease in the interest rate on the Series A Notes and the Series B Notes that depended on whether the issuance of the Series B Preferred Stock (see Refinancing Transactions and Shareholders’ Equity) was approved. When approval was obtained on June 9, 2004, the debt premium was applied to reduce the interest expense on the Series A Notes and the Series B Notes from a 20% rate to a 6% rate for the periods of time they were outstanding.

      At March 31, 2004, $19.6 million of the revolving A facility was utilized including outstanding letters of credit of $12.1 million. Under the terms of the facility, the company’s additional borrowing capacity at March 31, 2004 was approximately $35 million after taking into account outstanding letters of credit and the minimum availability and existing reserve requirements.

      The effective interest rates for borrowings under the revolving A facility and the term loan B facility were 4.75% and 12.0%, respectively. Both facilities include a number of positive and negative covenants with which the company was in compliance at March 31, 2004.

      On April 26, 2004, the company announced its intention to refinance the term loan B facility. On April 27, 2004, the company signed a commitment letter to replace the revolving A facility with a similar asset-based facility with a different lender (see Refinancing Transactions). On June 10, 2004, the company replaced the revolving A facility with a new asset based facility and refinanced the term loan B facility (see Subsequent Events).

      At March 31, 2004, the company had other lines of credit with various U.S. and non-U.S. banks totaling approximately $29 million. These credit facilities support the discounting of receivables, letters of credit, guarantees and leases in addition to providing borrowings under varying terms. Approximately $12 million was available to the company under these lines under certain circumstances.

      During 2003 and through March 12, 2004, the company had a committed revolving credit facility with certain U.S. and non-U.S. banks. At December 31, 2003, the gross amount of the facility was $65 million, of

F-15

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

which $54 million was utilized including borrowings of $42 million and outstanding letters of credit of $12 million. On March 12, 2004, all amounts borrowed under the revolving credit facility were repaid using a portion of the proceeds of the refinancing transactions entered into on that date (see Refinancing Transactions).

Long-Term Debt

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

Long-Term Debt

	Mar. 31,			Dec. 31,
	2004			2003
	(In millions)
8 3/8% Notes due March, 2004	$	—		$	115.0
7 5/8% Eurobonds due April, 2005		139.4			142.6
Capital lease obligations		16.6			17.1
Other		6.0			6.1
		162.0			280.8
Less current maturities		(2.3	)		(117.3	)
	$	159.7		$	163.5

      On March 15, 2004, the 8 3/8% Notes were repaid using a portion of the proceeds of the refinancing transactions entered into on March 12, 2004 (see Refinancing Transactions).

      On April 27, 2004, the company commenced a cash tender offer to repurchase all of the 7 5/8% Eurobonds due 2005 and on May 10, 2004, amended the terms of the offer. Under the amended terms and conditions of the tender offer, which were described in the supplemented offering materials, bondholders who validly tendered their Eurobonds and did not withdraw them received 104% of the principal amount of their tendered Eurobonds plus accrued interest to but not including the settlement date. The amended terms of the tender offer applied retroactively to holders who tendered their Eurobonds prior to the date of the amendment. €114,990,000 of the €115 million aggregate outstanding principal amount of the Eurobonds were purchased at the settlement of the tender offer on June 10, 2004 (see Subsequent Events).

Shareholders’ Equity

      In the first quarter of 2004, a total of 53,912 treasury shares were reissued in connection with contributions to employee benefit plans. This reduction in treasury shares was partially offset by the forfeiture of 47,946 restricted shares that were added to the treasury share balance in lieu of their cancellation.

      On April 15, 2004, 4,607,088 treasury shares were reissued in connection with the conversion of the 20% Secured Step-Up Series A Notes due 2007 into 15.0 million common shares (see Refinancing Transactions).

      In the first quarter of 2003, a total of 83,526 treasury shares were reissued in connection with grants of restricted shares and contributions to employee benefit plans. These reductions in treasury shares were partially offset by the cancellation of 66,543 restricted shares that had been granted in prior years.

      As discussed fully in the note captioned “Refinancing Transactions,” on March 12, 2004, the company entered into a definitive agreement with Glencore and Mizuho that ultimately significantly altered the company’s capitalization, including the issuance of a new series of convertible preferred stock (the Series B Preferred Stock (see Subsequent Events). The Series B Preferred Stock is initially convertible, at the option

F-16

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

of the holders, into 50.0 million shares of common stock at a conversion price of $2.00 per share and bear a cash dividend rate of 6% per year. The conversion price and dividend rate are subject to adjustment in certain circumstances including a provision that permits the payment of dividends in the form of additional shares of Series B Preferred Stock at a rate of 8% per year. In both cases, the number of common shares into which the Series B Preferred Stock is convertible would increase. To the extent not previously converted to common shares at the option of the holders, the Series B Preferred Stock must be converted to common shares on the seventh anniversary of the date of its issuance.

Comprehensive Loss

      Total comprehensive income (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 as follows:

Comprehensive Loss

	Three Months
	Ended March 31,
	2004			2003
	(In millions)
Net loss	$	(16.6	)	$	(8.3	)
Foreign currency translation adjustments		.1			3.7
Change in fair value of foreign currency exchange contracts		—			(.1	)
Total comprehensive loss	$	(16.5	)	$	(4.7	)

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

Accumulated Other Comprehensive Loss

	Mar. 31,			Dec. 31,
	2004			2003
	(In millions)
Foreign currency translation adjustments	$	(26.0	)	$	(26.1	)
Minimum pension liability adjustment		(80.8	)		(80.8	)
Fair value of foreign currency exchange contracts		.2			.2
	$	(106.6	)	$	(106.7	)

Contingencies

      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

F-17

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

the company. The company is vigorously defending these claims and believes it has reserves, indemnity claims against another party 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.

Organization

      The company has four business segments: machinery technologies — North America, machinery technologies — Europe, mold technologies and industrial fluids. Descriptions of the products and services of these business segments are included in the “Organization” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2003. Operating results by segment for the first quarters of 2004 and 2003 are presented in the following tables.

Total Sales by Segment

			Three Months
			Ended March 31,
			2004			2003
			(In millions)
Plastics technologies
	Machinery technologies — North America		$	77.3		$	88.3
	Machinery technologies — Europe			42.5			35.0
	Mold technologies			43.3			44.6
	Eliminations(a)			(.4	)		(3.0	)
		Total plastics technologies		162.7			164.9
Industrial fluids				26.2			25.3
Total sales			$	188.9		$	190.2

(a)  Represents the elimination of sales among plastics technologies segments.

Customer Sales by Segment

			Three Months
			Ended March 31,
			2004		2003
			(In millions)
Plastics technologies
	Machinery technologies — North America		$	77.1	$	87.8
	Machinery technologies — Europe			42.3		32.5
	Mold technologies			43.3		44.6
		Total plastics technologies		162.7		164.9
Industrial fluids				26.2		25.3
Total sales			$	188.9	$	190.2

      Consistent with the company’s internal reporting methods, segment operating profit or loss excludes restructuring costs and certain unallocated corporate and financing expenses.

F-18

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

Operating Information by Segment

				Three Months
				Ended March 31,
				2004			2003
				(In millions)
Operating profit (loss)
	Plastics technologies
		Machinery technologies — North America		$	(.6	)	$	2.1
		Machinery technologies — Europe			1.1			(.7	)
		Mold technologies			1.4			.3
			Total plastics technologies		1.9			1.7
	Industrial fluids				2.5			3.5
	Refinancing costs				(6.4	)		—
	Restructuring costs(a)				(1.1	)		(6.0	)
	Corporate expenses				(3.3	)		(3.5	)
	Other unallocated expenses(b)				(.6	)		(.8	)
	Operating loss				(7.0	)		(5.1	)
	Interest expense — net				(7.9	)		(5.2	)
	Loss before income taxes			$	(14.9	)	$	(10.3	)

(a)	In the first quarter of 2004, $.8 million relates to machinery technologies — North America, $.1 million relates to machinery technologies — Europe and $.2 million relates to mold technologies. In the first quarter of 2003, $2.8 million relates to machinery technologies — North America, $2.2 million relates to machinery technologies — Europe and $1.0 million relates to mold technologies.
(b)	Represents financing costs, including those related to the sale of accounts receivable.

Earnings Per Common Share

      Basic earnings per common share data are based on the weighted-average number of common shares outstanding during the respective periods. In both 2004 and 2003, weighted-average shares assuming dilution excludes the effects of convertible debt and potentially dilutive restricted shares because their inclusion would result in a smaller loss per common share.

Subsequent Events

      On April 15, 2004, the holders of $30 million of 20% Secured Step-Up Series A Notes due 2007 exercised their option to convert these obligations into 15.0 million common shares of the company (see Refinancing Transactions and Shareholders’ Equity).

      On April 30, 2004, the company completed the sale of its grinding wheels business (see Discontinued Operations).

      On May 26, 2004, Milacron Escrow Corporation, a wholly owned, direct subsidiary of the company created solely to issue notes and to merge with and into the company, issued $225,000,000 in aggregate principal amount of Senior Secured Notes in a private placement. The proceeds of this issuance were initially placed in escrow.

F-19

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

      On June 10, 2004, the conditions for release of the proceeds of the offering of Senior Secured Notes were satisfied, including the consummation of the merger of Milacron Escrow Corporation with and into the company.

      On June 10, 2004, the common stock into which the Series A Notes were converted and the Series B Notes were exchanged for 500,000 shares of Series B Preferred Stock, a new series of the company’s convertible preferred stock with a cumulative cash dividend rate of 6%.

      On June 10, 2004, the company entered into an agreement for a new $75 million asset based revolving credit facility with JPMorgan Chase Bank as administrative agent and collateral agent.

      On June 10, 2004, the company applied the proceeds of the offering of the Senior Secured Notes, together with $7.3 million in borrowings under the asset based facility and approximately $10.3 million of cash on hand, to:

•  purchase €114,990,000 of the €115 million aggregate outstanding principal amount of Milacron Capital Holdings B.V.’s 7 5/8% Guaranteed Bonds due in April 2005 at the settlement of a tender offer therefor;

•  terminate and repay $19 million in amounts outstanding under the revolving A facility (the company also used $17.4 million of availability under the asset based facility to replace or provide credit support for the letters of credit under the revolving A facility);

•  repay the $75 million term loan B facility; and

•  pay transaction expenses.

Condensed Consolidating Financial Information

      On May 26, 2004, 11 1/2% Senior Secured Notes due 2011 were issued by Milacron Escrow Corporation, a wholly-owned, direct subsidiary of Milacron Inc. created solely to issue the Senior Secured Notes and to merge with and into Milacron Inc. The merger of Milacron Escrow Corporation with and into Milacron Inc. was completed on June 10, 2004. Also on June 10, 2004, the Senior Secured Notes were jointly, severally, fully and unconditionally guaranteed by the company’s U.S. and Canadian restricted subsidiaries and by Milacron Capital Holdings B.V. Following are unaudited condensed consolidating financial statements of the company, including the guarantors. This information is provided pursuant to Rule 3-10 of Regulation S-X in lieu of separate financial statements of each subsidiary guaranteeing the Senior Secured Notes. The following condensed consolidating financial statements present the balance sheet, statement of operations and cash flows of (i) Milacron Inc. (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting), (ii) the guarantor subsidiaries of Milacron Inc., (iii) the nonguarantor subsidiaries of Milacron Inc., and (iv) the eliminations necessary to arrive at the information for the company on a consolidated basis. The condensed consolidating financial statements should be read in conjunction with the accompanying unaudited consolidated condensed financial statements of the company.

F-20

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2004

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
Sales			$	—		$	117.5		$	76.3		$	(4.9	)	$	188.9
	Cost of products sold			1.8			99.4			59.8			(4.9	)		156.1
		Manufacturing margins		(1.8	)		18.1			16.5			—			32.8
Other costs and expenses
	Selling and administrative			4.1			12.4			14.4			—			30.9
	Refinancing costs			6.4			—			—			—			6.4
	Restructuring costs			—			0.8			0.3			—			1.1
	Other — net			0.6			0.8			—			—			1.4
		Total other costs and expenses		11.1			14.0			14.7			—			39.8
Operating earnings (loss)				(12.9	)		4.1			1.8			—			(7.0	)
Other non-operating expense (income)
	Intercompany dividends			(2.9	)		—			—			2.9			—
	Intercompany management fees			(3.0	)		3.0			—			—			—
	Intercompany interest			(1.2	)		1.5			(0.3	)		—			—
	Equity in (earnings) losses of subsidiaries			5.7			5.8			—			(11.5	)		—
		Total other non-operating expense (income)		(1.4	)		10.3			(0.3	)		(8.6	)		—
Earnings (loss) from continuing operations before interest and income taxes				(11.5	)		(6.2	)		2.1			8.6			(7.0	)
Interest expense — net				(5.1	)		(2.7	)		(0.1	)		—			(7.9	)
Earnings (loss) from continuing operations before income taxes				(16.6	)		(8.9	)		2.0			8.6			(14.9	)
Provision (benefit) for income taxes				—			0.1			1.0			—			1.1
Earnings (loss) from continuing operations				(16.6	)		(9.0	)		1.0			8.6			(16.0	)
Discontinued operations — net of income taxes				—			(0.6	)		—			—			(0.6	)
Net earnings (loss)			$	(16.6	)	$	(9.6	)	$	1.0		$	8.6		$	(16.6	)

F-21

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2003

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
Sales			$	—		$	130.5		$	66.2		$	(6.5	)	$	190.2
	Cost of products sold			—			111.3			53.6			(6.5	)		158.4
		Manufacturing margins		—			19.2			12.6			—			31.8
Other costs and expenses
	Selling and administrative			4.0			13.5			12.7			—			30.2
	Restructuring costs			0.3			3.0			2.7			—			6.0
	Other — net			0.4			0.6			(0.3	)		—			0.7
		Total other costs and expenses		4.7			17.1			15.1			—			36.9
Operating earnings (loss)				(4.7	)		2.1			(2.5	)		—			(5.1	)
Other non-operating expense (income)
	Intercompany dividends			(3.2	)		—			—			3.2			—
	Intercompany management fees			(3.4	)		3.4			—			—			—
	Intercompany interest			(1.5	)		1.7			(0.2	)		—			—
	Equity in (earnings) losses of subsidiaries			9.8			(49.8	)		—			40.0			—
		Total other non-operating expense (income)		1.7			(44.7	)		(0.2	)		43.2			—
Earnings (loss) from continuing operations before interest and income taxes				(6.4	)		46.8			(2.3	)		(43.2	)		(5.1	)
Interest expense — net				(2.9	)		(2.5	)		0.2			—			(5.2	)
Earnings (loss) from continuing operations before income taxes				(9.3	)		44.3			(2.1	)		(43.2	)		(10.3	)
Provision (benefit) for income taxes				(1.0	)		(2.0	)		0.3			—			(2.7	)
Earnings (loss) from continuing operations				(8.3	)		46.3			(2.4	)		(43.2	)		(7.6	)
Discontinued operations — net of income taxes				—			(0.7	)		—			—			(0.7	)
Net earnings (loss)			$	(8.3	)	$	45.6		$	(2.4	)	$	(43.2	)	$	(8.3	)

F-22

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING BALANCE SHEET

As of March 31, 2004

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
ASSETS
Current assets
	Cash and cash equivalents		$	(3.8	)	$	12.9		$	52.9		$	—		$	62.0
	Notes and accounts receivable (excluding intercompany receivables)			1.9			67.2			53.9			—			123.0
	Inventories			—			72.2			58.9			—			131.1
	Other current assets			35.4			14.9			20.9			—			71.2
	Intercompany receivables (payables)			(305.8	)		212.7			95.4			(2.3	)		—
		Current assets of continuing operations		(272.3	)		379.9			282.0			(2.3	)		387.3
	Assets of discontinued operations			—			9.9			—			—			9.9
		Total current assets		(272.3	)		389.8			282.0			(2.3	)		397.2
Property, plant and equipment — net				1.2			66.9			67.2			—			135.3
Goodwill				—			52.2			31.1			—			83.3
Investments in subsidiaries				317.5			192.1			(15.9	)		(493.7	)		—
Intercompany advances — net				296.8			(333.6	)		36.8			—			—
Other noncurrent assets				27.6			73.9			7.5			—			109.0
Total assets			$	370.8		$	441.3		$	408.7		$	(496.0	)	$	724.8
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit		$	185.4		$	—		$	0.7		$	—		$	186.1
	Long-term debt and capital lease obligations due within one year			0.9			—			1.4			—			2.3
	Trade accounts payable			7.3			27.7			30.4			—			65.4
	Advance billings and deposits			—			11.0			5.6			—			16.6
	Accrued and other current liabilities			32.5			55.8			19.4			—			107.7
		Current liabilities of continuing operations		226.1			94.5			57.5			—			378.1
	Liabilities of discontinued operations			—			1.6			—			—			1.6
		Total current liabilities		226.1			96.1			57.5			—			379.7
Long-term accrued liabilities				179.0			10.5			39.3			—			228.8
Long-term debt				9.1			139.4			11.2			—			159.7
		Total liabilities		414.2			246.0			108.0			—			768.2
Shareholders’ equity (deficit)
	Preferred shares			6.0			—			—			—			6.0
	Common shares, $1 par value			34.8			34.4			12.7			(47.1	)		34.8
	Capital in excess of par value			291.0			316.4			78.2			(394.6	)		291.0
	Reinvested earnings (deficit)			(268.6	)		(134.8	)		201.3			(66.5	)		(268.6	)
	Accumulated other comprehensive income (loss)			(106.6	)		(20.7	)		8.5			12.2			(106.6	)
		Total shareholders’ equity (deficit)		(43.4	)		195.3			300.7			(496.0	)		(43.4	)
Total liabilities and shareholders’ equity (deficit)			$	370.8		$	441.3		$	408.7		$	(496.0	)	$	724.8

F-23

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING BALANCE SHEET

As of March 31, 2003

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
ASSETS
Current assets
	Cash and cash equivalents		$	18.7		$	9.2		$	54.4		$	—		$	82.3
	Notes and accounts receivable (excluding intercompany receivables)			0.7			36.3			54.0			—			91.0
	Inventories			—			88.4			64.3			—			152.7
	Other current assets			19.9			16.5			24.6			—			61.0
	Intercompany receivables (payables)			(341.2	)		258.6			84.9			(2.3	)		—
		Current assets of continuing operations		(301.9	)		409.0			282.2			(2.3	)		387.0
	Assets of discontinued operations			—			18.2			—			—			18.2
		Total current assets		(301.9	)		427.2			282.2			(2.3	)		405.2
Property, plant and equipment — net				1.8			76.4			69.0			—			147.2
Goodwill				—			117.3			27.6			—			144.9
Investments in subsidiaries				412.4			251.4			(15.6	)		(648.2	)		—
Intercompany advances — net				312.7			(348.5	)		35.8			—			—
Other noncurrent assets				108.6			55.8			17.3			—			181.7
Total assets			$	533.6		$	579.6		$	416.3		$	(650.5	)	$	879.0
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit		$	42.0		$	—		$	1.1		$	—		$	43.1
	Long-term debt and capital lease obligations due within one year			115.9			—			0.4			—			116.3
	Trade accounts payable			0.1			40.0			30.3			—			70.4
	Advance billings and deposits			—			11.1			3.8			—			14.9
	Accrued and other current liabilities			44.6			56.6			11.0			—			112.2
		Current liabilities of continuing operations		202.6			107.7			46.6			—			356.9
	Liabilities of discontinued operations			—			10.1			—			—			10.1
		Total current liabilities		202.6			117.8			46.6			—			367.0
Long-term accrued liabilities				191.8			10.6			35.5			—			237.9
Long-term debt				10.0			122.9			12.0			—			144.9
		Total liabilities		404.4			251.3			94.1			—			749.8
Shareholders’ equity (deficit)
	Preferred shares			6.0			—			—			—			6.0
	Common shares, $1 par value			33.8			34.4			12.8			(47.2	)		33.8
	Capital in excess of par value			283.8			300.4			81.3			(381.7	)		283.8
	Reinvested earnings (deficit)			(68.2	)		13.9			240.8			(254.7	)		(68.2	)
	Accumulated other comprehensive income (loss)			(126.2	)		(20.4	)		(12.7	)		33.1			(126.2	)
		Total shareholders’ equity (deficit)		129.2			328.3			322.2			(650.5	)		129.2
Total liabilities and shareholders’ equity (deficit)			$	533.6		$	579.6		$	416.3		$	(650.5	)	$	879.0

F-24

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2004

									Guarantor			Nonguarantor			Eliminations
						Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
						(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net earnings (loss)				$	(16.6	)	$	(9.6	)	$	1.0		$	8.6		$	(16.6	)
		Operating activities providing (using) cash
			Loss from discontinued operations				—			0.6			—			—			0.6
			Depreciation				0.1			2.9			2.0			—			5.0
			Amortization of intangibles				—			0.3			—			—			0.3
			Refinancings costs				6.4			—			—			—			6.4
			Restructuring costs				—			0.8			0.3			—			1.1
			Equity in (earnings) losses of subsidiaries				5.7			5.8			—			(11.5	)		—
			Distributions from equity subsidiaries				—			(2.9	)		—			2.9			—
			Deferred income taxes				—			(1.4	)		2.0			—			0.6
			Working capital changes
				Notes and accounts receivable			(0.2	)		(32.0	)		2.2			—			(30.0	)
				Inventories			—			0.4			(0.3	)		—			0.1
				Other current assets			(6.2	)		(3.8	)		(0.8	)		—			(10.8	)
				Trade accounts payable			4.7			(4.2	)		(2.6	)		—			(2.1	)
				Other current liabilities			(3.1	)		1.5			1.5			—			(0.1	)
			Decrease (increase) in other noncurrent assets				1.2			0.1			(0.1	)		—			1.2
			Increase (decrease) in long-term accrued liabilities				1.2			0.1			(0.1	)		—			1.2
			Other — net				0.4			0.7			(0.2	)		—			0.9
					Net cash provided (used) by operating activities		(6.4	)		(40.7	)		4.9			—			(42.2	)
	Investing activities cash flows
		Capital expenditures					—			(1.0	)		(0.5	)		—			(1.5	)
		Net disposals of plant, property and equipment					—			—			0.3			—			0.3
			Net cash used by investing activities				—			(1.0	)		(0.2	)		—			(1.2	)
	Financing activities cash flows
		Debt issuance costs					(8.3	)		—			—			—			(8.3	)
		Repayments of long-term debt					(115.2	)		—			(0.2	)		—			(115.4	)
		Increase in borrowings under lines of credit					140.4			—			—			—			140.4
			Net cash provided (used) by financing activities				16.9			—			(0.2	)		—			16.7
Intercompany receivables and payables							(42.0	)		42.6			(0.6	)		—			—
Intercompany advances							1.0			1.2			(2.2	)		—			—
Cash flows related to discontinued operations							—			(3.5	)		—			—			(3.5	)
Effect of exchange rate fluctuations on cash and cash equivalents							—			—			(0.6	)		—			(0.6	)
Increase (decrease) in cash and cash equivalents							(30.5	)		(1.4	)		1.1			—			(30.8	)
Cash and cash equivalents at beginning of quarter							26.7			14.3			51.8			—			92.8
Cash and cash equivalents at end of quarter						$	(3.8	)	$	12.9		$	52.9		$	—		$	62.0

F-25

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Unaudited) — (Continued)

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2003

									Guarantor			Nonguarantor			Eliminations
						Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
						(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net earnings (loss)				$	(8.3	)	$	45.6		$	(2.4	)	$	(43.2	)	$	(8.3	)
		Operating activities providing (using) cash
			Loss from discontinued operations				—			0.7			—			—			0.7
			Depreciation				0.1			3.4			1.9			—			5.4
			Amortization of intangibles				—			0.3			—			—			0.3
			Restructuring costs				0.3			3.0			2.7			—			6.0
			Equity in (earnings) losses of subsidiaries				9.8			(49.8	)		—			40.0			—
			Distributions from equity subsidiaries				—			(3.2	)		—			3.2			—
			Deferred income taxes				(3.2	)		—			0.9			—			(2.3	)
			Working capital changes
				Notes and accounts receivable			0.2			1.0			0.2			—			1.4
				Inventories			—			(1.2	)		(1.6	)		—			(2.8	)
				Other current assets			9.9			(0.7	)		(0.5	)		—			8.7
				Trade accounts payable			(1.9	)		0.8			1.7			—			0.6
				Other current liabilities			0.1			(7.1	)		(3.5	)		—			(10.5	)
			Decrease (increase) in other noncurrent assets				(0.5	)		0.3			0.3			—			0.1
			Increase (decrease) in long-term accrued liabilities				(0.6	)		—			(4.2	)		—			(4.8	)
			Other — net				0.4			0.2			(0.1	)		—			0.5
					Net cash provided (used) by operating activities		6.3			(6.7	)		(4.6	)		—			(5.0	)
	Investing activities cash flows
		Capital expenditures					—			(1.0	)		(0.3	)		—			(1.3	)
		Net disposals of plant, property and equipment					—			0.2			0.1			—			0.3
		Acquisitions					—			(2.9	)		(3.6	)		—			(6.5	)
		Divestitures					(24.4	)		—			—			—			(24.4	)
					Net cash used by investing activities		(24.4	)		(3.7	)		(3.8	)		—			(31.9	)
	Financing activities cash flows
		Dividends paid					(0.4	)		—			—			—			(0.4	)
		Repayments of long-term debt					(0.3	)		—			(0.2	)		—			(0.5	)
		Decrease in borrowings under lines of credit					—			—			(2.0	)		—			(2.0	)
					Net cash provided (used) by financing activities		(0.7	)		—			(2.2	)		—			(2.9	)
Intercompany receivables and payables							30.2			7.1			(37.3	)		—			—
Intercompany advances							(14.1	)		8.6			5.5			—			—
Cash flows related to discontinued operations							—			(3.7	)		—			—			(3.7	)
Effect of exchange rate fluctuations on cash and cash equivalents							—			0.2			3.3			—			3.5
Increase (decrease) in cash and cash equivalents							(2.7	)		1.8			(39.1	)		—			(40.0	)
Cash and cash equivalents at beginning of quarter							21.4			7.4			93.5			—			122.3
Cash and cash equivalents at end of quarter						$	18.7		$	9.2		$	54.4		$	—		$	82.3

F-26

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Milacron Inc.

      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 16(b). 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 the standards of the Public Company Accounting Oversight Board (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.

      Since the completion date of our audit of the accompanying financial statements and initial issuance of our report thereon dated February 10, 2004, except for the “Subsequent Events” note, as to which the date was March 12, 2004, which report contained an explanatory paragraph regarding the company’s ability to continue as a going concern, the company, as discussed in the “Subsequent Events” note, has obtained shareholder approval to convert certain debt to equity securities as required under the March 12, 2004 refinancing agreements. Therefore, the condition that raised substantial doubt about whether the Company will continue as a going concern no longer exists.

      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 U.S. generally accepted accounting principles. 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.

      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.

/s/ Ernst & Young LLP

Cincinnati, Ohio

February 10, 2004, except for the “Subsequent Events”
note, as to which the date is June 10, 2004

F-27

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2003, 2002 and 2001

				2003			2002			2001
				(In millions, except
				per-share amounts)
Sales				$	739.7		$	693.2		$	755.2
	Cost of products sold				605.3			571.6			623.7
	Cost of products sold related to restructuring				3.3			1.9			3.1
		Total cost of products sold			608.6			573.5			626.8
			Manufacturing margins		131.1			119.7			128.4
Other costs and expenses
	Selling and administrative				129.0			121.0			129.6
	Goodwill impairment charge				65.6			1.0			—
	Restructuring costs				23.8			12.0			14.4
	Other expense-net				1.5			(1.0	)		12.9
		Total other costs and expenses			219.9			133.0			156.9
Operating loss					(88.8	)		(13.3	)		(28.5	)
Interest
	Income				1.9			2.2			1.7
	Expense				(24.9	)		(25.5	)		(24.2	)
		Interest-net			(23.0	)		(23.3	)		(22.5	)
Loss from continuing operations before income taxes and cumulative effect of change in method of accounting					(111.8	)		(36.6	)		(51.0	)
Provision (benefit) for income taxes					72.7			(18.2	)		(22.3	)
Loss from continuing operations before cumulative effect of change in method of accounting					(184.5	)		(18.4	)		(28.7	)
Discontinued operations net of income taxes
	Loss from operations				(6.4	)		(25.2	)		(7.0	)
	Net gain (loss) on divestitures				(.8	)		8.4			—
		Total discontinued operations			(7.2	)		(16.8	)		(7.0	)
Cumulative effect of change in method of accounting					—			(187.7	)		—
Net loss				$	(191.7	)	$	(222.9	)	$	(35.7	)
Loss per common share — basic and diluted
	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	)

See notes to consolidated financial statements.

F-28

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2003 and 2002

			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

See notes to consolidated financial statements.

F-29

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND

SHAREHOLDERS’ EQUITY (DEFICIT)

Years Ended December 31, 2003, 2002 and 2001

					Other			4%		Common									Total
		Comprehensive			Comprehensive			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	)

See notes to consolidated financial statements.

F-30

MILACRON INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2002 and 2001

					2003			2002			2001
					(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net loss			$	(191.7	)	$	(222.9	)	$	(35.7	)
		Operating activities providing (using) cash Loss from discontinued operations				6.4			25.2			7.0
			Net (gain) loss on divestitures			.8			(8.4	)		—
			Cumulative effect of change in method of accounting			—			187.7			—
			Depreciation			20.3			22.0			23.7
			Amortization of goodwill and other intangibles			1.4			1.0			11.2
			Restructuring costs			27.1			13.9			17.5
			Goodwill impairment charge			65.6			1.0			—
			Deferred income taxes			73.3			(16.7	)		(15.6	)
			Working capital changes
				Notes and accounts receivable		6.6			9.7			41.2
				Inventories		23.7			36.0			44.9
				Other current assets		13.9			2.4			(.3	)
				Trade accounts payable		(6.1	)		6.9			(36.9	)
				Other current liabilities		(31.3	)		(11.0	)		(43.2	)
			Decrease (increase) in other noncurrent assets			1.2			(7.0	)		(19.3	)
			Decrease in long-term accrued liabilities			(2.7	)		(4.2	)		(3.2	)
			Other-net			1.5			.3			3.4
				Net cash provided (used) by operating activities		10.0			35.9			(5.3	)
	Investing activities cash flows
		Capital expenditures				(6.5	)		(6.2	)		(13.5	)
		Net disposals of property, plant and equipment				2.5			7.5			5.1
		Divestitures				(20.3	)		303.9			—
		Acquisitions				(6.5	)		(4.3	)		(28.6	)
			Net cash provided (used) by investing activities			(30.8	)		300.9			(37.0	)
	Financing activities cash flows
		Dividends paid				(.8	)		(1.6	)		(12.6	)
		Issuance of long-term debt				—			11.5			5.4
		Repayments of long-term debt				(2.2	)		(1.3	)		(5.5	)
		Increase (decrease) in borrowings under lines of credit				(2.6	)		(311.6	)		118.7
		Issuance of common shares				—			.4			4.1
		Purchase of treasury and other common shares				—			—			(7.7	)
			Net cash provided (used) by financing activities			(5.6	)		(302.6	)		102.4
Effect of exchange rate fluctuations on cash and cash equivalents						8.8			5.6			(.7	)
Cash flows related to discontinued operations						(11.9	)		(7.6	)		(3.1	)
Increase (decrease) in cash and cash equivalents						(29.5	)		32.2			56.3
Cash and cash equivalents at beginning of year						122.3			90.1			33.8
Cash and cash equivalents at end of year					$	92.8		$	122.3		$	90.1

See notes to consolidated financial statements.

F-31

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Use of Estimates

      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.

Consolidation

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

Foreign Currency Translation

      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.

Revenue Recognition

      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

      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.

Income Taxes

      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.

Earnings Per Common Share

      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.

Cash and Cash Equivalents

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

F-32

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventory Valuation

      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

      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.

     Goodwill

      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).

     Long-Lived Assets

      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.

     Warranty Reserves

      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.

     Retirement Benefit Plans

      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

F-33

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

     Stock-Based Compensation

      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.”

Pro Forma Loss

		2003			2002			2001
		(In millions, except
		per-share amounts)
Net loss as reported		$	(191.7	)	$	(222.9	)	$	(35.7	)
Effect on reported loss of accounting for stock options at fair value			(1.1	)		(2.2	)		(2.0	)
Pro forma net loss		$	(192.8	)	$	(225.1	)	$	(37.7	)
Loss per common share — basic and diluted
	As reported	$	(5.70	)	$	(6.67	)	$	(1.08	)
	Pro forma	$	(5.73	)	$	(6.73	)	$	(1.14	)

      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.”

     Derivative Financial Instruments

      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.

     Change in Method of Accounting

      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.

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

     Discontinued Operations

      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.

F-35

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Loss from Discontinued Operations

	2003			2002			2001
	(In millions)
Sales	$	51.6		$	325.0		$	507.5
Operating loss including restructuring costs		(5.1	)		(26.8	)		(13.1	)
Allocated interest expense		(1.3	)		(10.9	)		(16.7	)
Loss before income taxes and minority shareholders’ interests		(6.4	)		(37.7	)		(29.8	)
Benefit for income taxes		—			(10.4	)		(23.6	)
Loss before minority shareholders’ interests		(6.4	)		(27.3	)		(6.2	)
Minority shareholders’ interests		—			(2.1	)		.8
Loss from discontinued operations	$	(6.4	)	$	(25.2	)	$	(7.0	)

      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.

Gain (Loss) on Divestiture of Discontinued Operations

	2003			2002
	(In millions)
Gain on sale of Valenite	$	.4		$	31.3
Loss on sale of Widia and Werkö		.9			(14.9	)
Loss on sale of round metalcutting tools business		(2.2	)		(4.7	)
Estimated loss on sale of grinding wheels business		1.0			(5.2	)
Adjustment of reserves for the 1998 divestiture of the machine tools segment		(.9	)		1.9
Net gain (loss) on divestitures	$	(.8	)	$	8.4

F-36

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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:

Assets and Liabilities of Discontinued Operations

		2003		2002
		(In millions)
Notes and accounts receivable		$	.4	$	1.4
Inventories			4.1		7.9
Other current assets			.2		.1
Property, plant and equipment — net			2.5		6.6
	Total assets		7.2		16.0
Amounts payable to banks and current portion of long-term debt			—		.4
Trade accounts payable			1.1		4.4
Other current liabilities			.5		1.4
Long-term debt			—		2.7
Long-term accrued liabilities			.2		2.0
	Total liabilities		1.8		10.9
Net assets		$	5.4	$	5.1

Goodwill Impairment Charge

      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.

Restructuring Costs

      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.

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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 has also been moved to a smaller location near Manchester. 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.

F-38

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Restructuring Costs

		2003			2002			2001
		(In millions)
Accruals for termination benefits and facility exit costs		$	9.1		$	2.9		$	9.9
Supplemental retirement benefits			3.2			2.9			.5
Other restructuring costs
	Costs charged to expense as incurred		14.8			4.0			3.8
	Reserve adjustments		(1.8	)		(.5	)		(.1	)
			25.3			9.3			14.1
Costs related to the EOC and Reform integration			1.8			4.6			3.4
Total restructuring costs		$	27.1		$	13.9		$	17.5

      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.

Restructuring Reserves

		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

F-39

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

		2002
		Beginning				Usage and			Ending
		Balance		Additions		Other			Balance
		(In millions)
EOC and Reform integration
	Termination benefits	$	4.2	$	.8	$	(3.3	)	$	1.7
	Facility exit costs		.2		—		(.2	)		—
			4.4		.8		(3.5	)		1.7
Restructuring costs
	Termination benefits		7.1		2.0		(6.0	)		3.1
	Facility exit costs		.8		.9		(1.1	)		.6
			7.9		2.9		(7.1	)		3.7
Total reserves related to continuing operations		$	12.3	$	3.7	$	(10.6	)	$	5.4

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.

F-40

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allocation of Acquisition Cost

		2003		2002		2001
		(In millions)
Cash and cash equivalents		$	.4	$	—	$	—
Accounts receivable			1.5		.4		6.4
Inventories			.3		.7		8.3
Other current assets			.1		—		.1
Property, plant and equipment			.2		.3		11.1
Goodwill			—		.4		13.8
	Total assets		2.5		1.8		39.7
Current liabilities			1.4		.8		7.6
Long-term debt			—		.1		—
	Total liabilities		1.4		.9		7.6
Total acquisition cost		$	1.1	$	.9	$	32.1

      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.

Research and Development

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

Research and Development

	2003		2002		2001
	(In millions)
Research and development	$	17.8	$	15.8	$	21.1

Retirement Benefit Plans

      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.

Pension Expense (Income)

	2003			2002			2001
	(In millions)
Service cost (benefits earned during the period)	$	4.5		$	4.6		$	4.4
Interest cost on projected benefit obligation		33.4			34.5			34.2
Expected return on plan assets		(38.8	)		(45.9	)		(45.1	)
Supplemental retirement benefits(a)		3.2			4.7			.8
Amortization of unrecognized prior service cost		.8			.8			.5
Amortization of unrecognized gains and losses		3.1			.5			(.2	)
Pension expense (income)	$	6.2		$	(.8	)	$	(5.4	)

(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.

F-41

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Projected Benefit Obligation

	2003			2002
	(In millions)
Balance at beginning of year	$	(527.2	)	$	(472.5	)
Service cost		(4.5	)		(4.6	)
Interest cost		(33.4	)		(34.5	)
Benefits paid		39.3			38.3
Actuarial gain (loss)		12.6			(5.5	)
Merger of subsidiary plan		(4.0	)		(1.7	)
Supplemental retirement benefits		(3.2	)		(4.7	)
Changes in discount rates		(14.6	)		(40.7	)
Foreign currency translation adjustments		(2.3	)		(1.3	)
Balance at end of year	$	(537.3	)	$	(527.2	)

      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.

Plan Assets

	2003			2002
	(In millions)
Balance at beginning of year	$	342.7		$	432.0
Actual investment gain (loss)		61.4			(55.2	)
Benefits paid		(37.0	)		(36.1	)
Merger of subsidiary plan		3.8			2.0
Balance at end of year	$	370.9		$	342.7

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

Allocation of Plan Assets

	2003		2002
	(In millions)
Equity securities		65%		58%
Debt securities		34%		42%
Cash and cash equivalents		1%		—
		100%		100%

      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

F-42

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Funded Status at Year-End

	2003			2002
	(In millions)
Vested benefit obligation	$	(487.1	)	$	(471.0	)
Accumulated benefit obligation	$	(500.6	)	$	(485.0	)
Projected benefit obligation	$	(523.3	)	$	(516.6	)
Plan assets at fair value		370.9			342.7
Deficiency of plan assets in relation to projected benefit obligation		(152.4	)		(173.9	)
Unrecognized net loss		164.4			187.4
Unrecognized prior service cost		4.1			4.9
Prepaid pension cost	$	16.1		$	18.4

      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.

Balance Sheet Presentation

	2003			2002
	(In millions)
Intangible asset	$	3.5		$	4.1
Accrued pension cost		(119.6	)		(132.5	)
Accumulated other comprehensive loss(a)		132.2			146.8
	$	16.1		$	18.4

(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.

      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.

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Status at Year-End

	2003			2002
	(In millions)
Vested benefit obligation	$	(10.4	)	$	(7.5	)
Accumulated benefit obligation	$	(12.1	)	$	(8.8	)
Projected benefit obligation	$	(14.0	)	$	(10.6	)
Unrecognized net (gain) loss		.3			.1
Accrued pension cost	$	(13.7	)	$	(10.5	)

      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.

Actuarial Assumptions

	2003		2002		2001
Discount rate		6.49%		7.23%		7.72%
Expected long-term rate of return on plan assets		9.00%		9.50%		9.50%
Rate of increase in future compensation levels		2.41%		.73%		4.19%

      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.

Actuarial Assumptions

	2003		2002
Discount rate		6.24%		6.49%
Rate of increase on future compensation levels		3.69%		2.41%

      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.

F-44

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Postretirement Health Care Cost

	2003			2002			2001
	(In millions)
Service cost (benefits earned during the period)	$	.1		$	.1		$	.1
Interest cost on accumulated postretirement benefit obligation		1.5			1.7			1.9
Amortization of unrecognized gains		(.3	)		(.4	)		(.5	)
Postretirement health care cost	$	1.3		$	1.4		$	1.5

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

Accumulated Postretirement Benefit Obligation

	2003			2002
	(In millions)
Balance at beginning of year	$	(24.9	)	$	(26.5	)
Service cost		(.1	)		(.1	)
Interest cost		(1.5	)		(1.7	)
Participant contributions		(5.0	)		(4.3	)
Benefits paid		7.9			7.3
Actuarial gain		.8			1.7
Change in discount rate		(.4	)		(1.3	)
Balance at end of year	$	(23.2	)	$	(24.9	)

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

Accrued Postretirement Health Care Benefits

		2003			2002
		(In millions)
Accumulated postretirement benefit obligation
	Retirees	$	(17.3	)	$	(18.7	)
	Fully eligible active participants		(1.7	)		(2.3	)
	Other active participants		(4.2	)		(3.9	)
			(23.2	)		(24.9	)
Unrecognized net gain			(5.5	)		(5.5	)
Accrued postretirement health care benefits		$	(28.7	)	$	(30.4	)

F-45

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Actuarial Assumptions

	2003		2002		2001
Accumulated postretirement benefit obligation		6.25%		6.50%		7.25%
Postretirement health care cost		6.50%		7.25%		7.75%

      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.

F-46

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income Taxes

      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:

Components of Deferred Tax Assets and Liabilities

				2003			2002
				(In millions)
Deferred tax assets
	Net operating loss carryforwards			$	95.2		$	67.3
	Tax credit carryforwards				12.4			10.7
	Accrued postretirement health care benefits				9.3			10.0
	Inventories, due principally to obsolescence reserves and additional costs inventoried for tax purposes				6.3			7.3
	Accrued employee benefits other than pensions and retiree health care benefits				3.4			4.0
	Accrued pension cost				8.5			8.4
	Accrued warranty cost				1.8			1.4
	Accrued taxes				3.0			2.8
	Accounts receivable, due principally to allowances for doubtful accounts				1.8			1.1
	Goodwill				46.0			31.3
	Deferred pension costs				35.7			39.9
	Accrued liabilities and other				15.2			24.9
		Total deferred tax assets			238.6			209.1
		Less valuation allowances			(139.8	)		(36.1	)
			Deferred tax assets net of valuation allowances		98.8			173.0
Deferred tax liabilities
	Property, plant and equipment, due principally to differences in depreciation methods				8.2			9.4
	Inventories				6.8			6.5
		Total deferred tax liabilities			15.0			15.9
Net deferred tax assets				$	83.8		$	157.1

      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.

Loss Before Income Taxes

	2003			2002			2001
	(In millions)
United States	$	(98.1	)	$	(25.6	)	$	(39.9	)
Non-U.S.		(13.7	)		(11.0	)		(11.1	)
	$	(111.8	)	$	(36.6	)	$	(51.0	)

F-47

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Provision (Benefit) for Income Taxes

		2003			2002			2001
		(In millions)
Current provision (benefit)
	United States	$	(1.8	)	$	(4.4	)	$	(10.5	)
	State and local		—			.2			(.6	)
	Non-U.S.		1.2			2.7			4.4
			(.6	)		(1.5	)		(6.7	)
Deferred provision (benefit)
	United States		68.1			(12.3	)		(10.4	)
	Non-U.S.		5.2			(4.4	)		(5.2	)
			73.3			(16.7	)		(15.6	)
		$	72.7		$	(18.2	)	$	(22.3	)

Components of the Provision (Benefit) for Deferred Income Taxes

	2003			2002			2001
	(In millions)
Change in valuation allowances	$	104.6		$	19.2		$	6.4
Change in deferred taxes related to operating loss and tax credit carryforwards		(30.5	)		(31.7	)		(27.6	)
Depreciation and amortization		6.0			6.3			6.8
Inventories and accounts receivable		.6			(4.4	)		(5.2	)
Accrued pension and other employee costs		4.7			3.1			4.4
Other		(12.1	)		(9.2	)		(.4	)
	$	73.3		$	(16.7	)	$	(15.6	)

      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.

F-48

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

		2003			2002			2001
U.S. statutory tax rate			(35.0	)%		(35.0	)%		(35.0	)%
Increase (decrease) resulting from
	Effect of changes in valuation allowances		93.6			31.8			12.5
	Losses without current tax benefits		—			(.2	)		(.1	)
	Adjustment of tax reserves		—			(4.7	)		(17.4	)
	Statutory tax rate changes		—			—			1.9
	Effect of operations outside the U.S.		—			(38.1	)		(2.1	)
	State and local income taxes, net of federal benefit		—			(2.1	)		(3.4	)
	Other		6.4			(1.4	)		(.1	)
			65.0	%		(49.7	)%		(43.7	)%

      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 and Mizuho 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.

Earnings Per Common Share

      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.

Earnings Applicable to Common Shareholders

	2003			2002			2001
	(In millions)
Net loss	$	(191.7	)	$	(222.9	)	$	(35.7	)
Dividends on preferred shares		(.2	)		(.2	)		(.2	)
Loss applicable to common shareholders	$	(191.9	)	$	(223.1	)	$	(35.9	)

Reconciliation of Shares

	2003		2002		2001
	(In thousands)
Weighted-average common shares outstanding		33,660		33,482		33,222
Effect of dilutive stock options and restricted shares		—		—		—
Weighted-average common shares assuming dilution		33,660		33,482		33,222

F-49

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Receivables

      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 million 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

      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.

F-50

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Goodwill and Other Intangible Assets

      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.

Changes in Goodwill

	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

	2002
	Machinery
	Technologies			Machinery
	North			Technologies			Mold			Industrial
	America			Europe			Technologies			Fluids		Total
	(In millions)
Balance at beginning of year	$	129.6		$	46.9		$	166.6		$	10.1	$	353.2
Goodwill acquired		.1			.4			5.0			—		5.5
Impairment charges(a)		(112.4	)		(46.9	)		(60.1	)		—		(219.4	)
Foreign currency translation adjustments		—			.1			3.8			.1		4.0
Balance at end of year	$	17.3		$	.5		$	115.3		$	10.2	$	143.3

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

F-51

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Goodwill Amortization

		2003			2002			2001
		(In millions except
		per-share amounts)
Net loss as reported		$	(191.7	)	$	(222.9	)	$	(35.7	)
Goodwill amortization, net of income taxes(a)			—			—			8.5
Net loss excluding goodwill amortization		$	(191.7	)	$	(222.9	)	$	(27.2	)
Loss per common share — basic and diluted
	Net loss as reported	$	(5.70	)	$	(6.67	)	$	(1.08	)
	Goodwill amortization, net of income taxes		—			—			.26
	Net loss excluding goodwill amortization	$	(5.70	)	$	(6.67	)	$	(.82	)

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

Property, Plant and Equipment

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

Property, Plant and Equipment — Net

	2003			2002
	(In millions)
Land	$	10.7		$	10.6
Buildings		125.2			112.6
Machinery and equipment		211.6			210.9
		347.5			334.1
Less accumulated depreciation		(206.7	)		(184.3	)
	$	140.8		$	149.8

Other Assets

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

Other Current Assets

	2003		2002
	(In millions)
Deferred income taxes	$	27.9	$	40.6
Refundable income taxes		2.7		15.2
Other		14.6		13.8
	$	45.2	$	69.6

F-52

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Noncurrent Assets

	2003		2002
	(In millions)
Deferred income taxes net of valuation allowances	$	70.9	$	132.4
Intangible assets other than goodwill		6.5		7.8
Other		38.2		37.6
	$	115.6	$	177.8

Liabilities

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

Accrued and Other Current Liabilities

	2003		2002
	(In millions)
Accrued salaries, wages and other compensation	$	20.9	$	22.6
Reserves for post-closing adjustments and transaction costs		11.8		43.3
Accrued and deferred income taxes		8.0		6.7
Other accrued expenses		68.6		66.3
	$	109.3	$	138.9

      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.

Warranty Reserves

	2003			2002
	(In millions)
Balance at beginning of year	$	5.9		$	6.0
Accruals		4.9			3.6
Payments		(3.0	)		(3.2	)
Warranty expirations		(.1	)		(.7	)
Foreign currency translation adjustments		.4			.2
Balance at end of year	$	8.1		$	5.9

F-53

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Long-Term Accrued Liabilities

	2003		2002
	(In millions)
Accrued pensions and other compensation	$	42.5	$	39.2
Minimum pension liability		104.3		117.7
Accrued postretirement health care benefits		31.2		33.3
Accrued and deferred income taxes		21.5		20.9
Other		28.3		33.0
	$	227.8	$	244.1

Long-Term Debt

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

Long-Term Debt

	2003			2002
	(In millions)
8 3/8% Notes due 2004	$	115.0		$	115.0
7 5/8% Eurobonds due 2005		142.6			118.1
Capital lease obligations		17.1			17.5
Other		6.1			5.9
		280.8			256.5
Less current maturities		(117.3	)		(1.1	)
	$	163.5		$	255.4

      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.

F-54

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Maturities of Long-Term Debt

	(In millions)
2004	$	115.6
2005		146.9
2006		.3
2007		.3
2008		.2

      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.

Capital Lease Payments

	(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

(a) Includes $1.0 million applicable to 2004.

      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.

Rental Payments

	(In millions)
2004	$	11.8
2005		8.6
2006		5.6
2007		3.6
2008		2.6
After 2008		2.4

F-55

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Lines of Credit

      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.

Shareholders’ Equity

      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.

F-56

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Shareholders’ Equity — Preferred and Common Shares

	2003		2002
	(In millions, except
	per-share amounts)
4% Cumulative Preferred shares authorized, issued and outstanding, 60,000 shares at $100 par value, redeemable at $105 a share	$	6.0	$	6.0
Common shares, $1 par value, authorized 50,000,000 shares, issued and outstanding, 2003: 34,824,025 shares; 2002: 33,753,781 shares		34.8		33.8

      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 shareholder 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 shareholder rights plan to exempt the acquisition by Glencore and Mizuho 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 43% and 57% of Milacron’s fully diluted equity (on an as-converted basis) (see Subsequent Events).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Comprehensive Loss

      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.

Comprehensive Loss

	2003			2002			2001
	(In millions)
Net loss	$	(191.7	)	$	(222.9	)	$	(35.7	)
Foreign currency translation adjustments		8.5			6.2			(1.3	)
Reclassification of foreign currency translation adjustments to net gain on divestitures		—			10.6			—
Minimum pension liability adjustment(a)		14.6			(95.4	)		—
Cumulative effect of change in method of accounting		—			—			(.3	)
Change in fair value of foreign currency exchange contracts		—			(.2	)		.3
Total comprehensive loss	$	(168.6	)	$	(301.7	)	$	(37.0	)

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

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

Accumulated Other Comprehensive Loss

	2003			2002
	(In millions)
Foreign currency translation adjustments	$	(26.1	)	$	(34.6	)
Minimum pension liability adjustment		(80.8	)		(95.4	)
Fair value of foreign currency exchange contracts		.2			.2
	$	(106.7	)	$	(129.8	)

Contingencies

      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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

Foreign Exchange Contracts

      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.

Stock-Based Compensation

      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.

Stock Option Activity

					Weighted-
					Average
					Exercise
		Shares			Price
Outstanding at year-end 2000			4,081,275			20.65
	Granted		603,000			19.79
	Exercised		(311,350	)		13.26
	Cancelled		(158,150	)		20.91
Outstanding at year-end 2001			4,214,775			21.06
	Granted		829,500			13.19
	Exercised		(29,250	)		13.97
	Cancelled		(397,075	)		17.15
Outstanding at year-end 2002			4,617,950			20.03
	Granted		18,000			5.43
	Cancelled		(314,100	)		18.65
	Waived		(465,900	)		22.75
Outstanding at year-end 2003			3,855,950			19.75

      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 the 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

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Exercisable Stock Options at Year End

	Stock
	Options
2001		2,261,538
2002		2,653,163
2003		2,723,088

Shares Available for Future Grant at Year End

	Shares
2001		1,658,721
2002		969,524
2003		276,737

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

Components of Outstanding Stock Options

			Average		Weighted-
			Remaining		Average
	Number		Contract		Exercise
Range of Exercise Prices	Outstanding		Life		Price
$5.43-19.56		1,360,200		4.5	$	13.32
20.09-27.91		2,495,750		3.3		23.25
5.43-27.91		3,855,950

Components of Exercisable Stock Options

			Weighted-
			Average
	Number		Exercise
Range of Exercise Prices	Exercisable		Price
$5.43-19.56		497,850	$	13.59
20.09-27.91		2,225,238		23.63
5.43-27.91		2,723,088

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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:

Fair Value Assumptions

	2003			2002			2001
Dividend yield		1.6	%		.3-.7	%		.8-1.2	%
Expected volatility		54	%		46-50	%		39-50	%
Risk free interest rate at grant date		2.97	%		2.98- 4.28	%		4.74- 5.15	%
Expected life in years		5			2-5			2-7

      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 Stock Activity

	2003		2002		2001
Restricted stock granted		924,300		192,000		90,500
Weighted-average market value on date of grant	$	2.74	$	13.09	$	19.21

      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.

Organization

      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 —

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Total Sales by Segment

			2003			2002			2001
			(In millions)
Plastics technologies
	Machinery technologies — North America		$	321.2		$	313.6		$	361.7
	Machinery technologies — Europe			151.0			117.4			122.6
	Mold technologies			168.7			174.7			184.6
	Eliminations			(5.4	)		(8.5	)		(6.5	)
		Total plastics technologies		635.5			597.2			662.4
Industrial fluids				104.2			96.0			92.8
Total sales			$	739.7		$	693.2		$	755.2

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Customer Sales by Segment

			2003		2002		2001
			(In millions)
Plastics technologies
	Machinery technologies — North America		$	319.6	$	312.5	$	359.3
	Machinery technologies — Europe			147.2		110.0		118.6
	Mold technologies			168.7		174.7		184.5
		Total plastics technologies		635.5		597.2		662.4
Industrial fluids				104.2		96.0		92.8
Total sales			$	739.7	$	693.2	$	755.2

Operating Information by Segment

				2003			2002			2001
				(In millions)
Operating profit (loss)
	Plastics technologies(a)
		Machinery technologies — North America		$	6.7		$	8.0		$	(13.5	)
		Machinery technologies — Europe			(1.4	)		(8.1	)		(9.1	)
		Mold technologies			1.8			5.3			12.1
			Total plastics technologies		7.1			5.2			(10.5	)
	Industrial fluids				15.7			14.4			18.1
	Goodwill impairment charge(b)				(65.6	)		—			—
	Restructuring costs(c)				(27.1	)		(13.9	)		(17.5	)
	Corporate expenses(d)				(14.3	)		(15.4	)		(14.7	)
	Other unallocated expenses(e)				(4.6	)		(3.6	)		(3.9	)
Operating loss					(88.8	)		(13.3	)		(28.5	)
Interest expense — net					(23.0	)		(23.3	)		(22.5	)
Loss before income taxes				$	(111.8	)	$	(36.6	)	$	(51.0	)
Segment assets(f)
	Plastics technologies
		Machinery technologies — North America		$	165.5		$	187.4		$	220.5
		Machinery technologies — Europe			109.5			97.4			257.9
		Mold technologies			155.8			227.4			293.6
		Other			.7			1.0			1.9
			Total plastics technologies		431.5			513.2			773.9
	Industrial fluids				50.1			48.0			46.1
	Cash and cash equivalents				92.8			122.3			90.1
	Receivables sold				(33.0	)		(34.6	)		(36.3	)
	Deferred income taxes				98.8			173.0			85.7
	Assets of discontinued operations				7.2			16.0			455.7
	Unallocated corporate and other(g)				64.1			77.8			97.1
Total assets				$	711.5		$	915.7		$	1,512.3

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating Information by Segment

				2003		2002		2001
				(In millions)
Capital expenditures
	Plastics technologies
		Machinery technologies — North America		$	1.7	$	2.6	$	4.3
		Machinery technologies — Europe			1.1		.3		5.7
		Mold technologies			1.6		1.7		2.4
			Total plastics technologies		4.4		4.6		12.4
	Industrial fluids				2.1		1.5		.9
	Unallocated corporate				—		.1		.2
Total capital expenditures				$	6.5	$	6.2	$	13.5
Depreciation and amortization
	Plastics technologies
		Machinery technologies — North America		$	8.7	$	9.9	$	14.0
		Machinery technologies — Europe			3.9		3.5		4.8
		Mold technologies			6.7		7.4		12.8
			Total plastics technologies		19.3		20.8		31.6
	Industrial fluids				2.0		1.5		2.6
	Unallocated corporate				.4		.7		.7
Total depreciation and amortization(h)				$	21.7	$	23.0	$	34.9

(a)	In 2002, operating profit of the machinery technologies — North America segment includes $4.5 million of royalty income from the licensing of patented technology and the operating profit of the mold technologies segment includes a $1.0 million goodwill impairment charge.
(b)	Relates to the mold technologies segment.
(c)	In 2003, $7.7 million relates to machinery technologies — North America, $6.5 million relates to machinery technologies — Europe, $12.6 million relates to mold technologies and $.3 million relates to corporate expenses. In 2002, $6.7 million relates to machinery technologies — North America, $(.4) million relates to machinery technologies — Europe, $6.4 million relates to mold technologies and $1.2 million relates to corporate expenses. In 2001, $6.8 million relates to machinery technologies — North America, $6.9 million relates to machinery technologies — Europe, $3.5 million relates to mold technologies and $.3 million relates to industrial fluids. In 2003, 2002 and 2001, $3.3 million, $1.9 million and $3.1 million, respectively, relate to product line discontinuation and are therefore included in cost of products sold in the Consolidated Statements of Operations for those years.
(d)	In 2001, includes a gain of $2.6 million on the sale of surplus real estate.
(e)	Includes financing costs including costs related to the sale of accounts receivable.
(f)	Segment assets consist principally of accounts receivable, inventories, goodwill and property, plant and equipment which are considered controllable assets for management reporting purposes.
(g)	Consists principally of corporate assets, nonconsolidated investments, certain intangible assets, cash surrender value of company-owned life insurance, prepaid expenses and deferred charges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(h) In 2001, expense for goodwill amortization totaled $10.8 million, of which $3.9 million relates to machinery technologies — North America, $1.4 million relates to machinery technologies — Europe, $5.2 million relates to mold technologies and $.3 million relates to industrial fluids.

Geographic Information

			2003		2002		2001
			(In millions)
Sales(a)
	United States		$	450.8	$	444.4	$	503.1
	Non-U.S. operations
		Germany		102.3		84.3		100.0
		Other Western Europe		121.9		105.8		101.3
		Asia		31.0		31.7		25.4
		Other		33.7		27.0		25.4
	Total sales		$	739.7	$	693.2	$	755.2
Noncurrent assets
	United States		$	150.6	$	230.3	$	442.6
	Non-U.S. operations
		Germany		68.9		64.7		65.0
		Other Western Europe		30.2		27.2		68.2
		Asia		5.8		6.0		5.9
		Other		13.8		10.4		6.4
	Total noncurrent assets		$	269.3	$	338.6	$	588.1

(a) Sales are attributed to specific countries or geographic areas based on the origin of the shipment.

      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.

Subsequent Events

      On March 12, 2004, the company entered into a definitive agreement whereby Glencore and Mizuho 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 were convertible into shares of the company’s common stock at a conversion price of $2.00 per share. Glencore and Mizuho converted the entire principal amount of the Series A Notes into 15 million shares of common stock on April 15, 2004. The Series A Notes and Series B Notes initially bore a combination of cash and pay-in-kind interest at a total rate of 20% per annum, which rate was retroactively reset on June 10, 2004 to 6% per annum from the date of issuance, payable in cash.

      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. This senior secured credit facility

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

consisted of a $65 million revolving A facility and a $75 million term loan B facility. On March 12, 2004, extensions of credit under the facility in an aggregate amount of $84 million were utilized to repay and terminate the company’s then-existing revolving credit facility and its then-existing receivables purchase program.

      On May 26, 2004, Milacron Escrow Corporation, a wholly-owned, direct subsidiary of the company created solely to issue notes and to merge with and into the company, issued $225,000,000 in aggregate principal amount of 11 1/2% Senior Secured Notes due 2011 in a private placement. The proceeds of this issuance were initially placed in escrow. On June 10, 2004, the conditions for release of the proceeds from escrow were satisfied, including the consummation of the merger of Milacron Escrow Corporation with and into the company.

      On June 10, 2004, the common stock into which the Series A Notes were converted and the Series B Notes were exchanged for 500,000 shares of Series B Preferred Stock, a new series of the company’s convertible preferred stock with a cumulative cash dividend rate of 6%. On June 10, 2004, the company also entered into an agreement for a new $75 million asset based revolving credit facility with JPMorgan Chase Bank as administrative agent and collateral agent.

      On June 10, 2004, the company applied the proceeds of the offering of the Senior Secured Notes, together with $7.3 million in borrowings under the asset based facility and approximately $10.3 million of cash on hand, to:

•  purchase €114,990,000 of the €115 million aggregate outstanding principal amount of Milacron Capital Holdings B.V.’s 7 5/8% Guaranteed Bonds due in April 2005 at the settlement of a tender offer therefor;

•  terminate and repay $19 million in amounts outstanding under the revolving A facility (the company also used $17.4 million in availability under the asset based facility to replace or provide credit support for the outstanding letters of credit under the revolving A facility);

•  repay the $75 million term loan B facility; and

•  pay transaction expenses.

      Pursuant to the terms of the asset based facility, the cash the company receives from collection of receivables is subject to an automatic “sweep” to repay the borrowings under the asset based facility on a daily basis. As a result, the company relies on borrowings under the asset based facility as the primary source of cash for use in our North American operations. The availability of borrowings under the asset based facility is subject to a borrowing base limitation, including an excess availability reserve, which may be adjusted from time to time by the administrative agent at its discretion, and the satisfaction of certain conditions to borrowing, including, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults (including under financial covenants) or any material adverse change in our business or financial condition. If the company has no additional availability or is unable to satisfy the borrowing conditions, its liquidity could be materially adversely affected.

      The asset based facility contains a number of customary affirmative and negative covenants. In addition, the asset based facility contains, for the first five quarters, a financial covenant requiring us to maintain a minimum level of cumulative consolidated EBITDA, to be tested quarterly, and a limit on capital expenditures to be complied with on a quarterly basis, in each case starting with the third quarter of 2004. Thereafter, we will have to comply with a fixed charge coverage ratio to be tested quarterly.

      As of June 18, 2004, Glencore and Mizuho collectively owned 100% of the shares of our outstanding Series B Preferred Stock, which represents approximately 57% of our outstanding fully diluted equity (on an as-converted basis). Glencore has reported in a Schedule 13D filing with the SEC that it has sold an undivided participation interest in its investment in us to Triage Offshore Funds, Ltd. equivalent to

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MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

62,500 shares of Series B Preferred Stock, representing approximately 7.2% of our outstanding equity (on an as-converted basis), with Glencore remaining as the record holder of such shares. If we redeem a portion of Glencore’s and Mizuho’s shares of Series B Preferred Stock with the proceeds of a rights offering, Glencore’s and Mizuho’s collective holdings would represent approximately 43% of our outstanding equity, with Triage’s participation interest in Glencore’s holdings representing approximately 5.0% of our outstanding equity, in each case on an as-covered basis and assuming full subscription of the rights offering. After seven years, the Series B Preferred Stock will 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 is subject to reset to $1.75 per share at the end of the second quarter of 2005 if a test based on our financial performance for 2004 is not satisfied. In addition, as part of the transaction we have issued to holders of the Series B Preferred Stock contingent warrants to purchase an aggregate of one million shares of our common stock, which contingent warrants are exercisable only if a test based on our financial performance for 2005 is not satisfied. Assuming that we do not conduct a rights offering to our existing shareholders, and both the conversion price of the Series B Preferred Stock is reset to $1.75 and the contingent warrants are exercised, the holders of the Series B Preferred Stock would own approximately 62.5% of our fully diluted equity (on an as-converted basis).

      The conversion of the Series A Notes into newly issued common stock on April 15, 2004, and the exchange of such common stock and the Series B Notes for Series B Preferred Stock on June 10, 2004, triggered an “ownership change” for U.S. federal income tax purposes. As a consequence of this ownership change, the timing of our utilization of tax loss carryforwards and other tax attributes will be substantially delayed. This delay will increase income tax expense and decrease available cash in future years.

      The holders of the Series B Preferred Stock, voting separately as a class, have the right to elect a number of directors to our board of directors in proportion to the percentage of fully diluted common stock represented by the outstanding Series B Preferred Stock (on an as-converted basis), rounded up to the nearest whole number (up to a maximum equal to two-thirds of the total number of directors, less one).

      After giving effect to the repayment and termination of the then-existing revolving credit facility and the then-existing accounts receivable liquidity facility, repayment of the senior U.S. notes, consummation of the tender offer for the Eurobonds, repayment and termination of the revolving A facility and the term loan B facility and payment of transaction expense, the company’s current cash balance was approximately $35 million at June 10, 2004.

Condensed Consolidating Financial Information

      On May 26, 2004, 11 1/2% Senior Secured Notes due 2011 were issued by Milacron Escrow Corporation, a wholly owned, direct subsidiary of Milacron Inc. created solely to issue the Senior Secured Notes and to merge with and into Milacron Inc. The merger of Milacron Escrow Corporation with and into Milacron Inc. was completed on June 10, 2004. Also on June 10, 2004, the Senior Secured Notes were jointly, severally, fully and unconditionally guaranteed by the company’s U.S. and Canadian restricted subsidiaries and by Milacron Capital Holdings B.V. Following are condensed consolidating financial statements of the company, including the guarantors. This information is provided pursuant to Rule 3-10 of Regulation S-X in lieu of separate financial statements of each subsidiary guaranteeing the Senior Secured Notes. The following condensed consolidating financial statements present the balance sheet, statement of operations and cash flows of (i) Milacron Inc. (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting), (ii) the guarantor subsidiaries of Milacron Inc., (iii) the nonguarantor subsidiaries of Milacron Inc., and (iv) the eliminations necessary to arrive at the information for the company on a consolidated basis. The condensed consolidating financial statements should be read in conjunction with the accompanying consolidated financial statements of the company.

F-67

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2003

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
Sales			$	—		$	482.7		$	275.8		$	(18.8	)	$	739.7
	Cost of products sold			(0.9	)		406.8			218.2			(18.8	)		605.3
	Cost of products sold related to restructuring			—			—			3.3			—			3.3
	Total cost of products sold			(0.9	)		406.8			221.5			(18.8	)		608.6
		Manufacturing margins		0.9			75.9			54.3			—			131.1
Other costs and expenses
	Selling and administrative			14.5			58.1			56.4			—			129.0
	Goodwill impairment charge			—			65.6			—			—			65.6
	Refinancing costs			1.8			—			—			—			1.8
	Restructuring costs			0.7			8.8			14.3			—			23.8
	Other — net			1.6			(2.1	)		0.2			—			(0.3	)
		Total other costs and expenses		18.6			130.4			70.9			—			219.9
Operating loss				(17.7	)		(54.5	)		(16.6	)		—			(88.8	)
Other non-operating expense (income)
	Intercompany dividends			(11.9	)		(20.7	)		—			32.6			—
	Intercompany management fees			(11.9	)		11.9			—			—			—
	Intercompany interest			(5.3	)		6.1			(0.8	)		—			—
	Equity in (earnings) losses of subsidiaries			120.6			(4.9	)		—			(115.7	)		—
		Total other non-operating expense (income)		91.5			(7.6	)		(0.8	)		(83.1	)		—
Earnings (loss) from continuing operations before interest and income taxes				(109.2	)		(46.9	)		(15.8	)		83.1			(88.8	)
Interest expense — net				(13.4	)		(9.2	)		(0.4	)		—			(23.0	)
Earnings (loss) from continuing operations before income taxes				(122.6	)		(56.1	)		(16.2	)		83.1			(111.8	)
Provision (benefit) for income taxes				68.3			(1.5	)		5.9			—			72.7
Earnings (loss) from continuing operations				(190.9	)		(54.6	)		(22.1	)		83.1			(184.5	)
Discontinued operations
	Earnings (loss) from operations			—			(6.4	)		—			—			(6.4	)
	Gain (loss) on divestitures			(0.8	)		—			—			—			(0.8	)
	Discontinued operations — net of income taxes			(0.8	)		(6.4	)		—			—			(7.2	)
	Net earnings (loss)		$	(191.7	)	$	(61.0	)	$	(22.1	)	$	83.1		$	(191.7	)

F-68

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2002

						Guarantor			Nonguarantor			Eliminations &
			Parent			Subsidiaries			Subsidiaries			Other			Consolidated
			(In millions)
Sales			$	—		$	480.6		$	236.4		$	(23.8	)	$	693.2
	Cost of products sold			(0.3	)		403.1			192.6			(23.8	)		571.6
	Cost of products sold related to restructuring			—			1.9			—			—			1.9
	Total cost of products sold			(0.3	)		405.0			192.6			(23.8	)		573.5
		Manufacturing margins		0.3			75.6			43.8			—			119.7
Other costs and expenses
	Selling and administrative			13.9			55.8			51.3			—			121.0
	Goodwill impairment charge			—			1.0			—			—			1.0
	Restructuring costs			0.7			6.8			4.5			—			12.0
	Other — net			3.2			(3.1	)		(1.1	)		—			(1.0	)
		Total other costs and expenses		17.8			60.5			54.7			—			133.0
Operating earnings (loss)				(17.5	)		15.1			(10.9	)		—			(13.3	)
Other non-operating expense (income)
	Intercompany dividends			(58.4	)		(0.7	)		(0.6	)		59.7			—
	Intercompany management fees			(14.1	)		12.4			1.7			—			—
	Intercompany royalties			—			3.6			(3.6	)		—			—
	Intercompany interest			(6.6	)		7.9			(1.3	)		—			—
	Equity in (earnings) losses of subsidiaries			300.1			30.5			32.5			(363.1	)		—
	Other intercompany transactions			0.9			0.4			(0.4	)		(0.9	)		—
		Total other non-operating expense (income)		221.9			54.1			28.3			(304.3	)		—
Earnings (loss) from continuing operations before interest and income taxes				(239.4	)		(39.0	)		(39.2	)		304.3			(13.3	)
	Interest expense — net			(13.9	)		(8.6	)		(0.8	)		—			(23.3	)
Earnings (loss) from continuing operations before income taxes				(253.3	)		(47.6	)		(40.0	)		304.3			(36.6	)
	Benefit for income taxes			(8.2	)		(6.0	)		(4.0	)		—			(18.2	)
Earnings (loss) from continuing operations				(245.1	)		(41.6	)		(36.0	)		304.3			(18.4	)
Discontinued operations — net of income taxes
	Loss from operations			—			(7.7	)		(17.5	)		—			(25.2	)
	Net gain (loss) on divestitures			22.2			(5.2	)		(8.6	)		—			8.4
		Total discontinued operations		22.2			(12.9	)		(26.1	)		—			(16.8	)
Cumulative effect of change in method of accounting				—			(141.3	)		(46.4	)		—			(187.7	)
Net earnings (loss)			$	(222.9	)	$	(195.8	)	$	(108.5	)	$	304.3		$	(222.9	)

F-69

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2001

						Guarantor			Nonguarantor			Eliminations &
			Parent			Subsidiaries			Subsidiaries			Other			Consolidated
			(In millions)
Sales			$	—		$	543.9		$	239.4		$	(28.1	)	$	755.2
	Cost of products sold			(4.6	)		469.8			186.6			(28.1	)		623.7
	Cost of products sold related to restructuring			—			3.1			—			—			3.1
	Total cost of products sold			(4.6	)		472.9			186.6			(28.1	)		626.8
		Manufacturing margins		4.6			71.0			52.8			—			128.4
Other costs and expenses
	Selling and administrative			11.7			68.3			49.6			—			129.6
	Restructuring costs			—			4.1			10.3			—			14.4
	Other — net			(0.9	)		10.8			3.0			—			12.9
		Total other costs and expenses		10.8			83.2			62.9			—			156.9
Operating loss				(6.2	)		(12.2	)		(10.1	)		—			(28.5	)
Other non-operating expense (income)
	Intercompany dividends			(64.0	)		—			—			64.0			—
	Intercompany management fees			(15.8	)		12.5			3.3			—			—
	Intercompany royalties			—			5.4			(5.4	)		—			—
	Intercompany interest			(15.1	)		19.8			(4.7	)		—			—
	Equity in (earnings) losses of subsidiaries			117.4			(12.5	)		4.9			(109.8	)		—
		Total other non-operating expense (income)		22.5			25.2			(1.9	)		(45.8	)		—
Earnings (loss) from continuing operations before interest and income taxes				(28.7	)		(37.4	)		(8.2	)		45.8			(28.5	)
	Interest expense — net			(13.0	)		(7.8	)		(1.7	)		—			(22.5	)
Earnings (loss) from continuing operations before income taxes				(41.7	)		(45.2	)		(9.9	)		45.8			(51.0	)
Provision (benefit) for income taxes				(6.0	)		(20.4	)		4.1			—			(22.3	)
Earnings (loss) from continuing operations			$	(35.7	)	$	(24.8	)	$	(14.0	)	$	45.8			(28.7	)
Discontinued operations — net of income taxes				—			(8.7	)		1.7			—			(7.0	)
Net earnings (loss)			$	(35.7	)	$	(33.5	)	$	(12.3	)	$	45.8		$	(35.7	)

F-70

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING BALANCE SHEET

As of December 31, 2003

						Guarantor			Nonguarantor			Eliminations
			Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
			(In millions)
ASSETS
Current assets
	Cash and cash equivalents		$	26.7		$	14.3		$	51.8		$	—		$	92.8
	Notes and accounts receivable (excluding intercompany receivables)			1.7			35.3			56.8			—			93.8
	Inventories			—			72.6			59.7			—			132.3
	Other current assets			13.9			11.0			20.3			—			45.2
	Intercompany receivables (payables)			(325.4	)		233.0			94.7			(2.3	)		—
		Current assets of continuing operations		(283.1	)		366.2			283.3			(2.3	)		364.1
	Assets of discontinued operations			—			7.2			—			—			7.2
		Total current assets		(283.1	)		373.4			283.3			(2.3	)		371.3
Property, plant and equipment — net				1.3			69.5			70.0			—			140.8
Goodwill				—			52.3			31.5			—			83.8
Investments in subsidiaries				300.5			197.9			(15.7	)		(482.7	)		—
Intercompany advances — net				297.8			(332.4	)		34.6			—			—
Other noncurrent assets				32.7			72.9			10.0			—			115.6
	Total assets		$	349.2		$	433.6		$	413.7		$	(485.0	)	$	711.5
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit		$	42.0		$	—		$	0.6		$	—		$	42.6
	Long-term debt and capital lease obligations due within one year			115.9			—			1.4			—			117.3
	Trade accounts payable			2.6			31.9			33.4			—			67.9
	Advance billings and deposits			—			9.6			5.6			—			15.2
	Accrued and other current liabilities			35.5			55.5			18.3			—			109.3
		Current liabilities of continuing operations		196.0			97.0			59.3			—			352.3
	Liabilities of discontinued operations			—			1.8			—			—			1.8
		Total current liabilities		196.0			98.8			59.3			—			354.1
Long-term accrued liabilities				177.8			10.3			39.7			—			227.8
Long-term debt				9.3			142.6			11.6			—			163.5
	Total liabilities			383.1			251.7			110.6			—			745.4
Shareholders’ equity (deficit)
	Preferred shares			6.0			—			—			—			6.0
	Common shares, $1 par value			34.8			34.4			12.8			(47.2	)		34.8
	Capital in excess of par value			284.0			294.1			78.2			(372.3	)		284.0
	Reinvested earnings (deficit)			(252.0	)		(122.3	)		200.3			(78.0	)		(252.0	)
	Accumulated other comprehensive income (loss)			(106.7	)		(24.3	)		11.8			12.5			(106.7	)
		Total shareholders’ equity (deficit)		(33.9	)		181.9			303.1			(485.0	)		(33.9	)
Total liabilities and shareholders’ equity (deficit)			$	349.2		$	433.6		$	413.7		$	(485.0	)	$	711.5

F-71

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING BALANCE SHEET

As of December 31, 2002

							Guarantor			Nonguarantor			Eliminations
				Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
				(In millions)
ASSETS
Current assets
	Cash and cash equivalents			$	21.4		$	7.4		$	93.5		$	—		$	122.3
	Notes and accounts receivable (excluding intercompany receivables)				0.9			37.1			51.3			—			89.3
	Inventories				—			87.1			60.5			—			147.6
	Other current assets				29.7			15.8			24.1			—			69.6
	Intercompany receivables (payables)				(311.1	)		265.8			47.6			(2.3	)		—
		Current assets of continuing operations			(259.1	)		413.2			277.0			(2.3	)		428.8
	Assets of discontinued operations				—			16.0			—			—			16.0
		Total current assets			(259.1	)		429.2			277.0			(2.3	)		444.8
Property, plant and equipment — net					2.0			79.8			68.0			—			149.8
Goodwill					—			116.4			26.9			—			143.3
Investments in subsidiaries					419.1			200.1			(15.6	)		(603.6	)		—
Intercompany advances — net					298.6			(339.9	)		41.3			—			—
Other noncurrent assets					105.0			56.4			16.4			—			177.8
	Total assets			$	565.6		$	542.0		$	414.0		$	(605.9	)	$	915.7
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit			$	42.0		$	—		$	3.0		$	—		$	45.0
	Long-term debt and capital lease obligations due within one year				0.8			—			0.3			—			1.1
	Trade accounts payable				2.0			39.1			27.7			—			68.8
	Advance billings and deposits				—			13.6			3.9			—			17.5
	Accrued and other current liabilities				69.0			57.9			12.0			—			138.9
		Current liabilities of continuing operations			113.8			110.6			46.9			—			271.3
	Liabilities of discontinued operations				—			10.9			—			—			10.9
		Total current liabilities			113.8			121.5			46.9			—			282.2
Long-term accrued liabilities					192.4			12.6			39.1			—			244.1
Long-term debt					125.4			118.1			11.9			—			255.4
	Total liabilities			$	431.6		$	252.2		$	97.9		$	—		$	781.7
Shareholders’ equity (deficit)
	Preferred shares				6.0			—			—			—			6.0
	Common shares, $1 par value				33.8			34.4			12.8			(47.2	)		33.8
	Capital in excess of par value				283.5			300.4			81.3			(381.7	)		283.5
	Reinvested earnings (deficit)				(59.5	)		(26.9	)		243.0			(216.1	)		(59.5	)
	Accumulated other comprehensive income (loss)				(129.8	)		(18.1	)		(21.0	)		39.1			(129.8	)
			Total shareholders’ equity (deficit)		134.0			289.8			316.1			(605.9	)		134.0
Total liabilities and shareholders’ equity (deficit)				$	565.6		$	542.0		$	414.0		$	(605.9	)	$	915.7

F-72

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING BALANCE SHEET

As of December 31, 2001

							Guarantor			Nonguarantor			Eliminations
				Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
				(In millions)
ASSETS
Current assets
	Cash and cash equivalents			$	51.7		$	9.7		$	28.7		$	—		$	90.1
	Notes and accounts receivable (excluding intercompany receivables)				0.3			38.2			50.0			—			88.5
	Inventories				—			110.4			67.5			—			177.9
	Other current assets				17.3			18.8			19.2			—			55.3
	Intercompany receivables (payables)				(290.5	)		239.4			51.1			—			—
		Current assets of continuing operations			(221.2	)		416.5			216.5			—			411.8
	Assets of discontinued operations				—			88.4			367.3			—			455.7
		Total current assets			(221.2	)		504.9			583.8			—			867.5
Property, plant and equipment — net					2.6			94.5			68.7			—			165.8
Goodwill					—			288.7			64.5			—			353.2
Investments in subsidiaries					763.4			222.0			50.3			(1,035.7	)		—
Intercompany advances — net					278.5			(339.6	)		59.8			1.3			—
Other noncurrent assets					84.2			26.1			15.5			—			125.8
	Total assets			$	907.5		$	796.6		$	842.6		$	(1,034.4	)	$	1,512.3
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit			$	69.0		$	—		$	2.7		$	—		$	71.7
	Long-term debt and capital lease obligations due within one year				—			—			3.9			—			3.9
	Trade accounts payable				3.4			30.9			24.8			—			59.1
	Advance billings and deposits				—			12.7			4.3			—			17.0
	Accrued and other current liabilities				(6.9	)		67.6			32.5			—			93.2
		Current liabilities of continuing operations			65.5			111.2			68.2			—			244.9
	Liabilities of discontinued operations				—			10.7			156.1			—			166.8
		Total current liabilities			65.5			121.9			224.3			—			411.7
Long-term accrued liabilities					82.1			44.4			38.1			—			164.6
Long-term debt					325.0			103.5			72.6			—			501.1
		Total liabilities		$	472.6		$	269.8		$	335.0		$	—		$	1,077.4
Shareholders’ equity (deficit)
	Preferred shares				6.0			—			—			—			6.0
	Common shares, $1 par value				33.5			22.0			82.1			(104.1	)		33.5
	Capital in excess of par value				281.4			331.4			77.5			(408.9	)		281.4
	Reinvested earnings (deficit)				165.0			182.1			399.0			(581.1	)		165.0
	Accumulated other comprehensive income (loss)				(51.0	)		(8.7	)		(51.0	)		59.7			(51.0	)
			Total shareholders’ equity (deficit)		434.9			526.8			507.6			(1,034.4	)		434.9
Total liabilities and shareholders’ equity (deficit)				$	907.5		$	796.6		$	842.6		$	(1,034.4	)	$	1,512.3

F-73

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2003

								Guarantor			Nonguarantor			Eliminations
					Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
					(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net loss			$	(191.7	)	$	(61.0	)	$	(22.1	)	$	83.1		$	(191.7	)
		Operating activities providing (using) cash
			Loss from discontinued operations			—			6.4			—			—			6.4
			Net loss on divestitures			0.8			—			—			—			0.8
			Depreciation			0.4			12.4			7.5			—			20.3
			Amortization of intangibles			—			1.4			—			—			1.4
			Restructuring costs			0.7			8.8			17.6			—			27.1
			Equity in (earnings) losses of subsidiaries			120.6			(4.9	)		—			(115.7	)		—
			Distributions from equity subsidiaries			—			(11.9	)		(20.7	)		32.6			—
			Goodwill impairment charge			—			65.6			—			—			65.6
			Deferred income taxes			81.3			(16.3	)		8.3			—			73.3
			Working capital changes
				Notes and accounts receivable		(0.5	)		2.9			4.2			—			6.6
				Inventories		—			14.8			8.9			—			23.7
				Other current assets		9.0			2.8			2.1			—			13.9
				Trade accounts payable		0.4			(7.3	)		0.8			—			(6.1	)
				Other current liabilities		(10.6	)		(17.7	)		(3.0	)		—			(31.3	)
			Decrease (increase) in other noncurrent assets			(1.2	)		1.6			0.8			—			1.2
			Increase (decrease) in long-term accrued liabilities			0.3			(0.8	)		(2.2	)		—			(2.7	)
			Other — net			7.7			(3.5	)		(2.7	)		—			1.5
				Net cash provided (used) by operating activities		17.2			(6.7	)		(0.5	)		—			10.0
	Investing activities cash flows
		Capital expenditures				—			(4.5	)		(2.0	)		—			(6.5	)
		Net disposals of plant, property and equipment				0.5			1.7			0.3			—			2.5
		Acquisitions				—			(2.9	)		(3.6	)		—			(6.5	)
		Divestitures				(20.3	)		—			—			—			(20.3	)
				Net cash used by investing activities		(19.8	)		(5.7	)		(5.3	)		—			(30.8	)
	Financing activities cash flows
		Dividends paid				(0.8	)		—			—			—			(0.8	)
		Repayments of long-term debt				(0.9	)		—			(1.3	)		—			(2.2	)
		Decrease in borrowings under lines of credit				—			—			(2.6	)		—			(2.6	)
				Net cash provided (used) by financing activities		(1.7	)		—			(3.9	)		—			(5.6	)
Intercompany receivables and payables						14.3			32.9			(47.2	)		—			—
Intercompany advances						0.7			(7.5	)		6.8			—			—
Cash flows related to discontinued operations						(5.4	)		(6.5	)		—			—			(11.9	)
Effect of exchange rate fluctuations on cash and cash equivalents						—			0.4			8.4			—			8.8
Increase (decrease) in cash and cash equivalents						5.3			6.9			(41.7	)		—			(29.5	)
Cash and cash equivalents at beginning of year						21.4			7.4			93.5			—			122.3
Cash and cash equivalents at end of year					$	26.7		$	14.3		$	51.8		$	—		$	92.8

F-74

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2002

								Guarantor			Nonguarantor			Eliminations
					Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
					(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net earnings (loss)			$	(222.9	)	$	(195.8	)	$	(108.5	)	$	304.3		$	(222.9	)
		Operating activities providing (using) cash
			Loss from discontinued operations			—			7.7			17.5			—			25.2
			Net gain (loss) on divestitures			(22.2	)		5.2			8.6			—			(8.4	)
			Cumulative effect of change in method of accounting			—			141.3			46.4			—			187.7
			Depreciation			0.7			14.3			7.0			—			22.0
			Amortization of intangibles			—			1.0			—			—			1.0
			Goodwill impairment charge			—			1.0			—			—			1.0
			Restructuring costs			0.7			8.7			4.5			—			13.9
			Equity in (earnings) losses of subsidiaries			300.1			30.5			32.5			(363.1	)		—
			Distributions from equity subsidiaries			—			(12.3	)		(47.4	)		59.7			—
			Deferred income taxes			(11.9	)		0.8			(5.6	)		—			(16.7	)
			Working capital changes
				Notes and accounts receivable		1.6			1.2			6.9			—			9.7
				Inventories		0.1			23.4			12.5			—			36.0
				Other current assets		—			2.4			—			—			2.4
				Trade accounts payable		(1.4	)		8.2			0.1			—			6.9
				Other current liabilities		39.8			(16.0	)		(34.8	)		—			(11.0	)
			Decrease (increase) in other noncurrent assets			(3.3	)		(4.8	)		1.1			—			(7.0	)
			Increase (decrease) in long-term accrued liabilities			(4.7	)		—			0.5			—			(4.2	)
			Other — net			2.4			(2.5	)		1.3			(0.9	)		0.3
				Net cash provided (used) by operating activities		79.0			14.3			(57.4	)		—			35.9
	Investing activities cash flows
		Capital expenditures				—			(4.6	)		(1.6	)		—			(6.2	)
		Net disposals of plant, property and equipment				—			5.6			1.9			—			7.5
		Acquisitions				—			—			(4.3	)		—			(4.3	)
		Divestitures				125.6			—			178.3			—			303.9
				Net cash provided by investing activities		125.6			1.0			174.3			—			300.9
	Financing activities cash flows
		Dividends paid				(1.6	)		—			—			—			(1.6	)
		Issuance of long-term debt				11.5			—			—			—			11.5
		Repayments of long-term debt				(0.3	)		—			(1.0	)		—			(1.3	)
		Decrease in borrowings under lines of credit				(232.0	)		—			(79.6	)		—			(311.6	)
		Issuance of common shares				0.4			—			—			—			0.4
				Net cash provided (used) by financing activities		(222.0	)		—			(80.6	)		—			(302.6	)
Intercompany receivables and payables						31.1			(65.4	)		34.3			—			—
Intercompany advances						(44.0	)		15.4			28.6			—			—
Cash flows related to discontinued operations						—			32.3			(39.9	)		—			(7.6	)
Effect of exchange rate fluctuations on cash and cash equivalents						—			0.1			5.5			—			5.6
Increase (decrease) in cash and cash equivalents						(30.3	)		(2.3	)		64.8			—			32.2
Cash and cash equivalents at beginning of year						51.7			9.7			28.7			—			90.1
Cash and cash equivalents at end of year					$	21.4		$	7.4		$	93.5		$	—		$	122.3

F-75

MILACRON INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2001

								Guarantor			Nonguarantor			Eliminations
					Parent			Subsidiaries			Subsidiaries			& Other			Consolidated
					(In millions)
Increase (decrease) in cash and cash equivalents
	Operating activities cash flows
		Net earnings (loss)			$	(35.7	)	$	(33.5	)	$	(12.3	)	$	45.8		$	(35.7	)
		Operating activities providing (using) cash
			Loss (earnings) from discontinued operations			—			8.7			(1.7	)		—			7.0
			Depreciation			0.8			16.3			6.6			—			23.7
			Amortization of goodwill and other intangibles			—			9.3			1.9			—			11.2
			Restructuring costs			—			7.2			10.3			—			17.5
			Equity in (earnings) losses of subsidiaries			117.4			(12.5	)		4.9			(109.8	)		—
			Distributions from equity subsidiaries			—			(45.0	)		(19.0	)		64.0			—
			Deferred income taxes			4.1			(30.2	)		10.5			—			(15.6	)
			Working capital changes
				Notes and accounts receivable		(0.1	)		36.2			5.1			—			41.2
				Inventories		—			44.7			0.2			—			44.9
				Other current assets		2.1			(0.5	)		(1.9	)		—			(0.3	)
				Trade accounts payable		0.9			(32.1	)		(5.7	)		—			(36.9	)
				Other current liabilities		(67.2	)		44.6			(20.6	)		—			(43.2	)
			Decrease (increase) in other noncurrent assets			(17.3	)		0.3			(2.3	)		—			(19.3	)
			Increase (decrease) in long-term accrued liabilities			(3.3	)		—			0.1			—			(3.2	)
			Other — net			(1.5	)		4.5			0.4			—			3.4
				Net cash provided (used) by operating activities		0.2			18.0			(23.5	)		—			(5.3	)
	Investing activities cash flows
		Capital expenditures				(0.2	)		(6.2	)		(7.1	)		—			(13.5	)
		Net disposals of plant, property and equipment				4.5			0.1			0.5			—			5.1
		Acquisitions				—			(2.1	)		(26.5	)		—			(28.6	)
				Net cash provided (used) by investing activities		4.3			(8.2	)		(33.1	)		—			(37.0	)
	Financing activities cash flows
		Dividends paid				(12.6	)		—			—			—			(12.6	)
		Issuance of long-term debt				—			—			5.4			—			5.4
		Repayments of long-term debt				—			(2.4	)		(3.1	)		—			(5.5	)
		Increase in borrowings under lines of credit				74.2			—			44.5			—			118.7
		Issuance of common shares				4.1			—			—			—			4.1
		Purchase of treasury and other common shares				(7.7	)		—			—			—			(7.7	)
				Net cash provided (used) by financing activities		58.0			(2.4	)		46.8			—			102.4
Intercompany receivables and payables						11.2			(36.2	)		25.0			—			—
Intercompany advances						(21.2	)		26.5			(5.3	)		—			—
Cash flows related to discontinued operations						—			(2.0	)		(1.1	)		—			(3.1	)
Effect of exchange rate fluctuations on cash and cash equivalents						—			(0.2	)		(0.5	)		—			(0.7	)
Increase (decrease) in cash and cash equivalents						52.5			(4.5	)		8.3			—			56.3
Cash and cash equivalents at beginning of year						(0.8	)		14.2			20.4			—			33.8
Cash and cash equivalents at end of year					$	51.7		$	9.7		$	28.7		$	—		$	90.1

F-76

SUPPLEMENTARY FINANCIAL INFORMATION

Operating Results by Quarter (Unaudited)

		2003
		Qtr 1			Qtr 2			Qtr 3			Qtr 4
		(In millions, except per-share amounts)
Sales		$	190.2		$	181.6		$	170.2		$	197.7
Manufacturing margins			31.8			28.1			31.2			40.0
	Percent of sales		16.7	%		15.4	%		18.3	%		20.2	%
Loss from continuing operations(a)			(7.6	)		(88.3	)		(65.7	)		(22.9	)
	Per common share — basic and diluted		(.23	)		(2.63	)		(1.95	)		(.68	)
Discontinued operations			(.7	)		(3.0	)		(2.0	)		(1.5	)
	Per common share — basic and diluted		(.02	)		(.09	)		(.06	)		(.04	)
Net loss			(8.3	)		(91.3	)		(67.7	)		(24.4	)
	Per common share — basic and diluted		(.25	)		(2.72	)		(2.01	)		(.72	)

		2002
Sales		$	158.5		$	169.9		$	173.3		$	191.5
Manufacturing margins			25.3			31.4			31.6			31.4
	Percent of sales		16.0	%		18.5	%		18.2	%		16.4	%
Earnings (loss) from continuing operations(b)			(7.0	)		(7.9	)		(4.5	)		1.0
	Per common share — basic and diluted		(.21	)		(.24	)		(.14	)		.03
Discontinued operations(c)			(6.1	)		(23.2	)		19.0			(6.5	)
	Per common share — basic and diluted		(.18	)		(.69	)		.57			(.20	)
Cumulative effect of change in method of accounting			(187.7	)		—			—			—
	Per common share — basic and diluted		(5.62	)		—			—			—
Net earnings (loss)			(200.8	)		(31.1	)		14.5			(5.5	)
	Per common share — basic and diluted		(6.01	)		(.93	)		.43			(.17	)

(a)	Includes restructuring costs of $6.0 million ($4.8 million after tax) in quarter 1, $6.3 million with no tax benefit in quarter 2, $6.4 million ($6.3 million after tax) in quarter 3 and $8.4 million ($8.1 million after tax) in quarter 4. Also includes goodwill impairment charges of $52.3 million in quarter 3 and $13.3 million in quarter 4, in both cases with no tax benefit.
(b)	Includes restructuring costs of $5.0 million ($3.1 million after tax) in quarter 1, $2.9 million ($2.0 million after tax) in quarter 2, $1.9 million ($1.1 million after tax) in quarter 3 and $4.1 million ($2.6 million after tax) in quarter 4.
(c)	In quarter 2, includes a loss of $15.3 million related to the sale of the company’s Widia and Werkö metalcutting tools businesses. In quarter 3, includes a gain of $29.4 million on the sale of the company’s Valenite metalcutting tools business. In quarter 4, includes a loss of $9.9 million on the expected divestitures of the company’s grinding wheels and round metalcutting tools businesses and a benefit of $4.2 million related to adjustments of previously recognized gains and losses on divestitures.

F-77

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

      The following table sets forth all expenses (subject to future contingencies) payable by us in connection with the issuance and distribution of our securities being registered hereby. All amounts are estimated except the SEC registration fee:

Expenses	Amount
SEC registration fee	$	4,100.89
Printing and engraving expenses		*
Legal fees and expenses		*
Blue Sky fees and expenses		*
Subscription agent fees and expenses		*
Accounting fees and expenses		*
Miscellaneous expenses		*
TOTAL	$	*

*  To be completed by amendment

Item 14. Indemnification of Directors and Officers.

      Section 145(a) of the General Corporation Law of the State of Delaware (the “DGCL”) provides in relevant part that a corporation may indemnify any officer or director who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another entity, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

      Section 145(b) of the DGCL provides in relevant part that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

      Our Certificate of Incorporation limits the liability of directors to the fullest extent permitted by Delaware law, and our By-laws provide for the indemnification of our directors and officers to the maximum extent permitted by Delaware law.

II-1

      Section 145(g) of the DGCL provides that a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.

      Milacron Inc. maintains a global Directors’ and Officers’ liability insurance policy that provides coverage to its directors and officers.

Item 15. Recent Sales of Unregistered Securities.

Series A Notes, Series B Notes, Series B Preferred Stock and Contingent Warrants

      On March 12, 2004, we issued $100 million in aggregate principal amount of new exchangeable debt securities to Glencore Finance AG and Mizuho International plc. 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.

      On April 15, 2004, we issued 15 million shares of common stock to Glencore and Mizuho upon conversion of the entire principal amount of the Series A Notes.

      On June 10, 2004, we issued 500,000 shares of a new series of our convertible preferred stock, the 6.0% Series B Convertible Preferred Stock, to Glencore and Mizuho in exchange for the 15 million shares of common stock into which the Series A Notes were converted and the entire principal amount of the Series B Notes. As part of this transaction, we also issued to Glencore and Mizuho contingent warrants to purchase an aggregate of one million shares of our common stock for $0.01 per share, which contingent warrants are exercisable only if a test based on our 2005 financial performance is not satisfied.

      The sales of the above securities were exempt from the registration requirements of the Securities Act in reliance on Section 4(2) of the Securities Act, as transactions by an issuer not involving a public offering. There were no underwriters involved in connection with any of the above sales of securities.

11 1/2% Senior Secured Notes due 2011

      On May 26, 2004, Milacron Escrow Corporation, a wholly owned, direct subsidiary of Milacron Inc. created solely to issue notes and to merge with and into Milacron Inc., issued and sold $225,000,000 in aggregate principal amount of 11 1/2% Senior Secured Notes due 2011 to certain initial purchasers pursuant to the exemption from SEC registration provided under Section 4(2) of the Securities Act. The initial purchasers resold the 11 1/2% Senior Secured Notes at a cash price equal to 97.673% of the aggregate principal amount to qualified institutional buyers pursuant to Rule 144A under the Securities Act. On June 10, 2004, in connection with the release of the proceeds of the 11 1/2% Senior Secured Notes to us from escrow, Milacron Escrow Corporation merged with and into Milacron Inc., Milacron Inc. assumed the obligations of Milacron Escrow Corporation with respect to the 11 1/2% Senior Secured Notes, and certain subsidiaries of Milacron Inc. provided guarantees of the obligations under the 11 1/2% Senior Secured Notes. In connection with the transaction, we entered into a registration rights agreement with the initial purchasers of the 11 1/2% Senior Secured Notes in which we agreed to complete an exchange offer for the 11 1/2% Senior Secured Notes. Pursuant to the registration rights agreement with the initial purchasers of the 11 1/2% Senior Secured Notes, we have filed a registration statement on Form S-4 in order to offer to exchange the unregistered notes and guarantees for 11 1/2% Senior Secured Notes and related guarantees that have been registered under the Securities Act.

Common Stock Issued as Consideration for an Asset Purchase

      In March, 2002, we purchased certain assets from cpm compounding processing machinery GmbH. As part of the consideration for this purchase we issued common stock to Advanced Polymer (formerly cpm compounding processing GmbH) on March 15, 2002 (62,500 shares) and to Kruger Anlagenbau GmbH

II-2

(formerly Advanced Polymer) on March 26, 2002 (5,663 shares), June 27, 2002 (7,181 shares) and September 30, 2002 (15,683 shares). These issuances were exempt from the registration requirements of the Securities Act in reliance on Section 4(6) of the Securities Act, as transactions by an issuer to one or more accredited investors not in excess of $5 million.

Item 16. Exhibits and Financial Statement Schedules.

Item 16(a) — Exhibits

Exhibit
Number			Exhibit Description
	3	.1	Restated Certificate of Incorporation of Milacron Inc. — Incorporated by reference to the company’s Form S-8 filed on June 11, 2004
	3	.2	Certificate of Designation of 6.0% Series B Convertible Preferred Stock of Milacron Inc. — Incorporated by reference to the company’s Form S-8 filed on June 11, 2004
	3	.3	Amended and Restated Bylaws of Milacron Inc. — Incorporated by reference to the company’s Form S-8 filed on June 11, 2004
	4	.1	Form of Specimen Stock Certificate
	4	.2	Form of Specimen Subscription Certificate*
	4	.3	Indenture dated as of May 26, 2004, between Milacron Escrow Corporation, to be merged with and into Milacron Inc., and U.S. Bank National Association, as trustee, relating to the 11 1/2% Senior Secured Notes due 2011 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.4	Supplemental Indenture dated as of June 10, 2004, among Milacron Inc., the Guaranteeing Subsidiaries named therein and U.S. Bank National Association, as trustee, relating to the 11 1/2% Senior Secured Notes due 2011 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.5	Form of 11 1/2% Senior Secured Notes due 2011 (included in Exhibit 4.3) — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.6	Registration Rights Agreement dated as of May 26, 2004, between Milacron Escrow Corporation and Credit Suisse First Boston LLC, as representative of the several purchasers listed therein, relating to the 11 1/2% Senior Secured Notes due 2011 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.7	Joinder to the Registration Rights Agreement dated June 10, 2004 by Milacron Inc. and the Guarantors listed therein — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.8	Security Agreement dated June 10, 2004, made by each of the Grantors listed therein in favor of U.S. Bank National Association — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.9	Security Agreement (Canada) dated June 10, 2004, made by each of the Grantors listed therein in favor of U.S. Bank National Association — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.10	Pledge Agreement dated June 10, 2004, made by each of the Pledgors listed therein in favor of U.S. Bank National Association — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.11	Intercreditor Agreement dated as of June 10, 2004, by and between JPMorgan Chase Bank and U.S. Bank National Association, acknowledged by Milacron Inc. and the subsidiaries of Milacron Inc. listed therein — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004

II-3

Exhibit
Number			Exhibit Description
	4	.12	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by D-M-E Company in favor of U.S. Bank National Association (1975 N. 17th Avenue, Melrose Park, Illinois 60160), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.13	Mortgage made by D-M-E U.S.A. Inc. in favor of U.S. Bank National Association (6328 Ferry Avenue, Charlevoix, Michigan 49720), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.14	Mortgage made by D-M-E U.S.A. Inc. in favor of U.S. Bank National Association (29215 Stephenson Highway, Madison Heights, Michigan 48071), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.15	Mortgage made by Oak International, Inc. in favor of U.S. Bank National Association (1160 White Street, Sturgis, Michigan 49091), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.16	Mortgage made by Milacron Industrial Products, Inc. in favor of U.S. Bank National Association (31003 Industrial Road, Livonia, Michigan 48150), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.17	Mortgage made by D-M-E U.S.A. Inc. in favor of U.S. Bank National Association (29111 Stephenson Highway, Madison Heights, Michigan 48071), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.18	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by D-M-E Company in favor of U.S. Bank National Association (558 Leo Street, Dayton, Ohio 45404), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.19	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Milacron Inc. in favor of U.S. Bank National Association (418 West Main Street, Mount Orab, Ohio 45154), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.20	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Milacron Inc. in favor of U.S. Bank National Association (3000 Disney Street, Cincinnati, Ohio 45209), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.21	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Milacron Inc. in favor of U.S. Bank National Association (3010 Disney Street, Cincinnati, Ohio 45209), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.22	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by D-M-E Company in favor of U.S. Bank National Association (977 Loop Road, Lewistown, Pennsylvania), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	4	.23	Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by D-M-E Company in favor of U.S. Bank National Association (70 East Hillis Street, Youngwood, Pennsylvania 15697), dated as of June 10, 2004 — Incorporated by reference to the company’s Form S-4 filed on June 25, 2004
	5		Opinion of Cravath, Swaine & Moore LLP*
	10	.1	Milacron Supplemental Pension Plan, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999

II-4

Exhibit
Number			Exhibit Description
	10	.2	Milacron Supplemental Retirement Plan, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.3	Milacron Inc. Plan for the Deferral of Director’s Compensation, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1998
	10	.4	Milacron Inc. Retirement Plan for Non-Employee Directors, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1998
	10	.5	Milacron Supplemental Executive Retirement Plan, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.6	Milacron Compensation Deferral Plan, as amended — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.7	Rights Agreement dated as of February 5, 1999, between Milacron Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent — Incorporated by reference to the company’s Registration Statement on Form 8-A (File No. 001-08485)
	10	.8	Purchase and Sale Agreement between UNOVA, Inc., UNOVA Industrial Automation Systems, Inc., UNOVA U.K. Limited and Cincinnati Milacron Inc. dated August 20, 1998 — Incorporated by reference to the company’s Form 8-K dated October 2, 1998
	10	.9	Purchase and Sale Agreement between Johnson Controls, Inc., Hoover Universal, Inc. and Cincinnati Milacron Inc. dated August 3, 1998 — Incorporated by reference to the company’s Form 8-K dated September 30, 1998
	10	.10	Milacron Supplemental Executive Pension Plan — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.11	Milacron Compensation Deferral Plan Trust Agreement by and between Milacron Inc. and Reliance Trust Company — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.12	Milacron Supplemental Retirement Plan Trust Agreement by and between Milacron Inc. and Reliance Trust Company — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 1999
	10	.13	Stock Purchase Agreement, dated as of May 3, 2002 among Milacron Inc., Milacron B.V., and Kennametal Inc. — Incorporated by reference to the company’s Form 8-K dated May 3, 2002
	10	.14	Stock Purchase Agreement, dated as of June 17, 2002 between Milacron Inc., and Sandvik BV — Incorporated by reference to the company’s Form 8-K dated June 17, 2002
	10	.15	Tier I Executive Severance Agreement with R. D. Brown — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003

II-5

Exhibit
Number			Exhibit Description
	10	.16	Tier II Executive Severance Agreement with R. P. Lienesch and H. C. O’Donnell — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003
	10	.17	Temporary Enhanced Severance Plan applicable to R. D. Brown, R. P. Lienesch and H. C. O’Donnell — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003
	10	.18	Award Letter re. Temporary Enhanced Severance Plan to R.D. Brown — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003
	10	.19	Award Letter re. Temporary Enhanced Severance Plan to R. P. Lienesch — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003
	10	.20	Award Letter re. Temporary Enhanced Severance Plan to H.C. O’Donnell — Incorporated by reference to the company’s Form 10-Q for the quarter ended September 30, 2003
	10	.21	Amended and restated Financing Agreement dated as of March 31, 2004 among Milacron Inc. and certain subsidiaries as Borrowers, certain subsidiaries as Guarantors, the Lenders from time to time party thereto, and Credit Suisse First Boston, Cayman Islands Branch, as Administrative and Collateral Agent — Incorporated by reference to the company’s Form 8-K dated March 31, 2004
	10	.22	Note Purchase Agreement dated as of March 12, 2004 among Milacron Inc., Glencore Finance AG and Mizuho International plc — Incorporated by reference to the company’s Form 8-K dated March 31, 2004
	10	.23	Registration Rights Agreement dated as of March 12, 2004 among Milacron Inc., Glencore Finance AG and Mizuho International plc — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.24	Amendment No. 1 to Rights Agreement dated as of March 11, 2004 among Milacron Inc. and Mellon Investor Services LLC — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.25	Cincinnati Milacron Inc. 1994 Long-Term Incentive Plan, as amended February 10, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.26	Milacron Inc. 1997 Long-Term Incentive Plan, as amended February 10, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.27	Milacron Inc. 2002 Short-Term Incentive Plan, as amended February 10, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.28	Milacron Retirement Plan for Non-Employee Directors, as amended February 10, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.29	Milacron Compensation Deferral Plan, as amended February 26, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003

II-6

Exhibit
Number			Exhibit Description
	10	.30	Amendment to Tier 1 Executive Severance Agreement with R. D. Brown and Tier II Executive Severance Agreements with R. P. Lienesch and H. C. O’Donnell dated as of February 10, 2004 — Incorporated by reference to the company’s Form 10-K for the fiscal year ended December 31, 2003
	10	.31	Contingent Warrant Agreement dated March 12, 2004 by and among Milacron Inc., Glencore Finance AG and Mizuho International plc
	10	.32	Letter Amendment to Note Purchase Agreement dated April 5, 2004 among Milacron Inc., Glencore Finance AG and Mizuho International plc
	10	.33	Letter Amendment to Note Purchase Agreement dated June 7, 2004 among Milacron Inc., Glencore Finance AG and Mizuho International plc
	10	.34	Amendment No. 2 to Rights Agreement dated as of June 9, 2004 among Milacron Inc. and Mellon Investor Services LLC
	10	.35	Milacron Inc. 2004 Long-Term Incentive Plan
	10	.36	Financing Agreement dated as of June 10, 2004 by and among Milacron Inc. and certain subsidiaries as Borrowers, certain subsidiaries as Guarantors, the Lenders from time to time party thereto, JPMorgan Chase Bank as Administrative and Collateral Agent, Wells Fargo Foothill, LLC as Documentation Agent and J.P. Morgan Business Credit Corp., as Sole Lead Arranger and Book Manager
	12		Statements Regarding Computation of Ratios
	21		Subsidiaries of the Registrant
	23	.1	Consent of Ernst & Young
	23	.2	Consent of Cravath, Swaine & Moore LLP (included in Exhibit 5)
	24		Powers of Attorney are included in the signature pages of this registration statement
	99	.1	Form of Instructions as to use of Milacron Inc. Subscription Certificates*
	99	.2	Form of Letter to Shareholders who are Record Holders*
	99	.3	Form of Letter to Shareholders who are Beneficial Holders*
	99	.4	Form of Letter to Clients of Shareholders who are Beneficial Holders*
	99	.5	Form of Beneficial Owner Election Form*
	99	.6	Form of Nominee Holder Certification*
	99	.7	Form of 401(k) Plan Participant Election Form*
	99	.8	Form of Letter to Participants in the Milacron Inc. 401(k) Plan*
	99	.9	Form of Subscription Agent Agreement between Milacron Inc. and Mellon Bank, N.A.*

Milacron Inc. hereby agrees to furnish to the Securities and Exchange Commission, upon its request, the instruments with respect to long-term debt for securities authorized thereunder which do not exceed 10% of the registrant’s total consolidated assets

*  To be filed by amendment

II-7

Item 16(b) — Financial Statement Schedules

MILACRON INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Years Ended 2003, 2002, and 2001

Col. A		Col. B		Col. C					Col. D			Col. E
				Additions
		Balance at		Charged to								Balance
		Beginning		Cost and		Other -			Deductions -			at End
Description		of Period		Expenses		Describe			Describe			of Period
		(In thousands)
Year ended 2003
	Allowance for doubtful accounts	$	12,354	$	4,610	$	1,261	(a)	$	(3,138	)(b)	$	15,087
	Restructuring and consolidation reserves	$	5,362	$	9,387	$	648	(a)	$	(7,206	)(b)	$	6,505
										(1,686	)(c)
	Allowance for inventory obsolescence	$	24,169	$	5,416	$	2,738	(a)	$	(5,316	)(b)	$	27,007
Year ended 2002
	Allowance for doubtful accounts	$	10,017	$	3,939	$	616	(a)	$	(2,218	)(b)	$	12,354
	Restructuring and consolidation reserves	$	12,365	$	3,629	$	519	(a)	$	(10,622	)(b)	$	5,362
										(529	)(c)
	Allowance for inventory obsolescence	$	19,031	$	6,916	$	1,869	(a)	$	(3,647	)(b)	$	24,169
Year ended 2001
	Allowance for doubtful accounts	$	9,354	$	3,437	$	324	(d)	$	(38	)(a)	$	10,017
										(3,060	)(a)
	Restructuring and consolidation reserves	$	2,060	$	12,435	$	1,133	(d)	$	(3,252	)(b)	$	12,365
							98	(a)		(109	)(c)
	Allowance for inventory obsolescence	$	17,700	$	10,347		—		$	(9,016	)(b)	$	19,031

(a)	Represents foreign currency translation adjustments during the year.
(b)	Represents amounts charged against the reserves during the year.
(c)	Represents reversals of excess reserves.
(d)	Consists of reserves of subsidiaries purchased during the year.

Item 17. Undertakings

      The undersigned registrant hereby undertakes:

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-8

SIGNATURES

      Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cincinnati, State of Ohio, on June 23, 2004.

MILACRON INC.

By:  /s/ RONALD D. BROWN

Name: Ronald D. Brown

Title:   Chairman, President and Chief Executive Officer

POWER OF ATTORNEY

      The undersigned hereby constitute and appoint Ronald D. Brown, Robert P. Lienesch, Hugh C. O’Donnell and Walter S. Wood and each of them with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below this Registration Statement and any and all amendments thereto, including post-effective amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and hereby ratify and confirm that all such attorneys-in-fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ RONALD D. BROWN Ronald D. Brown	Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)	June 9, 2004
/s/ ROBERT P. LIENESCH Robert P. Lienesch	Vice President — Finance and Chief Financial Officer (Principal Financial Officer)	June 9, 2004
/s/ ROSS A. ANDERSON Ross A. Anderson	Controller (Principal Accounting Officer)	June 9, 2004
/s/ DARRYL F. ALLEN Darryl F. Allen	Director	June 9, 2004
/s/ DAVID L. BURNER David L. Burner	Director	June 9, 2004
/s/ BARBARA HACKMAN FRANKLIN Barbara Hackman Franklin	Director	June 21, 2004

II-9

Signature	Title	Date
/s/ STEVEN N. ISAACS Steven N. Isaacs	Director	June 9, 2004
/s/ JAMES E. PERRELLA James E. Perrella	Director	June 9, 2004
/s/ JOSEPH A. STEGER Joseph A. Steger	Director	June 9, 2004
/s/ CHARLES F.C. TURNER Charles F.C. Turner	Director	June 9, 2004

II-10 EX-4.1 2 y98027exv4w1.htm FORM OF SPECIMEN STOCK CERTIFICATE

Exhibit 4.1

MILACRON INC.

THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NV AND RIDGCFIELD PARK, NJ

CUSIP S1S7DT ID 3 SEE REVERSE FOR CERTAIN DEFINITIONS

FULLY PAI D AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF $1 PER SHARE OF

COUNTERSIGNED AND REGISTERED: MELLON INVESTOR SERVICES LLC

MILACRON INC.

     THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF WHICH THE COMPANY IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST MAY BE ADDRESSED TO THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE.

     The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	- as tenants in common	UNIF GIFT MIN ACT-	Custodian
TEN ENT	- as tenants by the entireties		(Cust)                                         (Minor)
JT TEN	- as joint tenants with right of		under Uniform Gifts to Minors
	survivorship and not as tenants
	in common		Act
			(State)

Additional abbreviations may also be used though not in the above list.

For value received,                                        hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
              IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the books of the within-named Company with full power of substitution in the premises.

Dated,  

SIGNATURE(S) GUARANTEED:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE. IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

     This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement dated as of February 5, 1999 as it may be amended from time to time (the “Rights Agreement”), between Milacron Inc. (the “Company”) and ChaseMellon Shareholder Services, L.L.C., now named Mellon Investor Services LLC, as Rights Agent (the “Rights Agent”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights shall be evidenced by separate certificates and shall no longer be evidenced by this certificate. At the expense of the Company, the Rights Agent shall mail to the holder of this certificate a copy of the Rights Agreement without charge to such holder after receipt of a written request therefor. Rights beneficially owned by Acquiring Persons or their Affiliates or Associates (as such terms are defined in the Rights Agreement) and by any subsequent holder of such rights are null and void and nontransferable.

EX-4.1

FORM OF SPECIMEN STOCK CERTIFICATE

EX-10.31

                                                                   EXHIBIT 10.31
================================================================================

                          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..................................   12
Section 4.8    Fractional Shares..........................................................   12


                                       -i-



                                                                                         
                                            ARTICLE V

                                          MISCELLANEOUS

Section 5.1    Payment of Taxes and Charges...............................................   12
Section 5.2    Amendment and Waiver.......................................................   12
Section 5.3    Assignment.................................................................   13
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...................................................................   15
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



                                      -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

                                      -2-


                  (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 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.

                                      -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.

                                      -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.

                                      -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 2.01 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 2.02 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 2.03 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.

                                      -6-


                  Section 2.04 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 2.05 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 2.06 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 2.07 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.

                                      -7-


                                   ARTICLE III

                        CONTINGENT WARRANT EXERCISE PRICE
                       AND EXERCISE OF CONTINGENT WARRANTS

                  Section 3.01 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 3.02 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 3.03 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

                                      -8-


issue, a certificate or certificates for the number of full Contingent Warrant
Shares, registered in 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 3.04 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 3.05 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 3.06 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 3.07 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 4.01 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

                                      -9-


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 (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; provided, however, that in no event shall the
Exercise Price be adjusted to below $0.01 per share. Such adjustment shall be
made successively whenever any event specified above shall occur.

                  Section 4.02 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 4.03 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

                                      -10-


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.

                  Section 4.04 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 4.05 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 4.06 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

                                      -11-


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 4.07 Contingent Warrant Certificate Amendments.
Irrespective of any adjustments pursuant to this Article IV, Contingent Warrant
Certificates theretofore or thereafter 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 4.08 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 5.01 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 5.02 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

                                      -12-


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 5.03 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.

                  Section 5.04 Term. This Agreement shall commence on the date
hereof and end on March 15, 2011.

                  Section 5.05 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 5.06 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

                                      -13-


                  Telephone: 011 44 207 236 1090
                  Facsimile: 011 44 207 090 6806
                  Attention: Patrick Collins

                  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.

                  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 5.07 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 5.08 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.

                                      -14-


                  Section 5.09 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.

                  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.

                                      -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: /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



                                                                       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

                                      A-1


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.

                                      A-2


                  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

                                      A-3


                              [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.)

                                      A-4


                         [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.

                                      A-5


                  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
                                                ________________________________

                                      A-6

EX-10.32

                                                                   EXHIBIT 10.32

                                  Milacron Inc.
                              2090 Florence Avenue
                             Cincinnati, Ohio 45206

Glencore Finance AG
Baarermattstrasse 3
CH-6341 Baar
SWITZERLAND
Attention: Steven Isaacs

Mizuho International plc
Bracken House
One Friday Street
London EC4M 9JA
UNITED KINGDOM
Attention: Patrick Collins

                                                                   April 5, 2004

            Re: Note Purchase Agreement dated as of March 12, 2004

Dear Sir or Madam:

            Reference is made to the Note Purchase Agreement dated as of March
12, 2004 (the "Note Purchase Agreement"), among Milacron Inc., a Delaware
Corporation (the "Company") and Glencore Finance AG and Mizuho International plc
(each, an "Investor," and collectively, the "Investors"). Terms used but not
defined herein shall have the meanings assigned to them in the Note Purchase
Agreement.

            Pursuant to Section 14.3 of the Note Purchase Agreement, each of the
Company and the Investors as Majority Holders hereby agree as follows:

            (A) The definition of "Intercreditor Agreement" in Article I of the
Note Purchase Agreement is amended and restated in its entirety as follows:

            "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, as may be
      amended, restated or otherwise modified from time to time.



            (B) Section 4.20 of the Note Purchase Agreement is amended and
restated in its entirety as follows:


            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, voting
      separately as a single class, and the holders of a majority of the voting
      power of the outstanding shares of Common Stock and 4% Cumulative
      Preferred Stock entitled to vote thereon, voting together as a single
      class, are the only votes 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) a majority of the votes cast
      thereon by the holders of the outstanding shares of Common Stock and 4%
      Cumulative Preferred Stock entitled to vote thereon, 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 (provided that the total votes cast represent over 50% in
      interest of all outstanding shares of Common Stock and 4% Cumulative
      Preferred Stock) (the affirmative votes described in clauses (i) and (ii)
      of this sentence, collectively the "Stockholder Approval").

            (b) The affirmative consent or vote of the holders of two-thirds of
      the outstanding shares of 4% Cumulative Preferred Stock entitled to vote
      thereon ("4% Cumulative Preferred Stockholder Consent"), voting separately
      as a single class, and the affirmative vote of the holders of a majority
      of the voting power of the outstanding shares of Common Stock and 4%
      Cumulative Preferred Stock entitled to vote thereon, voting together as a
      single class, are the only votes 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.

            (C) Section 6.15 of the Note Purchase Agreement is amended and
restated in its entirety as follows:

            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
      (and/or any Common Stock into which such Series A Notes have been
      converted), 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 and/or represented by any Common Stock into
      which such Series A Notes have been converted), rounded up to the nearest
      whole number (the "Series A Directors"); provided, however, that the
      number of directors that the Holders of Series A

                                       2


      Notes (and/or any Common Stock into which such Series A Notes have been
      converted) 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 so selected 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
      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 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. Notwithstanding anything to the
      contrary herein, one officer or employee of each Investor, if selected for
      appointment or election as a Series A Director, shall not be subject to
      the requirement that all Series A Directors shall meet the definition of
      "independent" under the rules of the New York Stock Exchange.

            (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 at least ten (10). Reasonably promptly thereafter, the Board
      of Directors shall appoint one (1) person selected by the Holders of the
      Series A Notes (and/or any Common Stock into which such Series A Notes
      have been converted) to the vacant directorship on the Board of Directors
      in accordance with clause (a) above. If such person is appointed to the
      Board of Directors, the Company shall use commercially reasonable efforts
      to cause such person to be elected as a director at the next stockholder
      meeting called for the purpose of electing directors (the "Next
      Stockholder Meeting"). It is understood that, effective as of the election
      of directors at the Next Stockholder Meeting, the size of the Board of
      Directors shall be reduced to eight (8). Reasonably promptly after the
      date of the Next Stockholder Meeting, the Board of Directors shall
      increase the size of the Board of Directors to a number sufficient so that
      at least a majority of the directors shall be "independent" under the
      rules of the New York Stock Exchange and so that the Board of Directors
      may, and the Board of Directors shall, at such time appoint two additional
      persons selected by the Holders of the Series A Notes (and/or any Common
      Stock into which such Series A Notes have been converted) to directorships
      on the Board of Directors in accordance with clause (a) above.

            (D) Section 13.5 of the Note Purchase Agreement is amended by
deleting the word "negligence" in the first sentence of such Section and
substituting in lieu thereof the words "gross negligence".

            (E) Clause (a) of Section 14.5 of the Note Purchase Agreement is
amended by deleting the words "within 10 Business Days after the Closing" in the
first

                                       3


sentence of such clause and substituting in lieu thereof the words "within
20 Business Days after the Closing".

            (F) The Note Purchase Agreement is amended by inserting the
following new Section 14.14 immediately following Section 14.13:

            Section 14.14 Subordination. The Notes and all Obligations
      thereunder shall be subordinated pursuant to the terms thereof and the
      terms of the Intercreditor Agreement.

            (G) Except as expressly provided herein, the Note Purchase Agreement
shall remain in full force and effect and shall be otherwise unaffected hereby.
Upon the effectiveness of this letter agreement, the term "Note Purchase
Agreement" as used in the Note Purchase Agreement shall refer to the Note
Purchase Agreement as amended hereby.

            (H) This letter 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.

            (I) This letter agreement 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.

            (J) In the event that a judicial proceeding is necessary, the sole
forum for resolving disputes arising out of or relating to this letter 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.

            (K) 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 letter agreement or any other document or the transactions contemplated
hereby or thereby.

            (L) The holding of any provision of this letter agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this letter agreement, which shall remain in full force
and effect. If any provision of this letter 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.

                                       4


            (M) It is agreed that a waiver by any party of a breach of any
provision of this letter agreement shall not operate, or be construed, as a
waiver of any subsequent breach by the breaching party.

                                           Very truly yours,

                                           MILACRON INC.,

                                              by
                                                   /s/ Ronald D. Brown
                                                 -------------------------------
                                                  Name:  Ronald D. Brown
                                                  Title: Chairman, President and
                                                         Chief Executive Officer

Accepted and agreed as of the
date first above written:

GLENCORE FINANCE AG,

 by  /s/ Steven Isaacs
    -----------------------------
     Name: Steven Isaacs
     Title: Managing Director

MIZUHO INTERNATIONAL PLC,

 by /s/ Matthew M. Weber
     ----------------------------
      Name: Matthew M. Weber
      Title: Attorney

Copies to:

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Mark I. Greene, Esq.

Cadwalader, Wickersham & Taft LLP
100 Maiden Lane
New York, NY 10038
Attention: Gregory M. Petrick, Esq.

                                       5

EX-10.33

                                                                   EXHIBIT 10.33

                                  Milacron Inc.
                              2090 Florence Avenue
                             Cincinnati, Ohio 45206

Glencore Finance AG
Baarermattstrasse 3
CH-6341 Baar
SWITZERLAND
Attention: Steven Isaacs

Mizuho International plc
Bracken House
One Friday Street
London EC4M 9JA
UNITED KINGDOM
Attention: Patrick Collins

                                                                  June 7th, 2004

             Re: Note Purchase Agreement dated as of March 12, 2004

Dear Sir or Madam:

            Reference is made to the Note Purchase Agreement dated as of March
12, 2004, as amended April 5, 2004 (the "Note Purchase Agreement"), among
Milacron Inc., a Delaware Corporation (the "Company") and Glencore Finance AG
and Mizuho International plc (each, an "Investor," and collectively, the
"Investors"). Terms used but not defined herein shall have the meanings assigned
to them in the Note Purchase Agreement.

            Pursuant to Section 14.3 of the Note Purchase Agreement, each of the
Company and the Investors as Majority Holders hereby agree as follows:

            (A) Notwithstanding anything to the contrary contained in the Note
Purchase Agreement or the Notes, the Euro Note Refinancing Condition shall be
deemed to be satisfied for all purposes under the Note Purchase Agreement and
the Notes upon the payment by wire transfer to the paying agent for the Euro
Notes of an amount sufficient to repurchase at least 99% of the (euro)115
million in aggregate principal amount of the Euro Notes.

            (B) Except as expressly provided herein, the Note Purchase Agreement
shall remain in full force and effect and shall be otherwise unaffected hereby.
Upon the effectiveness of this letter agreement, the term "Note Purchase
Agreement" as used in the Note Purchase Agreement shall refer to the Note
Purchase Agreement as amended hereby.



            (C) This letter 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.

            (D) This letter agreement 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.

            (E) In the event that a judicial proceeding is necessary, the sole
forum for resolving disputes arising out of or relating to this letter 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.

            (F) 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 letter agreement or any other document or the transactions contemplated
hereby or thereby.

            (G) The holding of any provision of this letter agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this letter agreement, which shall remain in full force
and effect. If any provision of this letter 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.

            (H) It is agreed that a waiver by any party of a breach of any
provision of this letter agreement shall not operate, or be construed, as a
waiver of any subsequent breach by the breaching party.

                                     Very truly yours,

                                     MILACRON INC.,

                                        by

                                            /s/ J. C. Francy
                                           ------------------------------------
                                           Name: J. C. Francy
                                           Title: Treasurer

                                       2


Accepted and agreed as of the
date first above written:

GLENCORE FINANCE AG,

      by    /s/ Andreas Hubmann  /s/ Barbara Wolfensberger
         ----------------------------------------------------
            Name: Andreas Hubman, Barbara Wolfensberger
            Title: Director

MIZUHO INTERNATIONAL PLC,

      by    /s/ Matthew M. Weber
         -------------------------------
            Name: Matthew M. Weber
            Title: Attorney-In-Fact

Copies to:

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Mark I. Greene, Esq.

Cadwalader, Wickersham & Taft LLP
100 Maiden Lane
New York, NY 10038
Attention: Gregory M. Petrick, Esq.

                                       3

EX-10.34

                                                                   Exhibit 10.34

                       AMENDMENT NO. 2 TO RIGHTS AGREEMENT

      THIS AMENDMENT NO. 2 TO RIGHTS AGREEMENT (this "Amendment"), dated as of
June 9, 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, as amended by Amendment No. 1 to Rights
Agreement dated as of March 11, 2004, 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 to the first paragraph.

                  The first paragraph of the Rights Agreement is hereby amended
by deleting the phrase "par value $1.00 per share" in the last sentence thereof
and substituting therefor the phrase "par value $0.01 per share".

            2. Amendment to Section 1.

                  The definition of "Certificate of Designation" in Section 1 is
hereby amended by deleting the phrase "Preferred Stock" therein and substituting
therefor "Preferred Shares".

            3. Amendment to Exhibit A.

                  Exhibit A to the Rights Agreement is hereby replaced with
Exhibit A to this Amendment.

            4. Effectiveness.

            This Amendment shall be deemed effective as of June 9, 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.

                                       2


            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 Furher
                                           ------------------------------------
                                           Name: Linda Fuhrer
                                           Title: Assistant Vice President

                                       3


                                                                       EXHIBIT A

             AMENDED AND RESTATED CERTIFICATE OF THE VOTING POWERS,

                     DESIGNATIONS, PREFERENCES AND RELATIVE
                    PARTICIPATING, OPTIONAL AND OTHER SPECIAL
                     RIGHTS AND QUALIFICATIONS, LIMITATIONS
                           OR RESTRICTIONS OF SERIES A
                            PARTICIPATING CUMULATIVE
                               PREFERRED STOCK OF
                                  MILACRON INC.

             Pursuant to Section 151 of the General Corporation Law
                            of the State of Delaware

      Milacron Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), in accordance with the
provisions of Sections 103 and 151(g) thereof, DOES HEREBY CERTIFY:

            1. That by resolution of the Board of Directors of the Company dated
February 5, 1999, and by a Certificate of Designations filed in the office of
the Secretary of State of the State of Delaware on February 5, 1999, the Company
authorized a series of 300,000 shares of Serial Preference Stock of the Company
designated as Series A Participating Preferred Stock (the "Series A Preferred
Stock") and established the voting powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred and
the qualifications, limitations or restrictions thereof.

            2. As of the date hereof no shares of Series A Preferred Stock are
outstanding and no shares of Series A Preferred Stock have been issued.

            3. That pursuant to the authority conferred on the Board of
Directors of the Company by its Restated Certificate of Incorporation and the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, the Board of Directors on June 9, 2004 adopted the following
resolution amending the voting powers, preferences and relative, participating,
optional and other special rights of the Series A Preferred Stock and the
qualifications, limitations or restrictions thereof.

                  RESOLVED, that pursuant to the authority conferred upon the
      Board of Directors of the Company and the Restated Certificate of
      Incorporation and by the provisions of Section 151(g) of the General
      Corporation Law of the State of Delaware, the voting powers, preferences
      and relative, participating, optional and other special rights of the
      Series A Participating Cumulative Preferred Stock of the Company, and the
      qualifications, limitations or restrictions thereof be, and the same
      hereby are, amended in their entirety as follows:



                  SECTION 1. Designation and Number of Shares. The shares of
      such series shall be designated as "Series A Participating Cumulative
      Preferred Stock" (the "Series A Preferred Stock"). The number of shares
      initially constituting the Series A Preferred Stock shall be 300,000;
      provided, however, that, if more than a total of 300,000 shares of Series
      A Preferred Stock shall be issuable upon the exercise of Rights (the
      "Rights") issued pursuant to the Rights Agreement dated as of February 5,
      1999, between 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 (as such agreement may be amended from
      time to time, the "Rights Agreement"), the Board of Directors of the
      Company, pursuant to Section 151(g) of the General Corporation Law of the
      State of Delaware, shall direct by resolution or resolutions that a
      certificate be properly executed, acknowledged, filed and recorded, in
      accordance with the provisions of Section 103 thereof, providing for the
      total number of shares of Series A Preferred Stock authorized to be issued
      to be increased (to the extent that the Restated Certificate of
      Incorporation then permits) to the largest number of whole shares (rounded
      up to the nearest whole number) issuable upon exercise of such Rights.

                  SECTION 2. Dividends or Distributions. (a) Subject to the
      prior and superior rights of the holders of shares of the 4% Cumulative
      Preferred Stock of the Company (the "Preferred Stock"), any other series
      of Serial Preference Stock or any other class of capital stock of the
      Company ranking prior and superior to the shares of Series A Preferred
      Stock with respect to dividends, the holders of shares of the Series A
      Preferred Stock shall be entitled to receive, when, as and if declared by
      the Board of Directors, out of the assets of the Company legally available
      therefor, (1) quarterly dividends payable in cash on the last day of each
      fiscal quarter in each year, or such other dates as the Board of Directors
      of the Company shall approve (each such date being referred to herein as a
      "Quarterly Dividend Payment Date"), commencing on the first Quarterly
      Dividend Payment Date after the first issuance of a share or a fraction of
      a share of Series A Preferred Stock, in the amount of $.01 per whole share
      (rounded to the nearest cent) less the amount of all cash dividends
      declared on the Series A Preferred Stock pursuant to the following clause
      (2) since the immediately preceding Quarterly Dividend Payment Date or,
      with respect to the first Quarterly Dividend Payment Date, since the first
      issuance of any share or fraction of a share of Series A Preferred Stock
      (the total of which shall not, in any event, be less than zero) and (2)
      dividends payable in cash on the payment date for each cash dividend
      declared on the Common Stock in an amount per whole share (rounded to the
      nearest cent) equal to the Formula Number (as hereinafter defined) then in
      effect times the cash dividends then to be paid on each share of Common
      Stock. In addition, if the Company shall pay any dividend or make any
      distribution on the Common Stock payable in assets, securities or other
      forms of noncash consideration (other than dividends or distributions
      solely in shares of Common Stock), then, in each such case, the Company
      shall simultaneously pay or make on each outstanding whole share of Series
      A Preferred Stock a dividend or distribution in like kind equal to the
      Formula Number then in effect times such dividend or distribution on each
      share of the Common Stock. As used herein, the "Formula Number" shall be
      1,000; provided, however, that, if at any time after February 5, 1999, the
      Company shall (i) declare or pay any dividend on the Common Stock payable
      in shares of Common Stock or make any distribution on the Common Stock in
      shares of Common Stock, (ii) subdivide (by a stock

                                      A-2


      split or otherwise) the outstanding shares of Common Stock into a larger
      number of shares of Common Stock or (iii) combine (by a reverse stock
      split or otherwise) the outstanding shares of Common Stock into a smaller
      number of shares of Common Stock, then in each such event the Formula
      Number shall be adjusted to a number determined by multiplying the Formula
      Number in effect immediately prior to such event by a fraction, the
      numerator of which is the number of shares of Common Stock that are
      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 (and rounding the result to the nearest whole number);
      and provided further that, if at any time after February 5, 1999, the
      Company shall issue any shares of its capital stock in a merger,
      reclassification, or change of the outstanding shares of Common Stock,
      then in each such event the Formula Number shall be appropriately adjusted
      to reflect such merger, reclassification or change so that each share of
      Preferred Stock continues to be the economic equivalent of a Formula
      Number of shares of Common Stock prior to such merger, reclassification or
      change.

                  (b) The Company shall declare a dividend or distribution on
      the Series A Preferred Stock as provided in Section 2(a) immediately prior
      to or at the same time it declares a dividend or distribution on the
      Common Stock (other than a dividend or distribution solely in shares of
      Common Stock); provided, however, that, in the event no dividend or
      distribution (other than a dividend or distribution in shares of Common
      Stock) shall have been declared on the Common Stock during the period
      between any Quarterly Dividend Payment Date and the next subsequent
      Quarterly Dividend Payment Date, a dividend of $.01 per share on the
      Series A Preferred Stock shall nevertheless be payable on such subsequent
      Quarterly Dividend Payment Date. The Board of Directors may fix a record
      date for the determination of holders of shares of Series A Preferred
      Stock entitled to receive a dividend or distribution declared thereon,
      which record date shall be the same as the record date for any
      corresponding dividend or distribution on the Common Stock.

                  (c) Dividends shall begin to accrue and be cumulative on
      outstanding shares of Series A Preferred Stock from and after the
      Quarterly Dividend Payment Date next preceding the date of original issue
      of such shares of Series A Preferred Stock; provided, however, that
      dividends on such shares which are originally issued after the record date
      for the determination of holders of shares of Series A Preferred Stock
      entitled to receive a quarterly dividend and on or prior to the next
      succeeding Quarterly Dividend Payment Date shall begin to accrue and be
      cumulative from and after such Quarterly Dividend Payment Date.
      Notwithstanding the foregoing, dividends on shares of Series A Preferred
      Stock which are originally issued prior to the record date for the
      determination of holders of shares of Series A Preferred Stock entitled to
      receive a quarterly dividend on the first Quarterly Dividend Payment Date
      shall be calculated as if cumulative from and after the last day of the
      fiscal quarter next preceding the date of original issuance of such
      shares. Accrued but unpaid dividends shall not bear interest. Dividends
      paid on the shares of Series A 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.

                                      A-3


                  (d) So long as any shares of the Series A Preferred Stock are
      outstanding, no dividends or other distributions shall be declared, paid
      or distributed, or set aside for payment or distribution, on the Common
      Stock unless, in each case, the dividend required by this Section 2 to be
      declared on the Series A Preferred Stock shall have been declared.

                  (e) The holders of the shares of Series A Preferred Stock
      shall not be entitled to receive any dividends or other distributions
      except as provided herein.

                  SECTION 3. Voting Rights. The holders of shares of Series A
      Preferred Stock shall have the following voting rights:

                  (a) Each holder of Series A Preferred Stock shall be entitled
      to a number of votes equal to the Formula Number then in effect, for each
      share of Series A Preferred Stock held of record on each matter on which
      holders of the Common Stock or stockholders generally are entitled to
      vote, multiplied by the maximum number of votes per share which any holder
      of the Common Stock or stockholders generally then have with respect to
      such matter (assuming any holding period or other requirement to vote a
      greater number of shares is satisfied).

                  (b) Except as otherwise provided herein or by applicable law,
      the holders of shares of Series A Preferred Stock and the holders of
      shares of Common Stock shall vote together as one class for the election
      of directors of the Company and on all other matters submitted to a vote
      of stockholders of the Company.

                  (c) If, at the time of any annual meeting of stockholders for
      the election of directors, the equivalent of six quarterly dividends
      (whether or not consecutive) payable on any share or shares of Series A
      Preferred Stock are in default, the number of directors constituting the
      Board of Directors of the Company shall be increased by two. In addition
      to voting together with the holders of Common Stock for the election of
      other directors of the Company, the holders of record of the Series A
      Preferred Stock, voting separately as a class to the exclusion of the
      holders of Common Stock, shall be entitled at said meeting of stockholders
      (and at each subsequent annual meeting of stockholders), unless all
      dividends in arrears have been paid or declared and set apart for payment
      prior thereto, to vote for the election of two directors of the Company,
      the holders of any Series A Preferred Stock being entitled to cast a
      number of votes per share of Series A Preferred Stock equal to the Formula
      Number. Until the default in payments of all dividends which permitted the
      election of said directors shall cease to exist, any director who shall
      have been so elected pursuant to the next preceding sentence may be
      removed at any time, without cause, only by the affirmative vote of the
      holders of the shares of Series A Preferred Stock at the time entitled to
      cast a majority of the votes entitled to be cast for the election of any
      such director at a special meeting of such holders called for that
      purpose, and any vacancy thereby created may be filled by the vote of such
      holders. If and when such default shall cease to exist, the holders of the
      Series A Preferred Stock shall be divested of the foregoing special voting
      rights, subject to revesting in the event of each and every subsequent
      like default in payments of dividends. Upon the termination of the
      foregoing special voting rights, the terms of office of all persons who
      may have been elected directors pursuant to said special voting rights
      shall forthwith terminate, and

                                      A-4


      the number of directors constituting the Board of Directors shall be
      reduced by two. The voting rights granted by this Section 3(c) shall be in
      addition to any other voting rights granted to the holders of the Series A
      Preferred Stock in this Section 3.

                  (d) Except as provided herein, in Section 11 or by applicable
      law, holders of Series A Preferred Stock shall have no special voting
      rights and their consent shall not be required (except to the extent they
      are entitled to vote with holders of Common Stock as set forth herein) for
      authorizing or taking any corporate action.

                  SECTION 4. Certain Restrictions. (a) Whenever quarterly
      dividends or other dividends or distributions payable on the Series A
      Preferred Stock as provided in Section 2 are in arrears, thereafter and
      until all accrued and unpaid dividends and distributions, whether or not
      declared, on shares of Series A Preferred Stock outstanding shall have
      been paid in full, the Company shall not:

            (i) declare or pay dividends on, make any other distributions on, or
      redeem or purchase or otherwise acquire for consideration any shares of
      stock ranking junior (either as to dividends or upon liquidation,
      dissolution or winding up) to the Series A Preferred Stock;

            (ii) declare or pay dividends on or make any other distributions on
      any shares of stock ranking on a parity (either as to dividends or upon
      liquidation, dissolution or winding up) with the Series A Preferred Stock,
      except dividends paid ratably on the Series A Preferred Stock and all such
      parity stock 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;

            (iii) redeem or purchase or otherwise acquire for consideration
      shares of any stock ranking on a parity (either as to dividends or upon
      liquidation, dissolution or winding up) with the Series A Preferred Stock;
      provided that the Company may at any time redeem, purchase or otherwise
      acquire shares of any such parity stock in exchange for shares of any
      stock of the Company ranking junior (either as to dividends or upon
      dissolution, liquidation or winding up) to the Series A Preferred Stock;
      or

            (iv) purchase or otherwise acquire for consideration any shares of
      Series A Preferred Stock, or any shares of stock ranking on a parity with
      the Series A Preferred Stock, except in accordance with a purchase offer
      made in writing or by publication (as determined by the Board of
      Directors) to all holders of such shares upon such terms as the Board of
      Directors, after consideration of the respective annual dividend rates and
      other relative rights and preferences of the respective series and
      classes, shall determine in good faith will result in fair and equitable
      treatment among the respective series or classes.

                  (b) The Company shall not permit any subsidiary of the Company
      to purchase or otherwise acquire for consideration any shares of stock of
      the Company unless the Company could, under paragraph (a) of this Section
      4, purchase or otherwise acquire such shares at such time and in such
      manner.

                                      A-5


                  SECTION 5. Liquidation Rights. Upon the liquidation,
      dissolution or winding up of the Company, whether voluntary or
      involuntary, no distribution shall be made (1) to the holders of shares of
      Common Stock or any other shares of stock ranking junior (either as to
      dividends or upon liquidation, dissolution or winding up) to the Series A
      Preferred Stock unless, prior thereto, the holders of shares of Series A
      Preferred Stock shall have received an amount equal to the accrued and
      unpaid dividends and distributions thereon, whether or not declared, to
      the date of such payment, plus an amount equal to the greater of (x) $.01
      per whole share or (y) an aggregate amount per share equal to the Formula
      Number then in effect times the aggregate amount to be distributed per
      share to holders of Common Stock or (2) to the holders of stock ranking on
      a parity (either as to dividends or upon liquidation, dissolution or
      winding up) with the Series A Preferred Stock, except distributions made
      ratably on the Series A Preferred Stock and all other such parity stock in
      proportion to the total amounts to which the holders of all such shares
      are entitled upon such liquidation, dissolution or winding up.

                  SECTION 6. Consolidation, Merger, Etc. In case the Company
      shall enter into any consolidation, merger, combination or other
      transaction in which the shares of Common Stock are exchanged for or
      changed into other stock or securities, cash or any other property, then
      in any such case the then outstanding shares of Series A Preferred Stock
      shall at the same time be similarly exchanged or changed into an amount
      per share equal to the Formula Number then in effect times the aggregate
      amount of stock, securities, cash or any other property (payable in kind),
      as the case may be, into which or for which each share of Common Stock is
      exchanged or changed. In the event both this Section 6 and Section 2
      appear to apply to a transaction, this Section 6 will control.

                  SECTION 7. No Redemption; No Sinking Fund. (a) The shares of
      Series A Preferred Stock shall not be subject to redemption by the Company
      or at the option of any holder of Series A Preferred Stock; provided,
      however, that the Company may purchase or otherwise acquire outstanding
      shares of Series A Preferred Stock in the open market or by offer to any
      holder or holders of shares of Series A Preferred Stock.

                  (b) The shares of Series A Preferred Stock shall not be
      subject to or entitled to the operation of a retirement or sinking fund.

                  SECTION 8. Ranking. The Series A Preferred Stock shall rank
      junior to the Preferred Stock and to all other series of Serial Preference
      Stock of the Company with respect to the payment of dividends and the
      distribution of assets upon liquidation, dissolution or winding up,
      unless, in the case of a series of Serial Preference Stock, the Board of
      Directors shall specifically determine otherwise in fixing the powers,
      preferences and relative, participating, optional and other special rights
      of the shares of such series and the qualifications, limitations and
      restrictions thereof.

                  SECTION 9. Fractional Shares. The Series A Preferred Stock
      shall be issuable upon exercise of the Rights issued pursuant to the
      Rights Agreement in whole shares or in any fraction of a share that is one
      one-thousandth (1/1,000) of a share or any integral multiple of such
      fraction which shall entitle the holder, in proportion to such

                                      A-6


      holder's fractional shares, to receive dividends, exercise voting rights,
      participate in distributions and to have the benefit of all other rights
      of holders of Series A Preferred Stock. In lieu of fractional shares, the
      Company, prior to the first issuance of a share or a fraction of a share
      of Series A Preferred Stock, may elect (a) to make a cash payment as
      provided in the Rights Agreement for fractions of a share other than one
      one-thousandth (1/1,000) of a share or any integral multiple thereof or
      (b) to issue depository receipts evidencing such authorized fraction of a
      share of Series A Preferred Stock pursuant to an appropriate agreement
      between the Company and a depository selected by the Company; provided
      that such agreement shall provide that the holders of such depository
      receipts shall have all the rights, privileges and preferences to which
      they are entitled as holders of the Series A Preferred Stock.

                  SECTION 10. Reacquired Shares. Any shares of Series A
      Preferred Stock purchased or otherwise acquired by the Company in any
      manner whatsoever shall be retired and canceled promptly after the
      acquisition thereof. All such shares shall upon their cancelation become
      authorized but unissued shares of Serial Preference Stock, without
      designation as to series until such shares are once more designated as
      part of a particular series by the Board of Directors pursuant to the
      provisions of Article FOURTH of the Restated Certificate of Incorporation.

                  SECTION 11. Amendment. None of the powers, preferences and
      relative, participating, optional and other special rights of the Series A
      Preferred Stock as provided herein or in the Restated Certificate of
      Incorporation shall be amended in any manner which would alter or change
      the powers, preferences, rights or privileges of the holders of Series A
      Preferred Stock so as to affect them adversely without the affirmative
      vote of the holders of at least 66-2/3% of the outstanding shares of
      Series A Preferred Stock, voting as a separate class; provided, however,
      that no such amendment approved by the holders of at least 66-2/3% of the
      outstanding shares of Series A Preferred Stock shall be deemed to apply to
      the powers, preferences, rights or privileges of any holder of shares of
      Series A Preferred Stock originally issued upon exercise of the Rights
      after the time of such approval without the approval of such holder.

                  IN WITNESS WHEREOF, the Company has caused this Certificate to
      be duly executed in its corporate name on this 9th day of June, 2004.

                                                       MILACRON INC.,

                                                       by
                                                          ______________________
                                                          Name:
                                                          Title:

                                      A-7

EX-10.35

                                                                   EXHIBIT 10.35

                                 MILACRON INC.

                         2004 LONG-TERM INCENTIVE PLAN

     1. PURPOSE OF THE PLAN.  The purpose of this Plan is to attract, retain and
motivate officers and other key employees of Milacron Inc. (the "Company") and
its Subsidiaries, to retain qualified individuals to serve as non-employee
members of the Board, and to provide such persons with appropriate incentives
and rewards for superior performance and contribution. The Plan is effective as
of April 1, 2004 (the "Effective Date"), subject to the approval of the
Company's stockholders.

     2. DEFINITIONS.  Capitalized terms used herein shall have the meanings
assigned to such terms in this Section 2.

     "Applicable Laws" means the requirements relating to the administration of
equity-based compensation plans under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any other
country or jurisdiction where awards are granted under the Plan.

     "Appreciation Right" means a right granted pursuant to Section 5 of this
Plan, and shall include both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.

     "Base Price" means the price to be used as the basis for determining the
Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.

     "Beneficial Owner" means a beneficial owner as defined in Rule 13d-3 under
the Exchange Act.

     "Board" means the Board of Directors of the Company.

     "Change in Control" shall mean any of the following events:

          (i) 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 (i), the following acquisitions shall
     not constitute a Change in Control: (a) any acquisition directly from the
     Company, (b) any acquisition by the Company, (c) any acquisition by any
     employee benefit plan (or related trust) sponsored or maintained by the
     Company or any corporation controlled by the Company, or (d) any
     acquisition by any corporation pursuant to a transaction which complies
     with clause (a) of section (iii) of this section;

          (ii) 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;

          (iii) There is consummated a merger, consolidation or other corporate
     transaction, other than (a) 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

                                        1

     the Company or such surviving entity or any parent thereof outstanding
     immediately after such merger, consolidation or transaction, or (b) 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;

          (iv) 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

          (v) The stockholders of the Company approve a plan of complete
     liquidation or dissolution of the Company.

Notwithstanding any other provision of this Plan to the contrary, a "Change in
Control" shall not occur solely as a result of any change in the combined voting
power of the stock and securities of the Company as a result of any securities
issued or issuable pursuant to the transactions contemplated by the Note
Purchase Agreement, dated as of March 12, 2004, by and among Milacron Inc.,
Glencore Finance AG and Mizuho International plc, including any securities
issued or issuable in exchange for, upon conversion or exercise of, or as a
payment of dividends upon, such securities.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the Committee described in Section 16 of the Plan.

     "Common Stock" means the common stock of the Company or any security into
which such Common Stock may be changed by reason of any transaction or event of
the type referred to in Section 12 of this Plan.

     "Company" has the meaning given such term in Section 1 of the Plan.

     "Covered Employee" means an Employee who is, or is determined by the
Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).

     "Date of Grant" means the date specified by the Committee on which a grant
of Option Rights, Appreciation Rights, Performance Units or Performance Shares
or a grant or sale of Restricted Shares or Deferred Shares or any awards granted
under Section 10 shall become effective.

     "Deferral Period" means the period of time during which Deferred Shares are
subject to deferral limitations under Section 8 of this Plan.

     "Deferred Shares" means an award made pursuant to Section 8 of this Plan of
the right to receive shares of Common Stock at the end of a specified Deferral
Period.

     "Director" means a member of the Board of Directors of the Company.

     "Effective Date" has the meaning given such term in Section 1 of the Plan.

     "Employee" means a salaried employee of the Company or any Subsidiary who
has demonstrated significant management potential or who has contributed in a
substantial measure to the successful performance of the Company, as determined
by the Committee.

     "Evidence of Award" means an agreement, certificate, resolution or other
type or form of writing or other evidence approved by the Committee which sets
forth the terms and conditions of the Option Rights, Appreciation Rights,
Performance Units, Performance Shares, Restricted Shares or Deferred

                                        2

     Shares or any awards granted under Section 10. An Evidence of Award may be
     in an electronic medium, may be limited to a notation on the books and
     records of the Company and, with the approval of the Committee, need not be
     signed by a representative of the Company or a Participant.

     "Exchange Act" means the Securities Exchange Act of 1934 and the rules and
regulations thereunder, as such law, rules and regulations may be amended from
time to time.
     "Free-Standing Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right.

     "Group" means any group as defined in Section 14(d)(2) of the Exchange Act.

     "Incentive Stock Options" means Option Rights that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision. For purposes of clarity, Incentive Stock Options may only be granted
to Employees.

     "Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Units or Performance Shares or, when so determined by the
Committee, Option Rights, Appreciation Rights and Restricted Shares pursuant to
this Plan. Management Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the individual
Participant or of the Subsidiary, division, department, region or function
within the Company or Subsidiary in which the Participant is employed. The
Management Objectives may be made relative to the performance of other
corporations. The Management Objectives applicable to any award to a Covered
Employee shall be based on specified levels of or growth in one or more of the
following criteria: revenues; earnings from operations; earnings before or after
interest and taxes; net income; cash flow; earnings per share; working capital;
economic value added; return on total capital; return on invested capital;
return on equity; return on assets; total return to stockholders; earnings
before or after interest, taxes, depreciation, amortization or extraordinary or
special items; return on investment; free cash flow; cash flow return on
investment (discounted or otherwise); net cash provided by operations; cash flow
in excess of cost of capital; operating margin; profit margin; stock price
and/or strategic business criteria consisting of one or more objectives based on
meeting specified product development, strategic partnering, research and
development, market penetration, geographic business expansion goals, cost
targets, customer satisfaction, employee satisfaction, management of employment
practices and employee benefits, supervision of litigation or information
technology, goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures. Management Objectives may be stated as a
combination of the listed factors. If the Committee determines that a change in
the business, operations, corporate structure or capital structure of the
Company, or the manner in which it conducts its business, or other events or
circumstances (including those events and circumstances described in Section 12
of this Plan) render the Management Objectives unsuitable, the Committee may in
its discretion modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable, except in the case of a Covered Employee to the
extent that such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.

     "Market Value per Share" means, as of any particular date, (i) the average
of the high and low prices of Common Stock on the date on which it is to be
valued hereunder as reported on the New York Stock Exchange, or if there are no
sales on such day, on the next preceding trading day during which a sale
occurred, or (ii) if clause (i) does not apply, the fair market value of the
Common Stock as determined by the Committee.

     "Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.

     "Option Price" means the purchase price payable on exercise of an Option
Right.


                                        3

     "Option Right" means the right to purchase shares of Common Stock from the
Company upon the exercise of an option granted pursuant to Section 4 of this
Plan.

     "Participant" means an Employee or a Director who receives a grant of
Option Rights, Appreciation Rights, Performance Units or Performance Shares or a
grant or sale of Restricted Shares or Deferred Shares or any awards under
Section 10.

     "Performance Period" means, in respect of a Performance Unit or Performance
Share, a period of time established pursuant to Section 6 of this Plan within
which the Management Objectives relating to such Performance Share or
Performance Unit are to be achieved.

     "Performance Share" means a bookkeeping entry that records the equivalent
of one share of Common Stock awarded pursuant to Section 6 of this Plan.

     "Performance Unit" means a bookkeeping entry that records a unit equivalent
to $1.00 awarded pursuant to Section 6 of this Plan.

     "Person" means any person (as defined in Section 3(a)(9) of 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.

     "Plan" means this Milacron Inc. 2004 Long-Term Incentive Plan, as amended
from time to time.

     "Restricted Shares" means shares of Common Stock granted or sold pursuant
to Section 7 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in such Section 7 has expired.

     "Spread" means the excess of the Market Value per Share on the date when an
Option Right or Appreciation Right is exercised, over the per share Option Price
or per share Base Price provided for in the related Option Right or Appreciation
Right, respectively.

     "Subsidiary" means a corporation, company or other entity which is
designated by the Committee and in which the Company has a direct or indirect
ownership or other equity interest, provided, however, that for purposes of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, the term "Subsidiary" has the meaning given to such
term in Section 424 of the Code, as interpreted by the regulations thereunder
and applicable law.

     "Tandem Appreciation Right" means an Appreciation Right granted pursuant to
Section 5 of this Plan that is granted in tandem with an Option Right.

     3. SHARES AVAILABLE UNDER THE PLAN.

     a. Subject to adjustment as provided in Section 3(b) and Section 12 of this
Plan, the number of shares of Common Stock that may be issued or transferred (i)
upon the exercise of Option Rights or Appreciation Rights, (ii) as Restricted
Shares, (iii) as Deferred Shares, (iv) in payment of Performance Units or
Performance Shares that have been earned, (v) in payment of awards granted under
Section 10 of the Plan or (vi) in payment of dividend equivalents paid with
respect to awards made under the Plan shall not exceed in the aggregate
7,000,000 shares of Common Stock. Such shares may be shares of original
issuance, treasury shares, shares purchased by the Company on the open market,
or a combination of the foregoing.

     b. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments in the number of shares of
Common Stock available in Section 3(a) above or otherwise

                                        4

specified in the Plan or in any award granted hereunder if the number of shares
of Common Stock actually delivered differs from the number of shares of Common
Stock previously counted in connection with an award. Shares of Common Stock
subject to an award granted under the Plan that is canceled, expired, forfeited,
settled in cash or is otherwise terminated without a delivery of Common Stock to
the Participant will again be available for awards, and Common Stock withheld in
payment of the exercise price or taxes relating to an award granted under the
Plan and shares of Common Stock equal to the number surrendered in payment of
any exercise price or taxes relating to an award under the Plan shall be deemed
to constitute Common Stock not delivered to the Participant and shall be deemed
to again be available for awards under the Plan. This Section 3(b) shall apply
to the number of shares of Common Stock reserved and available for Incentive
Stock Options only to the extent consistent with applicable Treasury regulations
relating to Incentive Stock Options under the Code.

     c. Notwithstanding anything in this Section 3, or elsewhere in this Plan,
to the contrary and subject to adjustment as provided in Section 12 of this
Plan, (i) the aggregate number of shares of Common Stock actually issued or
transferred by the Company upon the exercise of Incentive Stock Options shall
not exceed 7,000,000 shares of Common Stock; (ii) no Participant shall be
granted Option Rights and Appreciation Rights, in the aggregate, for more than
500,000 shares of Common Stock during any calendar year; (iii) no Director who
is not an Employee shall be granted Option Rights, Appreciation Rights,
Restricted Shares and Deferred Shares, in the aggregate, for more than 10,000
shares of Common Stock during any calendar year.

     d. Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive awards of (i)
Performance Shares, Restricted Shares specifying Management Objectives or awards
granted under Section 10 of the Plan specifying Management Objectives, which
awards, in the aggregate, cover a maximum of more than 500,000 shares of Common
Stock or (ii) Performance Units having an aggregate maximum value as of their
respective Dates of Grant in excess of $2,000,000.

     4. OPTION RIGHTS.  The Committee may, from time to time and upon such terms
and conditions as it may determine, authorize the granting to Employees of
Option Rights. Each such grant may utilize any or all of the authorizations, and
shall be subject to all of the limitations, contained in the following
provisions:

          a. Each grant shall specify the number of shares of Common Stock to
     which it pertains, subject to adjustments as provided in Section 12 of this
     Plan.

          b. Each grant shall specify an Option Price per share, which shall be
     equal to or greater than the Market Value per Share on the Date of Grant.

          c. Each grant shall specify whether the Option Price shall be payable
     (i) in cash or by check acceptable to the Company, (ii) by the actual or
     constructive transfer to the Company of shares of Common Stock owned by the
     Optionee not less than 6 months having a value at the time of exercise
     equal to the total Option Price, or (iii) by a combination of such methods
     of payment. To the extent permitted by law, any grant may provide for
     deferred payment of the Option Price from the proceeds of sale through a
     bank or broker on a date satisfactory to the Company of some or all of the
     shares to which such exercise relates.

          d. Grants may be made to the same Employee whether or not any Option
     Rights previously granted to such Employee remain unexercised.

          e. Each grant shall specify the period or periods of continuous
     service by the Optionee with the Company or any Subsidiary that is
     necessary before the Option Rights or installments thereof will become
     exercisable and may provide for the earlier exercise of such Option Rights
     in the event of a Change in Control, retirement, death or disability of the
     Optionee or other similar transaction or event as approved by the
     Committee.


                                        5

          f. Any grant of Option Rights may specify Management Objectives that
     must be achieved as a condition to the exercise of such rights.

          g. Option Rights granted under this Plan may be (i) options,
     including, without limitation, Incentive Stock Options, that are intended
     to qualify under particular provisions of the Code, (ii) options that are
     not intended so to qualify, or (iii) combinations of the foregoing.

          h. The exercise of an Option Right shall result in the cancellation on
     a share-for-share basis of any Tandem Appreciation Right authorized under
     Section 5 of this Plan.

          i. No Option Right shall be exercisable more than 10 years from the
     Date of Grant.

          j. Each grant of Option Rights shall be evidenced by an Evidence of
     Award which shall contain such terms and provisions, consistent with this
     Plan and applicable sections of the Code, as the Committee may approve.

     5. APPRECIATION RIGHTS.

     a. The Committee may authorize the granting (i) to any Optionee who is also
an Employee, of Tandem Appreciation Rights in respect of Option Rights granted
hereunder, and (ii) to any Employee, of Free-Standing Appreciation Rights. A
Tandem Appreciation Right shall be a right of the Optionee, exercisable by
surrender of the related Option Right, to receive from the Company an amount
determined by the Committee, which shall be expressed as a percentage of the
Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation
Rights may be granted at any time prior to the exercise or termination of the
related Option Rights; provided, however, that a Tandem Appreciation Right
awarded in relation to an Incentive Stock Option must be granted concurrently
with such Incentive Stock Option. A Free-Standing Appreciation Right shall be a
right of the Employee to receive from the Company an amount determined by the
Committee, which shall be expressed as a percentage of the Spread (not exceeding
100 percent) at the time of exercise.

     b. Each grant of Appreciation Rights may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:

          (i) Any grant may specify that the amount payable on exercise of an
     Appreciation Right may be paid by the Company in cash, in shares of Common
     Stock or in any combination thereof and may either grant to the Employee or
     retain in the Committee the right to elect among those alternatives.

          (ii) Any grant may specify that the amount payable on exercise of an
     Appreciation Right may not exceed a maximum specified by the Committee at
     the Date of Grant.

          (iii) Each grant shall specify the period or periods of continuous
     service by the Employee with the Company or any Subsidiary that is
     necessary before the Appreciation Right or installments thereof will become
     exercisable and may provide for the earlier exercise of such Appreciation
     Rights in the event of a Change in Control, retirement, death or disability
     of the Employee or other similar transaction or event as approved by the
     Committee.

          (iv) Each grant of an Appreciation Right shall be evidenced by an
     Evidence of Award, which shall describe such Appreciation Right, identify
     any related Option Right, state that such Appreciation Right is subject to
     all the terms and conditions of this Plan, and contain such other terms and
     provisions, consistent with this Plan and applicable sections of the Code,
     as the Committee may approve.

          (v) Any grant may provide for the payment to the Employee of dividend
     equivalents thereon in cash or shares of Common Stock on a current,
     deferred or contingent basis.


                                        6

     c. Any grant of Tandem Appreciation Rights shall provide that such Rights
may be exercised only at a time when the related Option Right is also
exercisable and at a time when the Spread is positive, and by surrender of the
related Option Right for cancellation.

     d. Regarding Free-Standing Appreciation Rights only:

          (i) Each grant shall specify in respect of each Free-Standing
     Appreciation Right a Base Price, which shall be equal to or greater than
     the Market Value per Share on the Date of Grant;

          (ii) Grants may be made to the same Employee regardless of whether any
     Free-Standing Appreciation Rights previously granted to the Employee remain
     unexercised; and

          (iii) No Free-Standing Appreciation Right granted under this Plan may
     be exercised more than 10 years from the Date of Grant.

     e. Any grant of Appreciation rights may specify Management Objectives that
must be achieved as a condition to exercise such rights.

     6. PERFORMANCE UNITS AND PERFORMANCE SHARES.  The Committee may also
authorize the granting to Employees of Performance Units and Performance Shares
that will become payable (or payable early) to an Employee upon achievement of
specified Management Objectives. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the limitations, contained in the
following provisions:

          a. Each grant shall specify the number of Performance Units or
     Performance Shares to which it pertains, which number may be subject to
     adjustment to reflect changes in compensation or other factors; provided,
     however, that no such adjustment shall be made in the case of a Covered
     Employee where such action would result in the loss of the otherwise
     available exemption of the award under Section 162(m) of the Code.

          b. The Performance Period with respect to each Performance Unit or
     Performance Share shall be such period of time commencing with the Date of
     Grant as shall be determined by the Committee at the time of grant.

          c. Any grant of Performance Units or Performance Shares shall specify
     Management Objectives which, if achieved, will result in payment or early
     payment of the award, and each grant may specify in respect of such
     specified Management Objectives a minimum acceptable level of achievement
     and shall set forth a formula for determining the number of Performance
     Units or Performance Shares that will be earned if performance is at or
     above the minimum level, but falls short of full achievement of the
     specified Management Objectives. The grant of Performance Units or
     Performance Shares shall specify that, before the Performance Shares or
     Performance Units shall be earned and paid, the Committee must determine
     that the Management Objectives have been satisfied.

          d. Each grant shall specify the time and manner of payment of
     Performance Units or Performance Shares that have been earned. Any grant
     may specify that the amount payable with respect thereto may be paid by the
     Company to the Employee in cash, in shares of Common Stock or in any
     combination thereof, and may either grant to the Employee or retain in the
     Committee the right to elect among those alternatives.

          e. Any grant of Performance Units may specify that the amount payable
     or the number of shares of Common Stock issued with respect thereto may not
     exceed maximums specified by the Committee at the Date of Grant. Any grant
     of Performance Shares may specify that the amount payable with respect
     thereto may not exceed a maximum specified by the Committee at the Date of
     Grant.


                                        7

          f. Each grant of Performance Units or Performance Shares shall be
     evidenced by an Evidence of Award, which shall contain such terms and
     provisions, consistent with this Plan and applicable sections of the Code,
     as the Committee may approve.

          g. The Committee may, at or after the Date of Grant of Performance
     Shares, provide for the payment of dividend equivalents to the holder
     thereof on either a current or deferred or contingent basis, either in cash
     or in additional shares of Common Stock.

     7. RESTRICTED SHARES.  The Committee may also authorize the grant or sale
of Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:

          a. Each such grant or sale shall constitute an immediate transfer of
     the ownership of Common Stock to the Participant in consideration of the
     performance of services, entitling such Participant to voting, dividend and
     other ownership rights, but subject to the substantial risk of forfeiture
     and restrictions on transfer hereinafter referred to.

          b. Each such grant or sale may be made without additional
     consideration or in consideration of a payment by such Participant that is
     less than Market Value per Share at the Date of Grant.

          c. Each such grant or sale shall provide that the Restricted Shares
     covered by such grant or sale shall be subject to a "substantial risk of
     forfeiture" within the meaning of Section 83 of the Code for a period to be
     determined by the Committee at the Date of Grant and may provide for the
     earlier lapse of such substantial risk of forfeiture in the event of a
     Change in Control, retirement, or death or disability of the Employee or
     other similar transaction or event as approved by the Committee.

          d. Each such grant or sale shall provide that during the period for
     which such substantial risk of forfeiture is to continue, the
     transferability of the Restricted Shares shall be prohibited or restricted
     in the manner and to the extent prescribed by the Committee at the Date of
     Grant (which restrictions may include, without limitation, rights of
     repurchase or first refusal in the Company or provisions subjecting the
     Restricted Shares to a continuing substantial risk of forfeiture in the
     hands of any transferee).

          e. Any grant of Restricted Shares may specify Management Objectives
     that, if achieved, will result in termination or early termination of the
     restrictions applicable to such shares. Each grant may specify in respect
     of such Management Objectives a minimum acceptable level of achievement and
     may set forth a formula for determining the number of Restricted Shares on
     which restrictions will terminate if performance is at or above the minimum
     level, but falls short of full achievement of the specified Management
     Objectives.

          f. Any such grant or sale of Restricted Shares may require that any or
     all dividends or other distributions paid thereon during the period of such
     restrictions be automatically deferred and reinvested in additional
     Restricted Shares, which may be subject to the same restrictions as the
     underlying award.

          g. Each grant or sale of Restricted Shares shall be evidenced by an
     Evidence of Award, which shall contain such terms and provisions,
     consistent with this Plan and applicable sections of the Code, as the
     Committee may approve. The Restricted Shares may be certificated or
     uncertificated, as determined by the Committee. Unless otherwise directed
     by the Committee, all certificates representing Restricted Shares shall be
     held in custody by the Company until all restrictions thereon shall have
     lapsed, together with a stock power or powers executed by the Participant
     in whose name such certificates are registered, endorsed in blank and
     covering such Shares.


                                        8

     8. DEFERRED SHARES.  The Committee may also authorize the grant or sale of
Deferred Shares to Employees. Each such grant or sale may utilize any or all of
the authorizations, and shall be subject to all of the requirements contained in
the following provisions:

          a. Each such grant or sale shall constitute the agreement by the
     Company to deliver Common Stock to the Employee in the future in
     consideration of the performance of services, but subject to the
     fulfillment of such conditions during the Deferral Period as the Committee
     may specify.

          b. Each such grant or sale may be made without additional
     consideration or in consideration of a payment by such Employee that is
     less than the Market Value per Share at the Date of Grant.

          c. Each such grant or sale shall be subject to a Deferral Period as
     determined by the Committee at the Date of Grant, and may provide for the
     earlier lapse or other modification of such Deferral Period in the event of
     a Change in Control, retirement, or death or disability of the Employee or
     other similar transaction or event as approved by the Committee.

          d. During the Deferral Period, the Employee shall have no right to
     transfer any rights under his or her award and shall have no rights of
     ownership in the Deferred Shares and shall have no right to vote them, but
     the Committee may, at or after the Date of Grant, authorize the payment of
     dividend equivalents on such shares on either a current or deferred or
     contingent basis, either in cash or in additional shares of Common Stock.

          e. Each grant or sale of Deferred Shares shall be evidenced by an
     Evidence of Award, which shall contain such terms and provisions,
     consistent with this Plan and applicable sections of the Code, as the
     Committee may approve.

     9. NON-EMPLOYEE DIRECTORS.  The Board may, from time to time and upon such
terms and conditions as it may determine, authorize the granting to Directors
who are not then Employees of Option Rights, Appreciation Rights, Restricted
Shares, Deferred Shares, or any combination of the foregoing. Each grant of
Option Rights, Appreciation Rights, Restricted Shares and Deferred Shares shall
be upon terms and conditions consistent with Sections 4, 5, 7 and 8 of this
Plan.

     10. OTHER AWARDS.

     a. The Committee is authorized, subject to limitations under applicable
law, to grant to any Employee such other awards that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on,
or related to, Common Stock or factors that may influence the value of Common
Stock, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Common Stock, purchase
rights for Common Stock, awards with value and payment contingent upon
performance of the Company or business units thereof or any other factors
designated by the Committee, and awards valued by reference to the book value of
Common Stock or the value of securities of, or the performance of specified
Subsidiaries or affiliates or other business units of, the Company. The
Committee shall determine the terms and conditions of such awards. Common Stock
delivered pursuant to an award in the nature of a purchase right granted under
this Section 10 shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Common Stock, other awards, notes or other property, as the Committee shall
determine.

     b. Cash awards, as an element of or supplement to any other award granted
under this Plan, may also be granted pursuant to this Section 10 of the Plan.

     c. The Committee is authorized to grant Common Stock as a bonus, or to
grant Common Stock or other awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as shall be determined
by the Committee.


                                        9

     11. TRANSFERABILITY.

     a. Except as otherwise determined by the Committee, no Option Right,
Appreciation Right or other award granted under the Plan shall be transferable
by a Participant other than by will or the laws of descent and distribution.
Except as otherwise determined by the Committee, Option Rights and Appreciation
Rights shall be exercisable during the Optionee's lifetime only by him or her or
by his or her guardian or legal representative.

     b. The Committee may specify at the Date of Grant that part or all of the
shares of Common Stock that are (i) to be issued or transferred by the Company
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Units or Performance Shares or (ii) no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in
Section 7 of this Plan, shall be subject to further restrictions on transfer.

     12. ADJUSTMENTS.  The Committee may make or provide for such adjustments in
the numbers of shares of Common Stock covered by outstanding Option Rights,
Appreciation Rights, Performance Shares, Deferred Shares and share-based awards
described in Section 10 of the Plan granted hereunder, in the Option Price and
Base Price provided in outstanding Appreciation Rights, and in the kind of
shares covered thereby, as the Committee, in its sole discretion, exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants or Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or (b)
any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets
(including, without limitation, a special or large non-recurring dividend),
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event, the Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration (or no consideration) as it, in good
faith, may determine to be equitable in the circumstances and may require in
connection therewith the surrender of all awards so replaced. The Committee may
also make or provide for such adjustments in the numbers of shares specified in
Section 3 of this Plan as the Committee in its sole discretion, exercised in
good faith, may determine is appropriate to reflect any transaction or event
described in this Section 12; provided, however, that any such adjustment to the
number specified in Section 3(c)(i) shall be made only if and to the extent that
such adjustment would not cause any Option intended to qualify as an Incentive
Stock Option to fail so to qualify.

     13. FRACTIONAL SHARES.  The Company shall not be required to issue any
fractional Common Stock pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.

     14. WITHHOLDING TAXES.  The Company shall have the right to deduct from any
payment under this Plan an amount equal to the federal, state, local, foreign
and other taxes which in the opinion of the Company are required to be withheld
by it with respect to such payment and to the extent that the amounts available
to the Company for such withholding are insufficient, it shall be a condition to
the receipt of such payment or the realization of such benefit that the
Participant or such other person make arrangements satisfactory to the Company
for payment of the balance of such taxes required to be withheld. At the
discretion of the Committee, such arrangements may include relinquishment of a
portion of such benefit pursuant to procedures adopted by the Committee from
time to time.

     15. FOREIGN EMPLOYEES.  In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in
                                        10

local law, tax policy or custom. Moreover, the Committee may approve such
supplements to or amendments, restatements or alternative versions of this Plan
as it may consider necessary or appropriate for such purposes, without thereby
affecting the terms of this Plan as in effect for any other purpose, and the
Corporate Secretary or other appropriate officer of the Company may certify any
such document as having been approved and adopted in the same manner as this
Plan. No such special terms, supplements, amendments or restatements, however,
shall include any provisions that are inconsistent with the terms of this Plan
as then in effect unless this Plan could have been amended to eliminate such
inconsistency without further approval by the stockholders of the Company.

     16. ADMINISTRATION OF THE PLAN.

     a. This Plan shall be administered by the Company's Personnel and
Compensation Committee of the Board. Notwithstanding the foregoing, the Board
may perform any function of the Committee hereunder, and the Board shall perform
all functions of the Committee with respect to any award for a Director who is
not then an Employee, in which case the term "Committee" shall refer to the
Board.

     b. The interpretation and construction by the Committee of any provision of
this Plan or of any Evidence of Award, agreement, notification or document
evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares,
Deferred Shares, Performance Units, Performance Shares or any awards granted
under Section 10 of the Plan and any determination by the Committee pursuant to
any provision of this Plan or of any such Evidence of Award, agreement,
notification or document shall be final, binding and conclusive. No member of
the Committee shall be liable for any such action or determination made not in
bad faith.

     17. AMENDMENTS AND OTHER MATTERS.

     a. The Board may at any time and from time to time amend the Plan in whole
or in part; provided, however, that any amendment which must be approved by the
stockholders of the Company in order to comply with applicable law or the rules
of the New York Stock Exchange or, if the Common Stock is not traded on the New
York Stock Exchange, the principal national securities exchange upon which the
Common Stock is traded or quoted, shall not be effective unless and until such
approval has been obtained. Presentation of this Plan or any amendment thereof
for stockholder approval shall not be construed to limit the Company's authority
to offer similar or dissimilar benefits under other plans or otherwise with or
without stockholder approval. Without limiting the generality of the foregoing,
the Board of Directors may amend this Plan to eliminate provisions which are no
longer necessary as a result in changes in tax or securities laws or
regulations, or in the interpretation thereof.

     b. The Committee shall not, without the further approval of the
stockholders of the Company, authorize the amendment of any outstanding Option
Right or Appreciation Right to reduce the Option Price or Base Price.
Furthermore, no Option Right or Appreciation Right shall be cancelled and
replaced with awards having a lower Option Price or Base Price, respectively,
without further approval of the stockholders of the Company. This Section 17(b)
is intended solely to prohibit the repricing of "underwater" Option Rights and
Appreciation Rights and shall not be construed to prohibit the adjustments
provided for in Section 12 of this Plan.

     c. The Committee also may permit Participants to elect to defer the
issuance of Common Stock or the settlement of awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for purposes
of this Plan. The Committee also may provide that deferred issuances and
settlements include the payment or crediting of dividend equivalents or interest
on the deferral amounts.

     d. The Committee may condition the grant of any award or combination of
awards authorized under this Plan on the deferral by the Participant of his or
her right to receive a cash bonus or other compensation otherwise payable by the
Company or a Subsidiary to the Participant.


                                        11

     e. In case of a Change in Control of the Company, or in the case of a
termination of employment of a Participant by reason of death, disability or
normal or early retirement, or in the case of hardship of a Participant or other
special circumstances, the Committee may, in its sole discretion, accelerate the
time at which any Option Right or Appreciation Right may be exercised or the
time when a Performance Unit or Performance Share shall be deemed to have been
fully earned or the time when a substantial risk of forfeiture or prohibition on
transfer of Restricted Shares shall lapse or the time when a Deferral Period
shall end. In addition, the Committee may, in its sole discretion, modify any
Option Right or Appreciation Right to extend the period following termination of
a Participant's employment to the Company or any Subsidiary during which such
award will remain outstanding and be exercisable, provided that no such
extension shall result in any award being exercisable more than ten years after
the Date of Grant.

     f. This Plan shall not confer upon any Participant any right with respect
to continuance of employment with the Company or any Subsidiary, nor shall it
interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate such Participant's employment at any time.

     g. Subject to Section 19, this Plan shall continue in effect until the date
on which all Common Stock available for issuance or transfer under this Plan has
been issued or transferred and the Company has no further obligation hereunder.

     h. Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right or title to any assets, funds or
property of the Company or any Subsidiary, including without limitation, any
specific funds, assets or other property which the Company or any Subsidiary may
set aside in anticipation of any liability under the Plan. A Participant shall
have only a contractual right to an award or the amounts, if any, payable under
the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing
contained in the Plan shall constitute a guarantee that the assets of the
Company or any Subsidiary shall be sufficient to pay any benefits to any person.

     i. This Plan and each Evidence of Award shall be governed by the laws of
the State of Delaware, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of the Plan
to the substantive law of another jurisdiction.

     j. If any provision of the Plan is or becomes invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended or limited in scope to conform to applicable laws
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in full force and effect.

     18. APPLICABLE LAWS.  The obligations of the Company with respect to awards
under the Plan shall be subject to all Applicable Laws and such approvals by any
governmental agencies as the Committee determines may be required.

     19. TERMINATION.  No grant shall be made under this Plan more than 10 years
after the Effective Date, but all grants effective on or prior to such date
shall continue in effect thereafter subject to the terms thereof and of this
Plan.



                                        12

EX-10.36

                                                                  EXHIBIT 10.36

                               FINANCING AGREEMENT

                            DATED AS OF JUNE 10, 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,

                              JPMORGAN CHASE BANK,
                  AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,

                           WELLS FARGO FOOTHILL, LLC,
                             AS DOCUMENTATION AGENT

                                       AND

                       J.P. MORGAN BUSINESS CREDIT CORP.,
                     AS SOLE LEAD ARRANGER AND BOOK MANAGER





                                                                                                                   
                                          ARTICLE I DEFINITIONS; CERTAIN TERMS

Section 1.01      Definitions...................................................................................       1
Section 1.02      Terms Generally...............................................................................      34
Section 1.03      Accounting and Other Terms....................................................................      34
Section 1.04      Time References...............................................................................      34

                                                  ARTICLE II THE LOANS

Section 2.01(a)   Commitments...................................................................................      34
Section 2.02(a)   Making the Loans..............................................................................      35
Section 2.03      Repayment of Loans; Evidence of Debt..........................................................      35
Section 2.04      Interest......................................................................................      36
Section 2.05      Reduction of Commitment; Prepayment of Loans..................................................      37
Section 2.06      Fees..........................................................................................      40
Section 2.07      [Reserved]....................................................................................      40
Section 2.08      Taxes.........................................................................................      40
Section 2.09      LIBO Rate Not Determinable; Illegality or Impropriety.........................................      43
Section 2.10      Indemnity.....................................................................................      43
Section 2.11      Continuation and Conversion of Loans..........................................................      44
Section 2.12      Conversion to Dollars.........................................................................      45
Section 2.13      Uncollected Funds Compensation................................................................      45
Section 2.14      Extension of Final Maturity Date..............................................................      45

                                     ARTICLE III LETTERS OF CREDIT AND OTHER MATTERS

Section 3.01      Letters of Credit.............................................................................      46
Section 3.02      Collection of Accounts........................................................................      51
Section 3.03      Payments......................................................................................      51
Section 3.04      Settlement Procedures.........................................................................      51
Section 3.05      Overadvances..................................................................................      53

                                    ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION

Section 4.01      Audit and Collateral Monitoring Fees..........................................................      54
Section 4.02      Payments; Computations and Statements.........................................................      54
Section 4.03      Sharing of Payments, Etc......................................................................      55



                                        i





                                                                                                                   
Section 4.04      Apportionment of Payments.....................................................................      55
Section 4.05      Increased Costs and Reduced Return............................................................      56
Section 4.06      Joint and Several Liability of the Borrowers..................................................      58

                                              ARTICLE V CONDITIONS TO LOANS

Section 5.01      Conditions Precedent to Effectiveness of this Agreement.......................................      59
Section 5.02      Conditions Precedent to All Loans and Letters of Credit.......................................      64

                                        ARTICLE VI REPRESENTATIONS AND WARRANTIES

Section 6.01      Representations and Warranties................................................................      65
         (a)      Organization, Good Standing, Etc..............................................................      65
         (b)      Authorization, Etc............................................................................      65
         (c)      Governmental Approvals........................................................................      65
         (d)      Enforceability of Loan Documents..............................................................      65
         (e)      Subsidiaries..................................................................................      66
         (f)      Litigation; Commercial Tort Claims............................................................      66
         (g)      Financial Condition...........................................................................      66
         (h)      Compliance with Law, Etc......................................................................      66
         (i)      ERISA.........................................................................................      67
         (j)      Taxes, Etc....................................................................................      67
         (k)      Regulations T, U and X........................................................................      67
         (l)      Nature of Business............................................................................      67
         (m)      Adverse Agreements, Etc.......................................................................      68
         (n)      Permits, Etc..................................................................................      68
         (o)      Properties....................................................................................      68
         (p)      Full Disclosure...............................................................................      69
         (q)      Operating Lease Obligations...................................................................      69
         (r)      Environmental Matters.........................................................................      69
         (s)      Insurance.....................................................................................      71
         (t)      Use of Proceeds...............................................................................      71
         (u)      Location of Bank Accounts.....................................................................      71
         (v)      Intellectual Property.........................................................................      71
         (w)      Material Contracts............................................................................      72
         (x)      Holding Company and Investment Company Acts...................................................      72
         (y)      Employee and Labor Matters....................................................................      72
         (z)      Customers and Suppliers.......................................................................      72
         (aa)     Name; Jurisdiction of Organization; Organizational ID Number; Chief Place
                  of Business; Chief Executive Office; FEIN.....................................................      73
         (bb)     Tradenames....................................................................................      73
         (cc)     Locations of Collateral.......................................................................      73
         (dd)     Security Interests............................................................................      73
         (ee)     [Reserved]....................................................................................      73
         (ff)     Financial Assistance..........................................................................      74
         (gg)     Schedules.....................................................................................      74
         (hh)     Canadian Pension and Benefit Plan Matters.....................................................      74



                                       ii





                                                                                                                   
                                        ARTICLE VII COVENANTS OF THE LOAN PARTIES

Section 7.01      Affirmative Covenants.........................................................................      74
         (a)      Reporting Requirements........................................................................      74
         (b)      Additional Guaranties and Collateral Security.................................................      78
         (c)      Compliance with Laws, Etc.....................................................................      79
         (d)      Preservation of Existence, Etc................................................................      79
         (e)      Keeping of Records and Books of Account.......................................................      79
         (f)      Inspection Rights.............................................................................      79
         (g)      Maintenance of Properties, Etc................................................................      80
         (h)      Maintenance of Insurance......................................................................      80
         (i)      Obtaining of Permits, Etc.....................................................................      80
         (j)      Environmental.................................................................................      80
         (k)      Further Assurances............................................................................      82
         (l)      Change in Collateral; Collateral Records......................................................      82
         (m)      Landlord Waivers; Collateral Access Agreements................................................      82
         (o)      Fiscal Year...................................................................................      83
         (p)      Borrowing Base................................................................................      83
         (q)      Use of Proceeds...............................................................................      83
         (r)      Post-Closing Matters..........................................................................      83
         (s)      Conference Calls..............................................................................      84
         (t)      Misplaced Notes...............................................................................      84
         (u)      Canadian Pension and Benefit Plans............................................................      84
         (v)      After Acquired Real Property..................................................................      85
         (w)      Senior Secured Priority Collateral............................................................      85

Section 7.02      Negative Covenants............................................................................      86
         (a)      Liens, Etc....................................................................................      86
         (b)      Indebtedness..................................................................................      86
         (c)      Fundamental Changes; Dispositions.............................................................      86
         (d)      Change in Nature of Business..................................................................      88
         (e)      Loans, Advances, Investments, Etc.............................................................      88
         (f)      Lease Obligations.............................................................................      90
         (g)      [Reserved]....................................................................................      90
         (h)      Restricted Payments...........................................................................      90
         (i)      Federal Reserve Regulations...................................................................      91
         (j)      Transactions with Affiliates..................................................................      91
         (k)      Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries................      91
         (l)      Limitation on Issuance of Capital Stock.......................................................      92
         (m)      Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc.....      92
         (n)      Investment Company Act of 1940................................................................      94
         (o)      Compromise of Accounts........................................................................      94
         (p)      ERISA.........................................................................................      94
         (q)      Environmental.................................................................................      95
         (r)      Certain Agreements............................................................................      95
         (s)      Misplaced Notes...............................................................................      95
         (t)      Wholly-Owned Subsidiaries.....................................................................      95

Section 7.03      Financial Covenants...........................................................................      95
         (a)      Minimum Fixed Charge Coverage Ratio...........................................................      95



                                       iii





                                                                                                                  
         (b)      Cumulative Consolidated EBITDA................................................................      96
         (c)      Capital Expenditures..........................................................................      96

                                         ARTICLE VIII MANAGEMENT, COLLECTION AND
                                   STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL

Section 8.01      Collection of Accounts; Management of Collateral..............................................      97
Section 8.02      Accounts Documentation........................................................................     100
Section 8.03      Status of Accounts and Other Collateral.......................................................     100
Section 8.04      Collateral Custodian..........................................................................     101
Section 8.05      Collateral Reporting..........................................................................     101
Section 8.06      Accounts Covenants............................................................................     102
Section 8.07      Inventory Covenants...........................................................................     102

                                              ARTICLE IX EVENTS OF DEFAULT

Section 9.01      Events of Default.............................................................................     103

                                                     ARTICLE X AGENT

Section 10.01     Appointment...................................................................................     106
Section 10.02     Nature of Duties..............................................................................     106
Section 10.03     Rights, Exculpation, Etc......................................................................     107
Section 10.04     Reliance......................................................................................     108
Section 10.05     Indemnification...............................................................................     108
Section 10.06     Agent Individually............................................................................     109
Section 10.07     Successor Agent...............................................................................     109
Section 10.08     Collateral Matters............................................................................     109

                                                   ARTICLE XI GUARANTY

Section 11.01     Guaranty......................................................................................     111
Section 11.02     Guaranty Absolute.............................................................................     111
Section 11.03     Waiver........................................................................................     112
Section 11.04     Continuing Guaranty; Assignments..............................................................     112
Section 11.05     Subrogation...................................................................................     113
Section 11.06     Judgment......................................................................................     113
Section 11.07     General Limitation on Guarantee Obligations...................................................     114
Section 11.08     Dutch Financial Assistance Rules..............................................................     114



                                       iv





                                                                                                                  
                                                ARTICLE XII MISCELLANEOUS

Section 12.01     Notices, Etc..................................................................................     114
Section 12.02     Amendments, Etc...............................................................................     115
Section 12.03     No Waiver; Remedies, Etc......................................................................     116
Section 12.04     Expenses; Taxes; Attorneys' Fees..............................................................     116
Section 12.05     Right of Set-off..............................................................................     117
Section 12.06     Severability..................................................................................     117
Section 12.07     Assignments and Participations................................................................     117
Section 12.08     Counterparts..................................................................................     120
Section 12.09     GOVERNING LAW.................................................................................     120
Section 12.10     CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.........................................     120
Section 12.11     WAIVER OF JURY TRIAL, ETC.....................................................................     120
Section 12.12     Consent by the Agents and Lenders.............................................................     121
Section 12.13     No Party Deemed Drafter.......................................................................     121
Section 12.14     Reinstatement; Certain Payments...............................................................     121
Section 12.15     Indemnification...............................................................................     121
Section 12.16     Parent as Agent for Borrowers.................................................................     123
Section 12.17     Records.......................................................................................     123
Section 12.18     Binding Effect................................................................................     123
Section 12.19     Interest......................................................................................     124
Section 12.20     Confidentiality...............................................................................     124
Section 12.21     Integration...................................................................................     125
Section 12.22     Replacement of Lenders........................................................................     125
Section 12.23     Dutch Parallel Debt...........................................................................     125
Section 12.24     USA PATRIOT Act...............................................................................     127
Section 12.25     Interest Act Disclosure.......................................................................     127



                                        v





                              SCHEDULE AND EXHIBITS

Schedule 1.01(A)       Lenders and Lenders' Commitments
Schedule 1.01(B)       Initial Inventory Categories
Schedule 1.01(C)       [Reserved]
Schedule 1.01(D)       Disbursement Accounts
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 D-2            Form of Notice of Conversion/Confirmation
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

                                       vi



                               FINANCING AGREEMENT

            Financing Agreement, dated as of June 10, 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, an
"Initial Guarantor" and collectively, the "Initial Guarantors"), the lenders
from time to time party hereto (each, a "Lender" and collectively, the
"Lenders"), JPMorgan Chase Bank ("JPMorgan"), as administrative agent and
collateral agent for the Lenders (in each such capacity, the "Administrative
Agent" and the "Collateral Agent", respectively) and Wells Fargo Foothill, LLC,
as documentation agent (in such capacity, the "Documentation Agent").

                                    RECITALS

            The Borrowers have requested the Lenders to extend credit to the
Borrowers consisting of a $75,000,000 secured revolving credit 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 pay fees and expenses related thereto and for general
corporate purposes of the Borrowers and their Subsidiaries. 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:

            "ABL Priority Collateral" shall have the meaning specified therefor
in the Intercreditor Agreement.

            "ABR Loan" means a Loan bearing interest based upon the Alternate
Base Rate.

            "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 and each Canadian
Borrowing Base Guarantor, all present and future rights of such Person 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.



            "Activation Notice" has the meaning specified therefor in Section
8.01(b).

            "Additional Commitment Lender" has the meaning specified therefor in
Section 2.14.

            "Adjusted LIBO Rate" means, with respect to any Eurodollar Loan for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

            "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 Agents 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.

            "Agent" means the Collateral Agent or the Administrative Agent, and
"Agents" means the Collateral Agent and the Administrative Agent, collectively.

            "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.

            "Alternate Base Rate" means, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.

            "Applicable Rate" means, for any day, with respect to any ABR Loan
or Eurodollar Loan, the applicable rate per annum set forth below under the
caption "ABR Spread" or "Eurodollar Spread", as the case may be, based upon the
Trailing Average Availability as of the last day of the immediately preceding
calendar month as set forth in the most recent Borrowing Base Certificate
delivered by the Borrowers pursuant to Section 7.01(a)(vi):

                                       2







                                                         ABR SPREAD IN        EURODOLLAR SPREAD IN
                           TRAILING AVERAGE              BASIS POINTS             BASIS POINTS
PRICING LEVEL                AVAILABILITY                  PER YEAR                 PER YEAR
                                                                     
                     Greater than or equal to
      1              $50,000,000                               75                      250

      2              Greater than or equal to
                     $35,000,000 but less than
                     $50,000,000                              100                      275

      3              Greater than or equal to
                     $20,000,000 but less than
                     $35,000,000                              125                      300

      4              Less than $20,000,000                    150                      325


Any increase or decrease in the Applicable Rate resulting from a change in the
Trailing Average Availability shall become effective as of the fifth Business
Day immediately following the date on which the Borrowers deliver the Borrowing
Base Certificate pursuant to Section 7.01(a)(vi); provided, however, that (i) if
a Borrowing Base Certificate is not delivered when due in accordance with
Section 7.01(a)(vi), then Pricing Level 4 shall apply as of the first Business
Day after the date on which such Borrowing Base Certificate was required to have
been delivered and shall remain in effect until the fifth Business Day
immediately following the date such Borrowing Base Certificate is delivered in
accordance with such Section; and (ii) the Applicable Rate in effect from the
Effective Date through delivery of the Borrowing Base Certificate for the
calendar month ending December 31, 2004 shall be 275 basis points per year for
Eurodollar Loans and 100 basis points for ABR Loans.

            "Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be reasonably determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.

            "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
Credit Commitment and (ii) the sum of (A) the aggregate outstanding principal
amount of all Revolving Credit Loans and (B) the LC Exposure.

            "Availability Reserve" means $10,000,000.

                                       3





            "Available Funds" means all deposits in the Administrative Agent's
Account which shall have been made by 2:00 p.m. on a Business Day, or such later
time in any Business Day as the Administrative Agent shall have expressly
consented to.

            "Bailee's Letter" means a letter in form and substance reasonably
acceptable to the Collateral 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 Collateral Agent and the Lenders with respect thereto.

            "Banking Services" means the provision to any Loan Party by a Lender
or any of its Affiliates (in each case with the consent of the Administrative
Agent) of treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items,
overdrafts and interstate depository network services).

            "Banking Services Obligations" of the Loan Parties means any and all
obligations of the Loan Parties, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.

            "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) and (ii) market value, in each case, determined in
accordance with GAAP calculated on a first-in first-out basis.

            "Borrower" and "Borrowers" have the respective meanings specified
therefor in the preamble hereto.

            "Borrowing Base" means, at any time, the sum of (i) the sum of (A)
85% of the value of the Net Amount of Eligible Accounts at such time; provided,
however, that the aggregate amount of this clause (A) attributable to Eligible
Accounts of the Canadian Borrowing Base Guarantors shall not exceed $5,000,000,
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 consigned Eligible Inventory shall not exceed $500,000, (y) 85%
of the aggregate Net Liquidation Values for all Inventory Categories and (z)
$30,000,000 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 that is not a Saturday, Sunday or other
day on which commercial banks in New York City or Chicago, Illinois are
authorized or required by law to remain

                                       4





closed; provided that, when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

            "Business Trade Secrets" has the meaning specified therefor in
Section 6.01(v)(ii).

            "Canadian Benefit Plans" means all material employee benefit plans
of any nature or kind whatsoever that are not Canadian Pension Plans and are
maintained or contributed to by any Loan Party having employees in Canada.

            "Canadian Dollars" and the sign "Cdn.$" shall mean lawful currency
of Canada.

            "Canadian Pension Plans" means each plan which is considered to be a
pension plan for the purposes of any applicable pension benefits standards
statute and/or regulation in Canada established, maintained or contributed to by
any Loan Party for its employees or former employees and shall not mean the
Canadian Pension Plan that is maintained by the Government of Canada.

            "Canadian Borrowing Base Guarantor" means any wholly-owned Canadian
Subsidiary of Parent (a) which is able to prepare all collateral reports in a
comparable manner to the Borrowers' reporting procedures; (b) which has granted
to the Collateral Agent a first priority perfected Lien (subject to Permitted
Liens and other Liens acceptable to the Collateral Agent) on all or
substantially all of its personal property constituting ABL Priority Collateral
(as defined in the Intercreditor Agreement) and a first priority perfected Lien
(or, prior to the Discharge of Term Obligations, a second priority perfected
Lien) on all or substantially all of its remaining personal property to secure
payment and performance of the Obligations; (c) with respect to which the
Administrative Agent has received all customary opinions, Uniform Commercial
Code and Personal Property Security Act search reports, certificates and other
documents reasonably requested by the Administrative Agent and such joinder
agreements to this Agreement, guaranties, contribution and set-off agreements
and such security agreements, pledge agreements, account control agreements and
other Loan Documents reasonably requested by the Administrative Agent in form
and substance reasonably satisfactory to the Administrative Agent; (d) whose
outstanding equity interests are subject to a first priority pledge (or, prior
to the Discharge of Term Obligations, a second priority pledge) in favor of the
Collateral Agent to secure payment and performance of the Obligations; and (e)
with respect to which the Collateral Agent has received and approved, in its
reasonable discretion, a collateral audit conducted by an independent audit firm
designated by Collateral Agent.

            "Canadian Subsidiary" means any Subsidiary of a Loan Party that is
created or organized under the laws of Canada or a Province or territory of
Canada.

            "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

                                       5





Issuing Bank or the manner in which any Lender, any Person controlling any
Lender, or the Issuing Bank 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 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, and which agreements
shall also be Control Agreements.

            "Cash Management Bank" has the meaning specified therefor in Section
8.01(a).

            "Cash Management Date" has the meaning set forth in Section 8.01(a).

            "Change in Law" has the meaning specified therefor in Section
4.05(a).

            "Change of Control" means each occurrence of any of the following:

            (a) other than pursuant to the Mizuho/Glencore Transactions, (i) the
acquisition, directly or indirectly, by any Person or group (within the meaning
of Section 13(d)(3) of the Exchange Act), other than any Permitted Holder
described in clause (i) of the definition thereof, of beneficial ownership of
more than 20% of the aggregate outstanding ordinary voting power of the Capital
Stock of the Parent; or (ii) the acquisition, directly or indirectly, by any
Permitted Holder described in clause (ii) of the definition thereof, of
beneficial ownership of more than 50% of the aggregate outstanding ordinary
voting power of the Capital Stock of the Parent;

            (b) other than pursuant to the Mizuho/Glencore 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;

                                       6





            (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);

            (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
such transaction described in this clause (ii) in which either (A) in the case
of any such transaction involving the Parent, (1) no Person or group (within the
meaning of Section 13(d)(3) of the Exchange Act), other than a Permitted Holder
described in clause (i) of the definition thereof, has, directly or indirectly,
acquired beneficial ownership of more than 20% of the aggregate outstanding
ordinary voting Capital Stock of the Parent or (2) no Permitted Holder described
in clause (ii) of the definition thereof, has, directly or indirectly, acquired
beneficial ownership of more than 50% 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; or

            (e) any "Change of Control" (or any similar term) as set forth in
the Senior Secured Notes Indenture.

            "China JV" means Milacron Plastics Machinery (Jiangyin) Co. LTD, a
limited liability company and an enterprise legal person under the laws of
China, to be formed as a joint venture between Jiangnan Mould & Plastic
Technology Co., LTD. (30%) and Milacron Plastics Technologies Group Inc. (70%)
for the purpose of research and development, design, manufacture, import
processing, processing and assembly and sale of plastics processing machinery
and supplies, molds for non-metallic articles, dies for motor vehicles, and
jigs, provision of related after-sales services, training, technical support and
technical consulting services.

            "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 and the Canadian
Borrowing Base Guarantors.

            "Commitment" means, with respect to each Lender, such Lender's
Revolving Credit Commitment.

            "Consent Date" has the meaning specified therefor in Section 2.14.

            "Consolidated EBITDA" means, for any period, the Consolidated Net
Income of Parent and its Consolidated Subsidiaries for such period, plus (a)
without duplication and to the extent deducted in determining such Consolidated
Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii)
consolidated income tax expense for such period, (iii) all amounts attributable
to depreciation

                                       7





and amortization for such period, (iv) other non-cash, non-operating expenses
for such period, (v) any extraordinary losses for such period, plus (vi) any
cash restructuring charges incurred from and after the first day of the first
complete fiscal quarter to occur after the Effective Date through December 31,
2005 in an amount not to exceed $2,000,000 and minus (b) without duplication and
to the extent included in determining such Consolidated Net Income, (i) any
extraordinary gains for such period and (ii) any non-operating income for such
period.

            "Consolidated Interest Expense" means, for any period, the excess of
(a) the sum of (i) the interest expense (including imputed interest expense in
respect of Capitalized Lease Obligations) of the Parent and its Consolidated
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, (ii) any interest accrued during such period in respect of
Indebtedness of the Parent or any Consolidated Subsidiary of the Parent that is
required to be capitalized rather than included in consolidated interest expense
for such period in accordance with GAAP, (iii) any cash payments made during
such period in respect of obligations referred to in clause (b) below that were
amortized or accrued in a previous period, minus (b) the sum of (i) to the
extent included in such consolidated interest expense for such period, non-cash
amounts attributable to amortization of financing costs paid in a previous
period, plus (ii) to the extent included in such consolidated interest expense
for such period, non-cash amounts attributable to amortization of debt discounts
or accrued interest payable in kind for such period.

            "Consolidated Net Income" means, for any period, the net income of
Parent and its Consolidated Subsidiaries, for such period calculated in
accordance with GAAP.

            "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 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.

                                       8





            "Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to the Administrative Agent, executed and delivered by
the applicable Loan Party, the Administrative Agent, and the applicable bank or
securities intermediary with respect to a deposit or securities account.

            "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 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).

            "Disbursement Account" mean each of the bank accounts listed on
Schedule 1.01(D) hereto.

            "Discharge of Term Obligations" has the meaning set forth in the
Intercreditor Agreement.

            "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 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.

            "Dollar Equivalent" means, at any time, (a) with respect to any
amount denominated in Dollars, such amount of Dollars, and (b) with respect to
any amount denominated in any currency other than Dollars, the amount of Dollars
as reasonably determined by the Administrative Agent at such time on the basis
of the Spot Rate for the purchase of Dollars with such other currency.

            "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 June 10, 2004.

            "Eligible Accounts" means, at any time, Accounts of a Domestic Loan
Party or a Canadian Borrowing Base Guarantor which at such time meet all of the
following specifications; provided that such specifications may be revised from
time to time by the Administrative Agent 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

                                       9





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 and the Inventory sold or
transferred in connection with such Account is not subject to repurchase or
similar agreement; (ii) no return, rejection, repossession or dispute has
occurred with respect to such Account, 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 return, rejection, repossession, 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 or a Canadian Borrowing Base Guarantor free and clear of any Lien other
than Liens permitted by Section 8.03 (including Prior Claims that are
unregistered and secure amounts that are not yet due and payable) and otherwise
continues to be in conformity in all material respects with all representations
and warranties made by a Domestic Loan Party and a Canadian Borrowing Base
Guarantor, as the case may be, to the Agents and the Lenders with respect
thereto in the Loan Documents; (iv) such Account is unconditionally payable in
Dollars or Canadian Dollars, as applicable, within 90 days from the invoice date
and is not evidenced by a promissory note, chattel paper or any other instrument
or other document; provided, however, that Accounts which are payable in
Japanese Yen and which otherwise satisfy the criteria set forth in this
definition (the "Yen Receivables") shall not be deemed ineligible by virtue of
the fact that such Accounts are payable in Japanese Yen, provided that (a)
solely for purposes of calculating the Borrowing Base, the amount of Yen
Receivables included within the calculation of the Borrowing Base shall be the
equivalent amount of Dollars (calculated based on the exchange rate for Dollars
on such date evidenced by a nationally published index for Japanese Yen) of such
Yen Receivables and (b) the aggregate amount of Yen Receivables included in the
Borrowing Base as Eligible Accounts shall not exceed $5,000,000; (v) no more
than 60 days have elapsed from the invoice due date, no more than 120 days have
elapsed from the invoice date with respect to such Account and any extension of
time for payment of such invoice has not extended such payment beyond 30 days
from the original invoice due date; (vi) such Account is not due from an
Affiliate of a Domestic Loan Party or a Canadian Borrowing Base Guarantor; (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 or Canada,
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 not also a supplier to or creditor of a Domestic Loan Party
or a Canadian Borrowing Base Guarantor, 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

                                       10





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 or the applicable Canadian Borrowing Base Guarantor 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 or a Canadian Borrowing Base Guarantor 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; and (xvii) 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, machine
work-in-process 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 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 Agents and the Lenders with respect thereto
in the Loan Documents; (ii) such Inventory is not held on consignment and 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
Domestic Loan Party or listed on Schedule 6.01(cc) or such other locations in
the continental United States as the Administrative Agent may approve in writing
from time to time (such approval not to be unreasonably withheld), provided,
that with respect to any such Inventory located on any single property that is
not owned by a Domestic Loan Party and that is not subject to a Landlord Waiver,
which Inventory has (a) an aggregate book value in excess of $500,000 (when
aggregated with other Inventory located at the same location) or (b) an
aggregate book value in excess of $2,000,000 (when aggregated with other
Inventory on other properties that are not owned by a Domestic Loan Party and
that are not subject to a Landlord Waiver), such Inventory in excess of the
dollar amounts in clauses (a) and (b) of this subsection (vi) may be excluded
from Eligible Inventory in the discretion of the Administrative Agent; (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

                                       11





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 machine work-in-process Inventory is at least 95% complete,
does not require any further manufacturing process other than cosmetic process,
is subject to a firm order and is designated to be shipped within 60 days, in
each case as detailed in the Administrative Borrower's internal work-in-process
report, provided that the aggregate Book Value of machine work-in-process
Inventory to be included in Eligible Inventory at any one time shall not exceed
$5,000,000; 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 benefit plan (as defined in
Section 3(3) of ERISA) (other than a Multiemployer Plan) 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 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.

                                       12





            "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 or 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 would be deemed to be a "controlled group" within the
meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.

            "Euro" or "E" means the single currency of participating member
states of the European Union.

            "Euro Note 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 Transactions" means (i) the tender offer for the Euro
Notes commenced by Milacron Capital on April 27, 2004 and the connected proxy
solicitation of holders of the Euro Notes to approve amendments to the terms of
the Euro Notes and the guarantee thereof, as such offer or solicitation may be
amended, modified or supplemented from time to time, (ii) the purchase of the
Euro Notes pursuant to such tender offer or otherwise and the payment of accrued
interest and premiums in connection therewith and the amendment to the terms of
the Euro Note Indenture and the guarantee thereof as contemplated by such proxy
solicitation and the payment of fees in connection therewith, (iii) the deposit
into an escrow account of an amount in cash or in cash equivalents sufficient to
repay, repurchase, refinance, redeem, exchange or otherwise retire the aggregate
principal amount of Euro Notes outstanding after the closing of the tender offer
on the stated maturity date thereof and (iv) use of proceeds from such escrow
account to repay, repurchase, refinance, redeem, exchange or otherwise retire
the Euro Notes outstanding after the closing of the tender offer in accordance
with the terms thereof.

            "Euro Notes" means, collectively, the 7.625% Guaranteed Fixed Rate
Bonds due 2005 of Milacron Capital in the original aggregate principal amount of
E115,000,000 issued pursuant to the Fiscal

                                       13



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 amended, restated or
otherwise modified.

            "Eurodollar Loan" means a Loan bearing interest calculated based
upon the Adjusted LIBO Rate.

            "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 (i) the lesser of (A) the Borrowing Base (before deducting
the Availability Reserve) and (B) the Total Revolving Credit Commitment and (ii)
the sum of (A) the aggregate outstanding principal amount of all Revolving
Credit Loans and (B) the LC Exposure.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Existing Credit Facility" means the Amended and Restated Financing
Agreement, dated as of March 31, 2004, among the Parent, certain Subsidiaries of
the Parent, as additional borrowers thereunder, certain Subsidiaries of the
Parent, as guarantors thereunder, the lenders party thereto and Credit Suisse
First Boston, acting through its Cayman Islands Branch, as administrative agent,
collateral agent, sole lead arranger and sole book runner, as amended,
supplemented or otherwise modified.

            "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; provided that "Extraordinary
Receipts" shall not mean any proceeds from the approximately $4,500,000 to be
received by Parent or any of its Subsidiaries in connection with the
contemplated termination of the Milacron Compensation Deferral Plan, of which
approximately $3,800,000 shall be used to pay all accounts under the Milacron
Compensation Deferral Plan and approximately $700,000 shall be transferred to
the Milacron SERP Trust, provided that the Parent provides written notice of the
receipt of such proceeds and such application thereof to the Administrative
Agent.

            "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.

            "Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) 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 that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for 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 April 27,
2004 by and between JPMorgan and the Parent.

                                       14





            "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 Collateral Agent, at the sole cost and expense
of the Borrowers.

            "Final Maturity Date" means the earliest to occur of (i) June 10,
2008 (as the same may be extended pursuant to Section 2.14), (ii) the date of
termination or reduction to zero of the Total Revolving Credit Commitment
pursuant to Section 2.05(a) or (iii) the date of termination of the Commitments
of the Lenders to make Loans and the Issuing Bank to issue Letters of Credit
pursuant to Section 9.01.

            "Financial Statements" means (i) the audited consolidated balance
sheet of the Parent and its Subsidiaries for the Fiscal Year ended December 31,
2003, 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 and consolidating balance sheet of the Parent and its
Subsidiaries, and the related consolidated statement of operations,
shareholder's equity and cash flows, in each case, for each quarterly period
ended subsequent to the Parent's Fiscal Year ended December 31, 2003, and in the
case of each of the foregoing clauses (i) and (ii), delivered to the
Administrative Agent on the Effective Date pursuant to Section 5.01(b)(xvi).

            "Fiscal Year" means the fiscal year of the Parent and its
Subsidiaries ending on December 31 of each year.

            "Fixed Charge Coverage Ratio" means, as of any date, the ratio of
(in each case determined on a consolidated basis, without duplication, in
accordance with GAAP) (a) (i) Consolidated EBITDA for the period of twelve
months most recently ended on or prior to such date, minus (ii) the aggregate
amount of all Non-Financed Capital Expenditures of the Parent and its
consolidated Subsidiaries during such period, minus (iii) the aggregate amount
paid by the Parent and its consolidated Subsidiaries in cash in respect of the
current portion of all income taxes for such period, minus (iv) the aggregate
amount of all cash dividends paid by the Parent and its consolidated
Subsidiaries during such period, to (b) the sum of (i) Consolidated Interest
Expense for such period, plus (ii) the aggregate amount of regularly scheduled
payments of principal in respect of long-term Indebtedness for borrowed money
(including the principal component of any payments in respect of Capitalized
Lease Obligations) paid or required to be paid by the Parent and its
consolidated Subsidiaries during such period, plus (iii) the aggregate amount of
all cash dividends paid by the Parent and its Consolidated Subsidiaries to
holders of their respective preferred stock during such period.

            "Foreign Insurance Repayment" has the meaning specified therefor in
clause (j) of the definition of Permitted Indebtedness.

            "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 Administrative 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

                                       15





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.

            "Glencore" means Glencore Finance AG.

            "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 an
"Initial 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 Agents 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 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.

            "Hedging Obligations" means obligations owed by any Borrower or any
Guarantor to any Lender or any Affiliate of any Lender (in each case with the
consent of the Administrative Agent) with respect to any Hedging Agreement.

                                       16





            "Hedging Reserve" means, as of any date of determination, an amount
determined by the Administrative Agent in its reasonable credit judgment to
reflect as of such date, the aggregate termination values of all Hedging
Agreements then in effect which constitute Hedging Obligations in the event such
Hedging Agreements were to be terminated on such date after taking into account
the effect of any legally enforceable netting agreement relating to such Hedging
Agreements.

            "Highest Lawful Rate" means, with respect to the Administrative
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 the Administrative 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., Cincinnati Milacron DISC Corp., Cincinnati Milacron International
Sales Co., Cincinnati Grinders Inc., Cincinnati Milling and Grinding, Cincinnati
Milling Machine Co., Milacron Commercial Corp., 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 (viii) 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 Indebtedness of any partnership
of or joint venture in which such Person is a general partner or a joint venture
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.

            "Initial Maturity Date" has the meaning specified therefor in
Section 2.14.

            "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,

                                       17





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 Agents and the Lenders,
substantially in the form of Exhibit G.

            "Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the Effective Date by and among the Administrative Agent, the
Administrative Borrower, and U.S. Bank National Association, as trustee.

            "Interest Period" means with respect to any Eurodollar Loan, the
period commencing on the date of such Loan and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Administrative Borrower may elect pursuant to Sections 2.02
or 2.11; provided, that (i) if any Interest Period would end on a day other than
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any Interest Period pertaining to a Eurodollar Loan
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period, (iii) no Interest Period for any Eurodollar Loan
shall end after the Final Maturity Date, and (iv) no more than eight (8)
Interest Periods in the aggregate for the Borrowers may exist at any one time.
For purposes hereof, the date of a Loan initially shall be the date on which
such Loan is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Loan.

            "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) hereto.

            "Issuing Bank" means JPMorgan, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 3.01(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term "Issuing Bank" shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

            "ITA" means the Income Tax Act (Canada), as the same may, from time
to time, be in effect.

            "JPMorgan" has the meaning specified therefor in the preamble
hereto.

            "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 Collateral 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.

            "LC Disbursement" means a payment made by the Issuing Bank pursuant
to a Letter of Credit.

            "LC Dropdead Date" has the meaning specified therefor in Section
3.01(c).

            "LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrowers at such time. The LC Exposure of any Lender at any
time shall be its Pro Rata Share of the total LC Exposure at such time.

            "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" means any letter of credit issued pursuant to
this Agreement.

            "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 Agents and the Lenders.

            "Letter of Credit Fees" have the meaning specified therefor in
Section 3.01(k).

            "LIBO Rate" means, with respect to any Eurodollar Loan for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Loan for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

            "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.

                                       19





            "Loan" means a Revolving Credit 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.

            "Loan Document" means this Agreement, any Guaranty, the Fee Letter,
any Security Agreement, any Pledge Agreement, any Cash Management Agreement, any
Control Agreement, any UCC Filing Authorization Letter, the Contribution
Agreement, the Intercompany Subordination Agreement, any Letter of Credit 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 Obligation in respect of any Letter of Credit 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 Agents and the Lenders on any of the Collateral with an aggregate fair
market value in excess of $3,000,000.

            "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 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.

            "Milacron Escrow" means Milacron Escrow Corporation, and any
successors thereto.

            "Misplaced Note Holder" has the meaning specified therefor in
Section 6.01(o)(iii).

            "Misplaced Notes" has the meaning specified therefor in Section
6.01(o)(iii).

            "Mizuho" means Mizuho International plc.

            "Mizuho/Glencore Transaction Documents" means the Note Purchase
Agreement, dated as of March 12, 2004, by and among Milacron Inc., Mizuho and
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

                                       20





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 therewith by and among Mizuho, Glencore, Milacron Inc. and Credit
Suisse First Boston, acting through its Cayman Islands Branch.

            "Mizuho/Glencore Transactions" means the transactions contemplated
by the Mizuho/Glencore Transaction Documents.

            "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 Agents 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(v) 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 to any taxing authorities by such
Person or such Subsidiary in connection therewith, (D) net income taxes to be
paid in connection with such Disposition (after taking into account any tax
credits or deductions and any tax sharing arrangements), (E) any reserves for
adjustments in respect of the sale price of such assets and for future
liabilities established in accordance with GAAP and (F) prior to the Discharge
of Term Obligations, in the case of Senior Secured Priority Collateral, amounts
payable to the holders of the Senior Secured Notes or to be held as Senior
Secured Priority Collateral or otherwise applied, in each case in accordance
with the terms of the Senior Secured Notes Indenture and the Intercreditor
Agreement, provided that (1) the Administrative Borrower shall certify to the
Administrative Agent that all such proceeds of Senior Secured Priority
Collateral have been deposited into a Senior Secured Priority Account in
accordance with Section 7.01(w) and as otherwise required by the Senior Secured
Notes Indenture, the Intercreditor Agreement or the Loan Documents and (2) the
Administrative Borrower shall notify the Administrative Agent in accordance with
Section 7.01(w) prior to any withdrawal from or deposits to any such account,
(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

                                       21





connection therewith, (B) transfer taxes paid by such Person or such Subsidiary
in connection therewith, (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 (D) prior to the Discharge of Term Obligations, amounts
constituting proceeds of the Senior Secured Priority Collateral used to prepay
the Senior Secured Notes pursuant to Section 3.07 of the Senior Secured Notes
Indenture), 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 by such Person or such Subsidiary in
connection therewith, (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 and (D) prior to the
Discharge of Term Obligations, proceeds of Senior Secured Priority Collateral to
the extent payable to the holders of the Senior Secured Notes or to be held as
Senior Secured Priority Collateral or otherwise applied, in each case in
accordance with the terms of the Senior Secured Notes Indenture and the
Intercreditor Agreement, provided that (1) the Administrative Borrower shall
certify to the Administrative Agent that all such proceeds of Senior Secured
Priority Collateral have been deposited into a Senior Secured Priority Account
in accordance with Section 7.01(w) and otherwise as required by the Senior
Secured Notes Indenture, the Intercreditor Agreement or the Loan Documents and
(2) the Administrative Borrower shall notify the Administrative Agent in
accordance with Section 7.01(w) prior to any withdrawal from or deposits to any
such account.

            "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
an appraiser reasonably acceptable to the Collateral Agent.

            "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 US Securities" means the convertible equity securities
contemplated by the Mizuho/Glencore Transactions.

            "Non-extending Lender" has the meaning specified therefore in
Section 2.14.

            "Non-Financed Capital Expenditures" means Capital Expenditures paid
in cash and not financed with Indebtedness for borrowed money; provided that
Capital Expenditures financed with the proceeds of Revolving Credit Loans shall
be deemed to constitute "Non-Financed Capital Expenditures" for purposes of this
Agreement.

            "Non-U.S. Lender" has the meaning specified therefor in Section
2.08(d).

            "Notice of Borrowing" has the meaning specified therefor in Section
2.02(a).

                                       22





            "Notice of Conversion/Continuation" has the meaning specified
therefor in Section 2.11(e).

            "Obligation Currency" has the meaning specified therefor in Section
11.06.

            "Obligations" means all present and future (i) Banking Services
Obligations, (ii) Hedging Obligations and (iii) indebtedness, obligations, and
liabilities of each Loan Party to the Agents and the Lenders or any Affiliate of
the Agents or 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 Letters of Credit 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, 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
Agents or any Lender (in its sole discretion) may elect to pay or advance on
behalf of such Person.

            "Opening Availability Loan" means an unsecured loan made on or prior
to the Effective Date by a Subsidiary of the Parent that is not a Loan Party to
a Loan Party in a maximum principal amount that does not exceed $5,000,000.

            "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).

            "Overadvance" has the meaning set forth in Section 3.05.

            "Paid in Full" means (i) the Total Revolving Credit 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 Agents, the Issuing Bank and
the Lenders from loss, cost, damage or expense, including reasonable attorneys'
fees and expenses, in connection with outstanding Letters of Credit 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 Letters of Credit 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 Letters of Credit then existing.

            "Parent" has the meaning specified therefor in the preamble hereto.

            "Payment Office" means the Administrative Agent's office located at
One Chase Square CS-5, Rochester, New York, New York, 14643, or at such other
office or offices of the Administrative

                                       23





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) each of Mizuho and Glencore and (A) any
controlling equity holder, majority-owned Subsidiary, or immediate family member
(in the case of an individual) of either Mizuho or Glencore, and (B) any trust,
corporation, partnership, limited liability company or other entity, the
beneficiaries, stockholders, partners, members, owners or Persons beneficially
holding a majority controlling interest of which consist of any or more of
Mizuho, Glencore and/or such Persons referred to in the immediately preceding
clause (A) 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 any of the Agents or Lenders under
this Agreement and the other Loan Documents;

            (b) any other Indebtedness existing on the Effective Date and 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
Agents 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 $10,000,000 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 evidenced by the Senior Secured Notes or the Senior
Secured Notes Guarantees, and the extensions of maturity, refinancing or
modification of the terms thereof, but only to the extent permitted by Section
7.02(m);

            (g) [Reserved];

            (h) [Reserved];

            (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
$30,000,000 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

                                       24





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 Administrative Agent and the Required Lenders; and

            (j) the following intercompany Indebtedness: (i) (x) Indebtedness of
Milacron Capital to Parent existing on the Effective Date and incurred in
connection with the refinancing of Euro Notes and (y) Indebtedness of any
Domestic Loan Party to any other Domestic Loan Party, in each case 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 a 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 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"); (vii) Indebtedness of any
Foreign Subsidiary owing to any Loan Party existing as of the Effective Date and
listed on Schedule 7.02(b) (but not the increase, extension of maturity,
refinancing or other modification thereof); and (viii) the Opening Availability
Loan, provided that such Indebtedness shall require no amortization, sinking
fund payment or any other scheduled maturity of the principal amount thereof on
any date which is earlier than the Final Maturity Date and such Indebtedness is
subject to an Intercompany Subordination Agreement or such other subordination
provisions acceptable to the Collateral Agent;

            (k) (i) Indebtedness (whether or not secured) incurred by any Loan
Party under Hedging Agreements provided by any Agent, any Lender or any
Affiliate of any Agent or any Lender entered into the ordinary course of
financial management and not for speculative purposes; and (ii) unsecured
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
Document, but excluding Contingent Obligations with respect to the New US
Securities;

                                       25





            (n) letters of credit existing as of the Effective Date and listed
on Schedule 7.02(b);

            (o) unsecured Indebtedness in respect of customer financing programs
(including lease transactions) in an aggregate principal amount outstanding not
at any time exceeding $20,000,000;

            (p) additional unsecured Indebtedness of the Loan Parties and any of
their Subsidiaries not otherwise permitted pursuant to this definition of
Permitted Indebtedness, so long as the aggregate principal amount of all
Indebtedness permitted by this clause (p) does not exceed $5,000,000; and

            (q) Indebtedness arising out of and in connection with the terms and
conditions of the sale of notes receivable permitted pursuant to Section
7.02(c)(i)(G).

            "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 (other than any such Lien imposed pursuant
to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA), 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 existing on the Effective Date and listed 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

                                       26





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 in the case of each of clauses (i) and
(ii), (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 $3,000,000;

            (f) deposits and pledges of cash securing (i) obligations incurred
in respect of workers' compensation, unemployment insurance, automobile
liability or other forms of 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 all such cash deposited or pledged at any time does not
exceed $2,500,000;

            (g) 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 clause (c) of the
definition of Permitted Indebtedness, and Liens securing Hedging Agreements
permitted by clause (k)(i) of the definition of Permitted Indebtedness, to the
extent permitted therein, to the extent such Hedging Agreements are with an
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) [Reserved];

            (n) Liens of the Issuing Bank required to be granted in connection
with Letters of Credit;

            (o) Liens securing indebtedness permitted by clause (f) of the
definition of Permitted Indebtedness, but only so long as the Intercreditor
Agreement shall be in full force and effect;

                                       27





            (p) [Reserved];

            (q) to the extent not included in clause (c) above, solely with
respect to Eligible Accounts owned by a Canadian Borrowing Base Guarantor, Prior
Claims that are unregistered and secure amounts that are not yet due and
payable;

            (r) 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 with respect to notes receivable sold
thereunder prior to the Effective Date and securing obligations not more than
$5,000,000 in the aggregate;

            (s) other Liens of the Loan Parties securing obligations not
exceeding $1,000,000 in the aggregate; provided that, to the extent that such
Liens are consensual, such Liens do not encumber any ABL Priority Collateral;
and

            (t) Liens arising out of and in connection with the terms and
conditions of the sale of notes receivable permitted pursuant to Section
7.02(c)(i)(G).

            "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 Agents 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 Agents 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 (i)
in the case of any Loan, the rate otherwise applicable to such Loan (assuming
that the Trailing Average Availability is less than $20,000,000) plus 2.0% and
(ii) in the case of any other amount, the sum of (A) the Alternate Base Rate,
plus (B) the Applicable Rate for ABR Loans (assuming that the Trailing Average
Availability is less than $20,000,000), plus 2.0%.

            "Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.

            "Prior Claims" means all liens created by applicable law (in
contrast with liens voluntarily granted) which rank or are capable of ranking
prior or pari passu with the Collateral Agent's security interests (or similar
liens under applicable laws), against all or part of the assets of a Canadian
Borrowing Base Guarantor, including for amounts owing for vacation pay, employee
source deductions and contributions, goods and services taxes, sales taxes,
harmonized sales taxes, Quebec corporate income taxes, municipal taxes, workers'
compensation, pension plan or fund obligations and overdue rents.

                                       28





            "Pro Rata Share" means, with respect to a Lender's obligation to
make Revolving Credit Loans and receive payments of interest, fees, and
principal with respect thereto, the percentage obtained by dividing (i) such
Lender's Revolving Credit Commitment, by (ii) the Total Revolving Credit
Commitment, provided, that, if the Total Revolving Credit Commitment has been
reduced to zero, the numerator shall be the aggregate unpaid principal amount of
such Lender's Revolving Credit Loans (including Agent Advances) and its interest
in the LC Exposure and the denominator shall be the aggregate unpaid principal
amount of all Revolving Credit Loans (including Agent Advances) and LC Exposure.

            "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); provided that "Receivables" shall not mean any proceeds from the
approximately $4,500,000 to be received by Parent or any of its Subsidiaries in
connection with the contemplated termination of the Milacron Compensation
Deferral Plan, of which approximately $3,800,000 shall be used to pay all
accounts under the Milacron Compensation Deferral Plan and approximately
$700,000 shall be transferred to the Milacron SERP Trust, provided that the
Parent provides written notice of the receipt of such proceeds and such
application thereof to the Administrative Agent..

            "Register" has the meaning specified therefor in Section 12.07(d).

            "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 Lender Assignment" means an assignment by a Lender to an
Affiliate of such Lender with respect to such Lender of all or a portion of its
rights and obligations under the Loan Documents.

            "Related Parties" means, 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.

                                       29





            "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 Availability" means an amount equal to $25,000,000.

            "Required Lenders" means (i) in the event that there are less than
four Lenders at the time of determination, two Lenders and (ii) otherwise, the
Lenders whose Pro Rata Share of the Revolving Credit Commitments constitute a
majority of the aggregate Revolving Credit Commitments (or if the Revolving
Credit Commitments have expired or terminated, the Lenders whose Pro Rata Share
of the Total Exposure constitute a majority of the Total Exposure).

            "Reserves" means as of any date of determination, the Availability
Reserve, the Hedging Reserve and such other amounts as the Administrative Agent
may from time to time establish and revise in its reasonable credit judgment
reducing the amount of Revolving Credit Loans and Letters of Credit 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 Agents and the Lenders in the
Collateral (including the enforceability, perfection and priority (including,
without limitation, in respect of any Liens (including Prior Claims), 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.

            "Revolving Credit Commitment" means, with respect to each Lender,
the commitment of such Lender to make Revolving Credit 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 Credit Loan" means a loan made by a Lender to the
Borrowers pursuant to Section 2.01(a)(i).

                                       30





            "SEC" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act.

            "Securities Account" means any securities account or other
investment account of a Loan Party.

            "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.

            "Security Agreement" means a Security Agreement made by a Loan Party
in favor of the Collateral Agent for the benefit of the Agents and the Lenders,
substantially in the form of Exhibit B, securing the Obligations and delivered
to the Collateral Agent.

            "Senior Secured Exchange Notes" means the 11 1/2% senior secured
notes of the Parent due May 15, 2011 issued in an exchange offer pursuant to the
Senior Secured Notes Indenture.

            "Senior Secured Notes" means the 11 1/2% secured notes of the Parent
due May 15, 2011 in an aggregate principal amount of $225,000,000 issued and
sold on the Effective Date pursuant to the Senior Secured Notes Indenture and
the Senior Secured Exchange Notes.

            "Senior Secured Notes Collateral Agent" means U.S. Bank National
Association, in its capacity as collateral agent under the Senior Secured Notes
Security Documents, together with its successors in such capacity.

            "Senior Secured Notes Documents" means the Senior Secured Notes
Indenture, the Senior Secured Notes, the Senior Secured Notes Guarantees, the
Senior Secured Notes Security Documents and all other agreements, instruments
and other documents pursuant to which the Senior Secured Notes have been or will
be issued or otherwise setting forth the terms of the Senior Secured Notes, in
each case as such agreement, instrument or other document may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, but to the extent permitted under the terms of the Loan
Documents.

            "Senior Secured Notes Guarantees" means the guarantee by each
guarantor of Parent's obligations under the Senior Secured Notes Indenture and
the Senior Secured Notes, executed pursuant to the provisions of the Senior
Secured Notes Indenture.

            "Senior Secured Notes Indenture" means the Indenture dated as of the
Effective Date by and among U.S. Bank National Association, as trustee, Milacron
Escrow, as issuer, to be merged with and into the Parent, and the guarantors
party thereto, as may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof, but only to the extent permitted
under the terms of the Loan Documents.

            "Senior Secured Notes Security Documents" means all security
agreements, pledge agreements, collateral assignments, mortgages, collateral
agency agreements, control agreements, deeds of trust or other grants or
transfers for security executed and delivered by Milacron Escrow, any guarantor
of the Senior Secured Notes or any Subsidiary of Milacron Escrow creating (or
purporting to create) a Lien upon "Collateral" (as such term is defined in the
Senior Secured Notes Indenture) in favor of the Senior Secured Notes Collateral
Agent or the Collateral Agent, as applicable, in each case, as amended,
modified, renewed, restated or replaced, in whole or in part, from time to time,
in accordance with its terms.

                                       31





            "Senior Secured Priority Account" means each deposit account of any
Loan Party to which solely proceeds of Senior Secured Priority Collateral are
deposited and which are segregated and identified in writing to the
Administrative Agent in accordance with Section 7.01(w).

            "Senior Secured Priority Collateral" means the Term Priority
Collateral as such term is defined in the Intercreditor Agreement.

            "Settlement Period" has the meaning specified therefor in Section
3.04(b) hereof.

            "Spot Rate" means, with respect to Dollars or Canadian Dollars, as
the case may be, the rate quoted by JPMorgan as the spot rate for the purchase
by JPMorgan of Dollars with Canadian Dollars or other currency or for the
purchase by JPMorgan of Canadian Dollars with Dollars or other currency (as the
context may require) at approximately 10:00 A.M. (New York City time) on the
date two (2) Business Days prior to the date as of which the foreign exchange
computation is made.

            "Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and any successor thereto.

            "Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

            "Stockholder Approval" has the meaning specified in the
Mizuho/Glencore Transaction Documents.

            "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.

            "Super Majority Required Lenders" means (i) in the event that there
are less than four Lenders at the time of determination, all of the Lenders and
(ii) otherwise, the Lenders whose Pro Rata Share of the Revolving Credit
Commitments constitute at least 75% of the aggregate Revolving Credit
Commitments (or if the Revolving Credit Commitments have expired or terminated,
the Lenders whose Pro Rata Share of the Total Exposure constitute a majority of
the Total Exposure).

                                       32





            "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.

            "Total Exposure" means, at any time, the sum of the aggregate
outstanding principal amount of Revolving Credit Loans and LC Exposure, owing
from the Loan Parties to the Lenders (or any Affiliate thereof) and the Agents
at such time.

            "Total Revolving Credit Commitment" means the sum of the amounts of
the Lenders' Revolving Credit Commitments.

            "Trailing Average Availability" means, as of any date of
determination thereof, the amount by which (a) the Borrowing Base on a daily
average basis over the period of three months most recently ended on or prior to
such date (calculated without deducting the Availability Reserve) exceeds (b)
the Total Exposure on a daily average basis over the period of three months most
recently ended on or prior to such date; provided, that for purposes of the
first such calculation to be made hereunder, Total Exposure shall be measured
over the period commencing on, and including, October 1, 2004 and ending on
December 31, 2004.

            "Transferee" has the meaning specified therefor in Section 2.08(a).

            "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 and each Pledge Agreement and each Mortgage.

            "Uncollected Funds" means all deposits of items which shall be on
deposit in the Administrative Agent's Account from time to time during the
period from the date on which such deposits became Available Funds to the
beginning of the following Business Day.

            "Uncollected Funds Compensation" means the compensation payable to
the Administrative Agent pursuant to Section 2.13.

            "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).

                                       33





            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
permitted 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 any Agent include
good faith estimates by such Agent (in the case of quantitative determinations)
and good faith beliefs by such 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 the
Uniform Commercial Code (including, without limitation, Article 8 or Article 9
thereof) 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.

            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 any Agent, any Lender or the Issuing Bank, such
period shall in any event consist of at least one full day.

                                   ARTICLE II

                                    THE LOANS

            Section 2.01 (a) Commitments. Subject to the terms and conditions
and relying upon the representations and warranties herein set forth:

                        (i)   each Lender severally agrees to make Revolving
      Credit 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 Credit Commitment to zero in accordance with the terms
      hereof, in an aggregate principal amount of Revolving Credit Loans at any
      time outstanding not to exceed the amount of such Lender's Revolving
      Credit Commitment.

                        (ii)  [Reserved].

                  (b)   Notwithstanding the foregoing:

                                       34





                        (i)   The aggregate principal amount of the Revolving
      Credit Loans outstanding at any time to the Borrowers shall not exceed the
      difference between (A) the lesser of (x) the Total Revolving Credit
      Commitment and (y) the then current Borrowing Base and (B) the LC
      Exposure.

                        (ii)  [Reserved].

                        (iii) [Reserved].

                        (iv)  The Revolving Credit Commitments 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 Credit Loans, on or after the Effective Date and
      prior to the Final Maturity Date, subject to the terms, provisions and
      limitations set forth herein.

            Section 2.02 (a) Making the Loans. 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 ABR
Loans, 12:00 noon (New York City time) on the borrowing date of the proposed ABR
Loan and (ii) in the case of a borrowing consisting of Eurodollar 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 an ABR Loan or a Eurodollar Loan and, in the case of a
Eurodollar Loan, the initial Interest Period with respect thereto, and (iii) the
proposed borrowing date, which must be a Business Day. 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. Notwithstanding the foregoing, so long as
any Disbursement Account is subject to a Control Agreement, the Administrative
Agent may, subject to the conditions of this agreement (but without any further
written notice required), make available to the Borrowers by a credit to an
account of the Borrowers maintained with the Administrative Agent, the proceeds
of ABR Loans to the extent necessary to pay items to be drawn on such
Disbursement Account that day after giving effect to all Available Funds to be
deposited to the Administrative Agent's Account on that day.

                  (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 Credit Loan that is a Eurodollar 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 Credit Loans that are ABR Loans.

            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.

                                       35





                  (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 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
Administrative 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. Subject to the terms of this Agreement, at the
option of the Borrowers, each Revolving Credit Loan will either be a Eurodollar
Loan or an ABR Loan. Each Revolving Credit Loan that is a Eurodollar 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 sum of the Adjusted LIBO Rate for the Interest Period in
effect for such Revolving Credit Loan plus the Applicable Rate for Eurodollar
Loans then in effect. Each Revolving Credit Loan which is an ABR 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 sum of the Alternate Base Rate plus the Applicable Rate for ABR
Loans then in effect.

                  (b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, and following a
written demand of the Agent in its sole discretion, 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 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, on the date of any
prepayment pursuant to Section 2.05 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

                                       36





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 (except that Revolving Credit Loans based on the
Alternate Base Rate shall be calculated on a 365-day basis)

            Section 2.05 Reduction of Commitment; Prepayment of Loans.

                  (a) Reduction of Commitments.

                        (i)   The Total Revolving Credit Commitment shall
      terminate on the Final Maturity Date. The Borrowers may, without premium
      or penalty (except as provided in Section 2.05(a)(iv)), reduce the Total
      Revolving Credit Commitment to an amount (which may be zero) not less than
      the sum of (I) the aggregate unpaid principal amount of all Revolving
      Credit Loans then outstanding, (II) the aggregate principal amount of all
      Revolving Credit Loans not yet made as to which a Notice of Borrowing has
      been given by the Administrative Borrower under Section 2.02, (III) the LC
      Exposure at such time and (IV) the stated amount of all Letters of Credit
      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 Credit
      Commitment in effect immediately prior to such reduction is less than
      $1,000,000, in which case the reduction shall be in the entire amount of
      such Total Revolving Credit Commitment), 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 Credit Commitment may not be increased.

                        (iii) Each such reduction of the Total Revolving Credit
      Commitment shall reduce the applicable Commitment of each Lender
      proportionately in accordance with its Pro Rata Share thereof.

                        (iv)  If prior to the one year anniversary of the
      Effective Date, either (a) this Agreement is terminated or (b) the Total
      Revolving Credit Commitment is reduced pursuant to Section 2.05(a) to an
      amount that is 50% or less of the amount of the Total Revolving Credit
      Commitment as in effect on the Effective Date, then at the effective date
      of such termination or reduction, the Borrowers shall pay to the
      Administrative Agent, for the ratable benefit of Lenders (in addition to
      the then outstanding principal, accrued interest and other charges then
      due and payable under the terms of this Agreement and any of the other
      Loan Documents) and any amounts owing pursuant to Section 2.10, as
      liquidated damages for the loss of the bargain and not as a penalty, an
      amount equal to 1.0% of the amount of the Total Revolving Credit
      Commitment (as such amount is calculated as of the date of termination or
      reduction). If any such termination or reduction occurs on or after the
      one year anniversary of the Effective Date, no such liquidated damages
      shall be payable.

                  (b) Optional Prepayment.

                        (i)   Revolving Credit Loans. Subject to subsection
      (iii) below, the Borrowers may prepay, without penalty or premium, the
      principal of any Revolving Credit Loan, in whole or in part, at any time.
      Each such prepayment (A) shall be in a minimum amount of $500,000 and in
      integral multiples of $100,000 in excess thereof (unless the outstanding
      principal

                                       37





      balance of the Revolving Credit Loan immediately prior to such reduction
      is less than $500,000 or any such integral multiple in which case the
      prepayment shall be in the entire amount of such outstanding principal
      balance), (B) shall be made pursuant to a written or telephonic (confirmed
      by telecopy) notice to the Administrative Agent received by the
      Administrative Agent no later than 9:00 a.m. (New York City Time) on the
      date of such prepayment and (C) shall be made no later than 12:00 noon
      (New York City Time) on the date such notice is given. Each such notice
      shall be irrevocable (provided that a notice of a refinancing of the
      entirety of the Loans delivered by any Borrower may state that such notice
      is conditioned upon the effectiveness of other credit facilities, in which
      case such notice may be revoked by such Borrower by notice to the
      Administrative Agent on or prior to the effective date if such condition
      is not satisfied) and shall specify the prepayment date and the principal
      amount of each Revolving Credit Loan or portion thereof to be prepaid.

                        (ii)  [Reserved].

                        (iii) Prepayment In Full. The Borrowers may, upon at
      least three (3) days prior written notice to the Administrative Agent,
      terminate this Agreement by paying to the Administrative Agent, in cash,
      the Obligations (including any amounts payable pursuant to Section
      2.05(a)(iv) and 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 Letters of Credit or (B) causing the
      original Letters of Credit 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 any amounts payable pursuant to Section
      2.05(a)(iv)) and 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 Letters of Credit or (B) causing the
      original Letters of Credit 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.

                  (c) Mandatory Prepayment.

                        (i)   The Borrowers will immediately prepay the
      Revolving Credit Loans at any time when the aggregate principal amount of
      all Revolving Credit Loans plus the outstanding LC Exposure exceeds the
      Borrowing Base, to the full extent of any such excess. On each day that
      any Revolving Credit Loans or LC Exposure are outstanding, the Borrowers
      shall hereby be deemed to represent and warrant to the Agents and the
      Lenders that the Borrowing Base calculated as of such day equals or
      exceeds the aggregate principal amount of all Revolving Credit Loans and
      LC Exposure 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 LC
      Exposure 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 LC Exposure plus
      the aggregate principal amount of all outstanding Revolving Credit Loans
      no longer exceeds the then current Borrowing Base.

                                       38





                        (ii)  On each Business Day the Administrative Agent
      shall apply all funds transferred to or deposited in the Administrative
      Agent's Account that are Available Funds, to the payment, in whole or in
      part, of the outstanding principal amount of the Revolving Credit Loans;
      provided that, if no Revolving Credit Loans remain outstanding after the
      application of such funds to repay any outstanding Revolving Credit Loans,
      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 Loan Parties and their Subsidiaries subject to Section
      6.01(t). In addition, if on any Business Day (x) the closing balance of
      cash and cash equivalents on deposit in bank accounts (after deducting the
      amount of all outstanding checks) plus (y) investments in money market
      funds and Securities Accounts whose assets are substantially comprised of
      securities that consist of cash equivalents of the Domestic Loan Parties
      and their Domestic Subsidiaries (in each case other than (i) the funds on
      deposit in the Excluded Deposit Accounts (as defined in the Security
      Agreement, (ii) funds on deposit in the Senior Secured Priority Accounts;
      provided that such amounts are held and applied in accordance with the
      Senior Secured Notes Indenture and the Intercreditor Agreement and (iii)
      Net Cash Proceeds which are required to be applied to the prepayment of
      the Loans in accordance with Section 2.05(c)) exceeds $4,000,000 in the
      aggregate, the Borrowers shall prepay the Revolving Credit Loans in the
      amount of such excess no later than 12:00 noon (New York City Time) on the
      immediately succeeding Business Day. It is understood and agreed that,
      upon prior written notice to the Administrative Agent received by
      Administrative Agent no later than 9:00 a.m. (New York City Time) on the
      date that a prepayment pursuant to the second sentence of this Section
      2.05(c)(ii) is due, no such prepayment shall be required if the
      Administrative Borrower reasonably believes that such prepayment will be
      in the amount of less than $100,000 after giving effect to disbursements
      to third parties to be made prior to 12:00 noon (New York City Time) on
      the date such prepayment is due. Upon request of the Administrative Agent,
      the Administrative Borrower shall promptly provide to the Administrative
      Agent a list of such third parties and amounts of such disbursements.

                        (iii) Upon any Disposition by any Loan Party or any of
      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 asset or 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).

                        (iv)  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 the Administrative
      Borrower of any shares of its Capital Stock, in each case, other than
      issuances 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) $31,500,000 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, 100% 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).

                                       39





                        (v)   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 100% of the Net Cash Proceeds received by such Person in
      connection with such Extraordinary Receipts. Any payments required to be
      made under this subsection (c)(v) shall be applied as set forth in Section
      2.05(d).

                        (vi)  [Reserved].

                        (vii) [Reserved].

                        (viii) 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).

                        (ix)  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).

                  (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)): first, to the payment of accrued and unpaid interest then due
and payable in respect of outstanding ABR Loans, second, to the principal amount
of outstanding ABR Loans, third, to accrued and unpaid interest then due and
payable in respect of outstanding Eurodollar Loans, fourth, to the principal
amount of outstanding Eurodollar Loans, and fifth, to all other accrued and
unpaid Obligations then due and payable, provided, that except upon the
occurrence and during the continuance of an Event of Default, no payment of a
Eurodollar Loan shall be made under this Section 2.05(d) on a date other than
the last day of an Interest Period or the Final Maturity Date;

                  (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).

            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
Agents and the Lenders, an unused line fee (the "Unused Line Fee"), which shall
accrue at the rate per annum of 0.50% on the daily amount of the excess, if any,
of the Total Revolving Credit Commitment over the sum of the average principal
amount of all Loans and LC Exposure 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.

            Section 2.07 [Reserved].

            Section 2.08 Taxes

                                       40





                  (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 any Agent, any Lender or the
Issuing Bank (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 such Agent, such Lender or the Issuing Bank (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 such Agent, such Lender or the Issuing Bank is organized
or has its principal lending office (all such non-excluded 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 or under any other Loan Document
to any Agent, any Lender or the Issuing Bank (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) such Agent, such Lender or the
Issuing Bank (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 hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Letters of Credit 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 each Agent, each Lender and the Issuing Bank (or Transferee)
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)
and any penalties, interest and reasonable expenses arising therefrom, or with
respect thereto, paid by such Lender, such Agent or the Issuing Bank (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 such Lender, such Agent or the Issuing Bank (or such Transferee) makes
written demand therefor specifying in reasonable detail the nature and amount of
such Taxes or Other Taxes. A certificate specifying in reasonable detail the
nature and amount of such payment delivered to the applicable Loan Party by a
Lender, the Issuing Bank, or by any Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.

                  (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 Administrative
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

                                       41





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 Administrative 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 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, any Agent or the Issuing Bank (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, such Agent or the Issuing Bank
(or Transferee) to disclose any information such Lender, such Agent or the
Issuing Bank (or Transferee) deems confidential and would not, in the sole
determination of such Lender, such Agent or the Issuing Bank (or Transferee), be
otherwise disadvantageous to such Lender, such Agent or the Issuing Bank (or
Transferee).

                  (g) If any Lender, any Agent or the Issuing Bank (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

                                       42





Administrative Borrower, net of all out-of-pocket expenses of such Lender, such
Agent or the Issuing Bank (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 LIBO Rate Not Determinable; Illegality or Impropriety.
(a) In the event, and on each occasion, that on or before the day on which LIBO
Rate is to be determined for a borrowing that is to include Eurodollar Loans,
the Administrative Agent has determined in good faith that, or has been advised
by the Collateral Agent or the Required Lenders that, (i) LIBO Rate cannot be
reasonably determined for any reason, (ii) LIBO Rate will not adequately and
fairly reflect the cost of making or maintaining Eurodollar Loans or (iii)
Dollar deposits in the principal amount of the applicable Eurodollar Loans are
not available in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of the Lenders' Eurodollar
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 Eurodollar Loan
pursuant to Section 2.02 or Section 2.11 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 an ABR 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
Eurodollar 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 Eurodollar 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
Eurodollar Loan as a Eurodollar 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 Eurodollar
Loan, convert each such Eurodollar Loan into an ABR Loan.

            Section 2.10 Indemnity.

                  (a) The Borrowers hereby jointly and severally indemnify each
Lender against any loss, cost or expense that such Lender actually sustains or
incurs or is deemed to sustain or incur in accordance with this Section 2.10(a)
(including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain any Eurodollar 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 Eurodollar
Loan hereunder, to convert any ABR Loan into a Eurodollar Loan or to continue a
Eurodollar 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 Eurodollar 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 Eurodollar Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof,

                                       43





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 Eurodollar Loan. Such loss or reasonable expense
shall be deemed to include but not be limited to an amount equal to the excess,
if any, as reasonably determined by such Lender, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, 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. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.

                  (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 ABR Loans
prior to any application of payments to Eurodollar 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 Eurodollar Loan, or any portion thereof,
into a subsequent Interest Period or to convert any ABR Loan or portion thereof
(other than any Overadvance) to a Eurodollar Loan, or on one (1) Business Day's
prior irrevocable written or telecopy notice to the Administrative Agent, to
convert any Eurodollar Loan or portion thereof into an ABR Loan, subject to the
following:

                  (a) no Eurodollar Loan may be continued as such and no ABR
Loan may be converted into a Eurodollar 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 Eurodollar Loan as such
or a conversion of an ABR Loan into a Eurodollar Loan, the aggregate principal
amount of such Eurodollar 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 Eurodollar Loan;

                  (d) if any conversion of a Eurodollar 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; and

                  (e) in the case of any conversion or continuation, such
election must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit D-2.

                                       44





            In the event that the Administrative Borrower shall not give notice
to continue any Eurodollar Loan into a subsequent Interest Period, such Loan
shall automatically become an ABR Loan at the expiration of the then current
Interest Period.

            Section 2.12 Conversion to Dollars. All valuations or computations
of monetary amounts set forth in this Agreement or the Loan Documents shall
include the Dollar Equivalent of amounts of currencies other than Dollars. In
connection with all such Dollar Equivalent amounts set forth in this Agreement
and the Loan Documents (including for the purpose of calculation of
Availability, the Borrowing Base and Excess Availability), currencies other than
Dollars shall be converted to Dollars on the basis of the Spot Rate for the
purchase of Dollars with such other currency in each case as determined by the
Administrative Agent in its reasonable discretion, on the date of determination.

            Section 2.13 Uncollected Funds Compensation. Any credit extended by
the Administrative Agent to the Borrowers by allowing the Uncollected Funds in
the Administrative Agent's Account to be immediately available funds to the
Borrowers shall not be deemed to be Loans hereunder. Uncollected Funds
Compensation to the Administrative Agent shall accrue on the amount of the
Uncollected Funds in existence from time to time at a variable rate per annum
equal to the Alternate Base Rate plus the Applicable Rate for ABR Loans for one
(1) full day. Upon making such computation, the Administrative Agent is
authorized to make a Revolving Credit Loan to the Borrowers for the amount
thereof (or during the continuance of an Event of Default, debit the
Administrative Agent's Account) for the payment thereof to the Administrative
Agent. The Administrative Agent shall notify the Borrowers of the amount of the
Uncollected Funds Compensation for the preceding calendar month in the next
monthly statement rendered by the Administrative Agent to the Borrowers.

            Section 2.14 Extension of Final Maturity Date.

                  (a) Request for Extension. The Administrative Borrower may, by
notice to the Administrative Agent, which shall promptly notify the Lenders, not
less than 60 days and not more than 90 days prior to the Final Maturity Date
(the "Initial Maturity Date"), request that the Lenders extend the Final
Maturity Date for an additional 364 days from the Consent Date (as defined
below); provided that the Administrative Borrower may request only one extension
pursuant to this Section 2.14. Each Lender, acting in its sole discretion,
shall, by notice to the Administrative Borrower and the Administrative Agent
given on or before the date that is 30 days prior to the Initial Maturity Date
or, if such date is not a Business Day, the Business Day next succeeding such
date (such date or Business Day, as the case may be, the "Consent Date"), advise
the Administrative Borrower and the Administrative Agent whether or not such
Lender agrees to such extension; provided that each Lender that determines not
to extend the Initial Maturity Date (a "Non-extending Lender") shall notify the
Administrative Borrower and the Administrative Agent (which shall notify the
Lenders) of such fact promptly after such determination (but in any event no
later than the Consent Date) and any Lender that does not advise the
Administrative Borrower on or before the Consent Date shall be deemed to be a
Non-extending Lender; provided further that any such consent given before the
Consent Date shall be revocable (unless such consent is expressly stated by the
applicable Lender to be irrevocable) until the opening of business of the
Administrative Agent on the Consent Date and any such consent given after, or
not revoked before, the opening of business of the Administrative Agent on the
Consent Date shall be irrevocable. The election of any Lender to agree to such
extension shall not obligate any other Lender to so agree.

                  (b) Replacement of Non-extending Lenders. The Borrowers shall
have the right upon not less than five Business Days' prior written notice to
the Administrative Agent, to (i) replace any Non-extending Lender with, and
otherwise add to this Agreement, one or more other banks (which may include any
Lender, each such bank, prior to the Initial Maturity Date, an "Additional
Commitment Lender") with the approval of the Administrative Agent (which
approval shall not be unreasonably

                                       45





withheld), each of which Additional Commitment Lenders shall have entered into
an agreement in form and substance satisfactory to the Administrative Borrower
and the Administrative Agent pursuant to which such Additional Commitment Lender
shall, effective as of the Initial Maturity Date, undertake a Commitment (or, in
the case of any such Additional Commitment Lender that is already a Lender,
undertake to increase its Commitment in an amount equal to the Commitment of the
applicable Non-extending Lender hereunder on such date) or (ii) repay all Loans,
together with accrued and unpaid interest, fees, any amounts payable pursuant to
Section 2.10 and all other amounts owing to any Non-extending Lender.

                  (c) Effectiveness of Extension. If (and only if) (i) as of the
Consent Date the total of the Commitments of the Lenders that have agreed to
extend the Initial Maturity Date and the additional Commitments of the
Additional Commitment Lenders shall equal at least $35,000,000, (ii) the
Administrative Borrower shall have delivered to the Administrative Agent
consolidating monthly projections through the proposed new Final Maturity Date
as extended, (iii) no Event of Default shall have occurred and be continuing on
the Initial Maturity Date, and the Administrative Agent shall have received a
certification to such effect in a certificate dated the Initial Maturity Date
and signed by an Authorized Officer of the Administrative Borrower, (iv) each of
the representations and warranties made by the Loan Parties in this Agreement,
and in each of the other Loan Documents, shall be true and complete on and as of
the Initial Maturity Date with the same force and effect as if made on and as of
such date (except to the extent any such representation or warranty by its terms
is made as of a specified date in which event such representation and warranty
shall be true and correct in all respects as of such specified date), and the
Administrative Agent shall have received a certification to such effect in a
certificate dated the Initial Maturity Date and signed by an Authorized Officer
of the Administrative Borrower; and (v) each Non-extending Lender shall have
been paid in full by the Administrative Borrower or by the Additional Commitment
Lender all amounts owing to such Non-extending Lender hereunder on or before the
Initial Maturity Date, then effective as of the Initial Maturity Date, the Final
Maturity Date shall be extended to the date falling 364 days after the Consent
Date (except that, if such date is not a Business Day, such Final Maturity Date
as so extended shall be the next preceding Business Day) and each Additional
Commitment Lender shall thereupon become a "Lender" for all purposes of this
Agreement.

            Even if the Initial Maturity Date is extended as aforesaid, the
Commitment of each Non-extending Lender shall terminate on the Initial Maturity
Date.

                                  ARTICLE III

                       LETTERS OF CREDIT AND OTHER MATTERS

            Section 3.01 Letters of Credit.

                  (a) General. Subject to the terms and conditions set forth
herein, the Administrative Borrower on behalf of a Borrower may request the
issuance of Letters of Credit for the account of such Borrower, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time prior to the Final Maturity Date. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Administrative Borrower to, or entered into by the
Administrative Borrower with, the Issuing Bank relating to any Letter of Credit,
the terms and conditions of this Agreement shall control.

                  (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding

                                       46





Letter of Credit), the Administrative Borrower shall hand deliver or telecopy
(or transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Administrative Borrower also
shall submit a letter of credit application on the Issuing Bank's standard form
in connection with any request for a Letter of Credit. A Letter of Credit shall
be issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrowers shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $25,000,000 and (ii)
the sum of the total Revolving Credit Loans plus the LC Exposure shall not
exceed the lesser of (x) the Borrowing Base and (y) the Total Revolving Credit
Commitment.

                  (c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) unless
cash collateralized in an amount equal to 105% of the undrawn face amount of
such Letter of Credit prior to the date that is 10 Business Days prior to the
Final Maturity Date (such date the "LC Dropdead Date"), the LC Dropdead Date,
provided that, any Letter of Credit with a one-year term may provide for renewal
thereof for an additional one-year period (which shall in no event extend beyond
the date referred to in the foregoing clause (ii)); provided, further, however
that the Issuing Bank may elect not to renew any such Letter of Credit by notice
to the beneficiary thereof at least 30 days prior to the expiry thereof.

                  (d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Lender, and each Lender hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Pro Rata Share of the aggregate amount available to be drawn under such Letter
of Credit. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Bank, such Lender's Pro Rata Share of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrowers for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

                  (e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrowers shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Administrative Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the Administrative
Borrower prior to such time on such date, then not later than 12:00 noon, New
York City time, on (i) the Business Day that the Administrative Borrower
receives such notice, if such notice is received prior to 10:00 a.m., New York
City time, on the day of

                                       47





receipt, or (ii) the Business Day immediately following the day that the
Administrative Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt; provided that unless the
Administrative Borrower elects otherwise, each LC Disbursement shall be deemed a
timely request in accordance with Section 2.02 (and subject to the conditions to
borrowing set forth in Section 5.02) that such payment be financed at or prior
to the time due with an ABR Loan in an equivalent amount and the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Loan. If the Borrowers fail to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrowers in respect thereof and such Lender's Pro
Rata Share thereof. Promptly following receipt of such notice, each Lender shall
pay to the Administrative Agent its Pro Rata Share of the payment then due from
the Borrowers, in the same manner as provided in Section 3.04 with respect to
Loans made by such Lender (and Section 3.04 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
Borrowers pursuant to this paragraph, the Administrative Agent shall distribute
such payment to the Issuing Bank or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.

                  (f) Obligations Absolute. The Borrowers' obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrowers' obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrowers to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by each Borrower to the extent permitted by applicable law) suffered by
the Borrowers that are caused by the Issuing Bank's failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to

                                       48





the contrary, or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.

                  (g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Administrative Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve the Borrowers of their
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such LC Disbursement.

                  (h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, interest shall accrue on such unreimbursed amount
at the rate of interest then applicable to ABR Loans and shall be payable on
demand, provided that if the Post-Default Rate of interest is otherwise in
effect at such time, then interest shall accrue on such unreimbursed amount at
the Post-Default Rate. Interest accrued pursuant to this paragraph shall be for
the account of the Issuing Bank, except that interest accrued on and after the
date of payment by any Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.

                  (i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrowers, the
Administrative Agent, the replaced Issuing Bank (only if, as of the date of such
written agreement, JPMorgan Chase Bank is the Issuing Bank but is not the
Administrative Agent) and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrowers shall pay all
unpaid Letter of Credit Fees accrued for the account of the replaced Issuing
Bank pursuant to Section 3.01(k). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

                  (j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Administrative Borrower
receives notice from the Administrative Agent or the Required Lenders demanding
the deposit of cash collateral pursuant to this paragraph, the Borrowers shall
deposit in the Letter of Credit Collateral Account for the benefit of the
Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus
any accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default described in clause (f) or (g) of
Section 9.01. Such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrowers
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the

                                       49





option and sole discretion of the Administrative Agent and at the Borrowers'
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrowers for the LC Exposure at such time or, if the
maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrowers under this Agreement. If the Borrowers are required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrowers within three Business Days after all Events
of Default have been cured or waived. Notwithstanding the foregoing, to the
extent required by the Senior Secured Notes Indenture, the Borrowers shall be
permitted to grant a security interest in, for the benefit of the holders of the
Senior Secured Notes, the cash to be deposited in the Letter of Credit
Collateral Account pursuant to this paragraph, subject to the terms of the
Intercreditor Agreement.

                  (k) Letter of Credit Fees. The Borrowers agree to pay
(collectively, the "Letter of Credit Fees") (i) to the Administrative Agent for
the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate used to determine the interest rate applicable to Eurodollar Loans on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 0.25% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

                  (l) Agent Advances. The Administrative Agent shall not make
any Revolving Credit Loan (other than Overadvances) or provide any Letter of
Credit to the Borrowers on behalf of the Lenders intentionally and with actual
knowledge that such Revolving Credit Loan or Letter of Credit would cause the
aggregate amount of the total outstanding Revolving Credit Loans and LC Exposure
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 Credit Loans or provide such additional Letters of Credit
on behalf of the Lenders, intentionally and with actual knowledge that such
Revolving Credit Loans or Letters of Credit will cause the total outstanding
Revolving Credit Loans and LC Exposure 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 Credit Loans or additional Letters of Credit to any Borrower which the
Administrative Agent may make or provide (after obtaining such actual knowledge
that the aggregate principal amount of the Revolving Credit Loans plus the LC
Exposure 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 Agents and the
Lenders and shall not cause

                                       50





the total principal amount of the Revolving Credit Loans, LC Exposure and the
Agent Advances to exceed the Total Revolving Credit Commitment and (ii) no such
additional Revolving Credit Loan or Letters of Credit shall be outstanding more
than ninety (90) days after the date such additional Revolving Credit Loan or
Letter of Credit is made or issued (as the case may be), except as the Lenders
may otherwise agree. Each Lender shall be obligated to pay the Administrative
Agent the amount of its Pro Rata Share of any such additional Revolving Credit
Loans or Letters of Credit.

            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 Lenders, the
Administrative Agent may, at its option, subject to the terms of this Section,
make available, on behalf of the Lenders, the full amount of the Revolving
Credit Loans requested or charged to the Borrowers' Loan Account(s) or otherwise
to be advanced by the Lenders pursuant to the terms hereof, without requirement
of prior notice to the Lenders of the proposed Revolving Credit Loans.

                  (b) With respect to all Revolving Credit Loans made by the
Administrative Agent on behalf of the Lenders as provided in this Section, the
amount of each Lender's Pro Rata Share of the outstanding Revolving Credit Loans
shall be computed weekly, and shall be adjusted upward or

                                       51





downward on the basis of the amount of the outstanding Revolving Credit 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 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 Credit 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 Lender
prior to 12:00 noon New York time, then such 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 Lender after 12:00 noon New York
time, then such 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 dollar amount of a Lender's Pro Rata
Share of the outstanding Revolving Credit Loans is more than the dollar amount
of such Lender's Pro Rata Share of the outstanding Revolving Credit Loans as of
the end of the previous Settlement Period, then such 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 dollar amount of a Lender's Pro
Rata Share of the outstanding Revolving Credit Loans in any Settlement Period is
less than the dollar amount of such Lender's Pro Rata Share of the outstanding
Revolving Credit Loans for the previous Settlement Period, the Administrative
Agent shall forthwith transfer to such Lender by wire transfer in immediately
available funds the amount of the decrease. The obligation of each of the
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 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 Credit Loans and
Letters of Credit. Each Lender shall only be entitled to receive interest on its
Pro Rata Share of the Revolving Credit Loans to the extent such Revolving Credit
Loans have been funded by such Lender. Because the Administrative Agent on
behalf of Lenders may be advancing and/or may be repaid Revolving Credit Loans
prior to the time when such Lenders will actually make Revolving Credit Loans
and/or be repaid such Revolving Credit Loans, interest with respect to Revolving
Credit Loans shall be allocated by the Administrative Agent in accordance with
the amount of Revolving Credit Loans actually advanced by and repaid to each
Lender and the Administrative Agent and shall accrue from and including the date
such Revolving Credit Loans are so advanced to but excluding the date such
Revolving Credit Loans are either repaid by the Borrowers or actually settled
with the applicable 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 Credit 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 time require each Lender to provide the Administrative Agent with
immediately available funds representing its Pro Rata Share of each Revolving
Credit Loans, prior to the Administrative Agent's disbursement of such Revolving
Credit Loans to such Borrower. In such event, all Revolving Credit Loans shall
be made by the Lenders simultaneously and proportionately to their Pro Rata
Shares. No Lender shall be responsible for any default by any other Lender in
the other Lender's obligation to make any Revolving Credit Loans requested
hereunder nor shall the Revolving Credit Commitment of any Lender be increased
or decreased as a result of the default by any other Lender in the other
Lender's obligation to make any Revolving Credit Loans hereunder.

                                       52





                  (d) If the Administrative Agent is not funding a particular
Revolving Credit 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 Lender will make available to the
Administrative Agent such Lender's Pro Rata Share of the Revolving Credit 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 Lender, the Administrative Agent shall be entitled
to recover such corresponding amount 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 Administrative Agent at the Federal Funds Effective
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 Credit Loans that are ABR Loans. During the period in
which such 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 Credit Loans so
advanced by the Administrative Agent to or for the benefit of any Borrower
shall, for all purposes hereof, be deemed a Revolving Credit Loan made by the
Administrative Agent for its own account. Upon any such failure by 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 Lender who fails to pay the Administrative Agent its Pro Rata Share of any
Revolving Credit Loans made available by the Administrative Agent on such
Lender's behalf, or any 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, re-lend 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 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 construed to increase or
otherwise affect the Revolving Credit Commitment of any 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 Revolving Credit 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 Revolving Credit Commitment.

            Section 3.05 Overadvances. Insofar as the Borrowers may request, and
the Administrative Agent may be willing in its sole and absolute discretion to
make, on behalf of the Lenders, Revolving Credit Loans to the Borrowers at a
time when the unpaid balance, without duplication, of the sum of the outstanding
Revolving Credit Loans, plus the LC Exposure, plus Agent Advances exceeds, or
would exceed with the making of any such Revolving Credit Loan, the Borrowing
Base (and such Loan or Loans being herein referred to individually as an
"Overadvance" and collectively, as "Overadvances"), the Administrative Agent
shall enter such Overadvances as debits in the Loan Account. Any Overadvance
made pursuant to the terms hereof shall be deemed to be a Loan made by all
Lenders ratably

                                       53





in accordance with their respective Pro Rata Shares and shall be subject to the
provisions of Section 3.04. All Overadvances shall be repaid on demand, shall be
secured by the Collateral and shall bear interest as provided in this Agreement
for Revolving Credit Loans generally. The foregoing notwithstanding, in no
event, unless otherwise consented to by all Lenders, (v) shall the aggregate
amount of Overadvances exceed $5,000,000 at any one time outstanding, (w) shall
any Overadvances be outstanding for more than fifteen (15) consecutive days, (x)
after all outstanding Overadvances have been repaid, shall Administrative Agent
make any additional Overadvances unless thirty (30) days or more have expired
since the last date on which any Overadvances were outstanding or, (y) shall
Agent make Revolving Credit Loans on behalf of Lenders under this subsection
1.1.2 to the extent such Revolving Credit Loans would cause a Lender's Pro Rata
Share of the Revolving Credit Loans to exceed such Lender's Revolving Credit
Commitment minus such Lender's Pro Rata Share of the LC Exposure and the Agent
Advances.

                                   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 any 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) the Administrative Agent's
prevailing daily rates for each such 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 Collateral Agent.

            Section 4.02 Payments; Computations and Statements.

                  (a) 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 Agents 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 Credit Loan hereunder made by the 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 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

                                       54





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. The
Administrative Agent will give the Administrative Borrower notice of any charge
to the Loan Account made in accordance with this Section 4.02(a) promptly after
such charge is made. 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 Letters
of Credit issued by the Issuing Bank 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 Letters of Credit, 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 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 Administrative Agent and/or the
Lenders:

                  (a) All payments of principal and interest in respect of
outstanding Loans, all payments in respect of the Letters of Credit, all
payments of fees (other than the fees set forth in Section 2.06 hereof, fees
with respect to Letters of Credit provided for in Section 3.01(k) and the audit
and collateral monitoring fee provided for in Section 4.01, in each case, to the
extent set forth in a written

                                       55





agreement among the Administrative 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 LC Exposure, as designated by the
Person making payment when the payment is made.

                  (b) After the occurrence and during the continuance of an
Event of Default, the Administrative Agent may, and upon the direction of the
Required Lenders shall, notwithstanding any terms to the contrary set forth in
this Agreement or any other Loan Document apply all payments in respect of any
Obligations and all proceeds of the Collateral, (i) first, ratably to pay the
Obligations in respect of any fees (including any fees or charges assessed by
the Issuing Bank), expense reimbursements, indemnities and other amounts then
due to the Administrative Agent, the Collateral Agent or the Issuing Bank until
paid in full; (ii) second, ratably to pay the Obligations in respect of any fees
(including Letter of Credit Fees payable to the Lenders), expense reimbursements
and indemnities then due to the 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 Credit Loans and
LC Exposure until paid in full; (vi) sixth, ratably to pay principal of the
Revolving Credit Loans and LC Exposure (or, to the extent such LC Exposure are
contingent to provide cash collateral in an amount up to 105% of such LC
Exposure which collateral shall be released upon all such Events of Default
ceasing to continue) until paid in full; and (vii) seventh, to the ratable
payment of all other Obligations then due and payable.

                  (c) For purposes of Section 4.04(b) (other than clause (vii)
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 (vii) 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,
any Agent or the Issuing Bank 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, any Agent or the Issuing
Bank or any Person controlling any such Lender, such Agent or the Issuing Bank
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, such Agent or the Issuing Bank or any Person
controlling any such Lender, such Agent or the Issuing Bank (in each case,
whether or not having the force of law) (each, a "Change in Law"), shall (i)
subject such Lender, such Agent or the Issuing Bank, or any Person controlling
such Lender, such Agent or the Issuing Bank to any tax, duty or other charge
with respect to this Agreement or any Loan made by such Lender or such Agent or
any Letter of Credit issued by the Issuing Bank, or change the basis of taxation
of payments to such Lender, such Agent or the Issuing Bank or any Person
controlling any such Lender, such Agent or the Issuing Bank of any amounts
payable hereunder (except for taxes on the overall net income of such Lender,
such Agent or the Issuing Bank or any Person controlling such Lender, such Agent
or the Issuing Bank), (ii) impose, modify or deem applicable any reserve,
special

                                       56





deposit or similar requirement against any Loan, any Letter of Credit or against
assets of or held by, or deposits with or for the account of, or credit extended
by, such Lender, such Agent or the Issuing Bank or any Person controlling such
Lender, such Agent or the Issuing Bank or (iii) impose on such Lender, such
Agent or the Issuing Bank or any Person controlling such Lender, such Agent or
the Issuing Bank any other condition regarding this Agreement or any Loan or
Letter of Credit, and the result of any event referred to in clauses (i), (ii)
or (iii) above shall be to increase the cost to such Lender, such Agent or the
Issuing Bank of making or maintaining any Loan (or of maintaining its obligation
to make any such Loan), issuing, guaranteeing, maintaining or participating in
any Letter of Credit, or agreeing to make any Loan or issue, guaranty, maintain
or participate in any Letter of Credit, or to reduce any amount received or
receivable by such Lender, such Agent or the Issuing Bank hereunder, then, upon
demand by such Lender, such Agent or the Issuing Bank, the Borrowers shall pay
to such Lender, such Agent or the Issuing Bank such additional amounts as will
compensate such Lender, such Agent or the Issuing Bank for such increased costs
or reductions in amount.

                  (b) If any Lender, any Agent or the Issuing Bank 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, such Agent or the Issuing Bank or any Person
controlling such Lender, such Agent or the Issuing Bank, and such Lender, such
Agent or the Issuing Bank determines that the amount of such capital is
increased as a direct or indirect consequence of any Loans made or maintained,
Letters of Credit issued or any guaranty or participation with respect thereto,
such Lender's, such Agent's or the Issuing Bank'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, such Agent's or the Issuing Bank's
any such other controlling Person's capital to a level below that which such
Lender, such Agent or the Issuing Bank or such controlling Person could have
achieved but for such circumstances as a consequence of any Loans made or
maintained, Letters of Credit issued, or any participation with respect thereto
or any agreement to make Loans, to issue or participate in Letters of Credit or
such Lender's, such Agent's or the Issuing Bank's or such other controlling
Person's other obligations hereunder (in each case taking into consideration
such Lender's, such Agent's or the Issuing Bank's or such other controlling
Person's policies with respect to capital adequacy), then, upon demand by such
Lender, such Agent or the Issuing Bank, the Borrowers shall pay to such Lender,
such Agent or the Issuing Bank from time to time such additional amounts as will
compensate such Lender, such Agent or the Issuing Bank for such cost of
maintaining such increased capital or such reduction in the rate of return on
such Lender's, such Agent's or the Issuing Bank'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, any Agent or the Issuing Bank until payment in full to such Lender, such
Agent or the Issuing Bank at the Alternate Base Rate. A certificate of such
Lender, such Agent or the Issuing Bank 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, such Agent or the Issuing Bank 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, such Agent's or the Issuing Bank's
reasons for invoking the provisions of this Section 4.05, and shall be final and
conclusive absent manifest error.

                  (d) If any Lender, any Agent or the Issuing Bank requests
compensation under this Section 4.05, or if the Borrowers are or would be
required to pay any additional amount to any Lender, any Agent or the Issuing
Bank pursuant to this Section 4.05, then such Lender, such Agent or the Issuing
Bank shall use commercially reasonable efforts to designate a different lending
office for funding or booking its Loans and/or Letters of Credit hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such Agent or the Issuing
Bank, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to this

                                       57





Section 4.05 in the future and (ii) would not subject such Lender, such Agent or
the Issuing Bank to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender, such Agent or the Issuing Bank. The Borrowers
hereby agree to pay all reasonable cost and expenses incurred by any Lender, any
Agent or the Issuing Bank in connection with any such designation or assignment.

                  (e) Failure or delay on the part of any Lender, any Agent or
the Issuing Bank to demand compensation pursuant to this Section 4.05 shall not
constitute a waiver of such Lender's, such Agent's or the Issuing Bank's right
to demand such compensation.

            Section 4.06 Joint and Several Liability of the Borrowers. (a)
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 Agents 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 Agents, 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
Agents, 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.

                  (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 Agents 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 and this Agreement shall have
been terminated. Any claim which any Borrower may have against any other
Borrower with respect to any payments to the Agents 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.

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                                   ARTICLE V

                               CONDITIONS TO LOANS

            Section 5.01 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective as of the Effective Date upon
concurrent satisfaction of each of the following conditions precedent in a
manner satisfactory to the Agents or upon waiver by the Agents thereof:

                  (a) Payment of Fees, Etc. The Agents and the Lenders shall
have received all fees and other amounts due and payable to such Persons at or
prior to the Effective Date, including, to the extent invoiced and presented to
the Administrative Borrower on or prior to the Effective Date, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrowers hereunder.

                  (b) Representations and Warranties; No Event of Default. The
following statements shall be true and correct on and as of the Effective Date:
(i) the representations and warranties contained in ARTICLE VI and in each other
Loan Document, certificate or other writing delivered to any Agent, any Lender
or the Issuing Bank 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 on the Effective Date will not contravene any law, rule
or regulation applicable to any Agent, any Lender or the Issuing Bank.

                  (d) Delivery of Documents. The Agents shall have received on
or before the Effective Date the following, each in form and substance
reasonably satisfactory to the Agents and, unless indicated otherwise, dated the
Effective Date:

                        (i)   (A) 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), (B) a
      Canadian Security Agreement(s), duly executed by each Canadian Borrowing
      Base Guarantor and (C) a Canadian Guaranty, duly executed by each Canadian
      Borrowing Base Guarantor;

                        (ii)  a Pledge Agreement(s), duly executed by each Loan
      Party, creating a pledge in favor of the Collateral Agent in (x) all of
      the Capital Stock of (I) such Loan Party's wholly-owned Domestic
      Subsidiaries (other than Inactive Subsidiaries), (II) Milacron Capital and
      (III) Milacron Canada Inc. and D-M-E of Canada Limited and (y) 65% of the
      voting Capital Stock of such Loan Party's (other than the Canadian
      Borrowing Base Guarantors') 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, the China JV and Ferromatik
      Milacron India Limited, and all intercompany promissory notes of such Loan
      Parties (other than of the Canadian Borrowing Base Guarantors);

                                       59





                        (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)   any survey of a Facility subject to a Mortgage
      that is delivered to the trustee for the holders of the Senior Secured
      Notes, in form and substance reasonably satisfactory to the Agents;
      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)  Control Agreements for each deposit or securities
      account maintained by the Loan Parties as of the Effective Date (other
      than for (i) the one deposit account held by D-M-E Company with Comerica
      Bank, the three deposit accounts held by the Parent with Bank of America,
      the one deposit account held by Milacron Marketing Company at Bank One
      (the "Bank One Account") and the one deposit account held by Uniloy
      Milacron Inc. at Bank of America, in each case, as identified on Schedule
      6.01(u) and (ii) the securities accounts held by the Parent at Fifth Third
      Securities, Inc. and Blackrock Securities, respectively, and the
      securities account held by the Parent at Deutsche Asset Management (the
      "Deutsche Securities Account") in each case, as identified on Schedule
      6.01(u);

                        (vii) 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 Agents, desirable to perfect the security interests
      purported to be created by each Security Agreement and each Pledge
      Agreement;

                        (viii) 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 (iv) 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 Agents, 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 Agents, shall not show any such Liens other than Permitted Liens;

                        (ix)  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;

                        (x)   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;

                        (xi)  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

                                       60





      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 requested by the Agents, with
      confirmation by telephone or telecopy (where available) on the Effective
      Date from such official(s) as to such matters;

                        (xii) 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 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;

                        (xiii) 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, together
      with all amendments thereto, certified as of the Effective Date by an
      Authorized Officer of such Loan Party;

                        (xiv) (A) an opinion of Cravath, Swaine & Moore LLP,
      special New York counsel to the Administrative Borrower, substantially in
      the form of Exhibit F, (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, Minnesota and
      Ohio, (E) an opinion of Stibbe P.C., counsel to the applicable Loan
      Parties in respect of the Pledge Agreement to be executed and delivered
      pursuant to Section 5.01(d)(ii)(II), (F) an opinion of Baker & McKenzie,
      counsel to the applicable Loan Parties in respect of the Canadian Security
      Agreement to be executed and delivered pursuant to Section 5.01(d)(i)(B)
      and the Canadian Guaranty to be executed and delivered pursuant to Section
      5.01(d)(i)(C) and (G) an opinion of local counsel to the applicable Loan
      Parties in the local jurisdictions where any real property is owned by
      such Loan Party and which is subject to a Mortgage thereon in favor of the
      Administrative Agent, in each case as to such other customary matters as
      the Agents may reasonably request;

                        (xv)  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;

                        (xvi) 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;

                        (xvii) evidence of the insurance coverage required by
      Section 7.01(h) and the terms of each Security Agreement and such other
      insurance coverage with respect to the business and operations of the Loan
      Parties as the Agents may reasonably request, in each case,

                                       61





      where requested by the Agents, with such endorsements as to the named
      insureds or loss payees thereunder (in the case of liability and property
      insurance) as the Agents 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 Agents 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 Agents may request;

                        (xviii) 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;

                        (xix) Landlord Waiver, Bailee Letter and/or similar
      collateral access agreements, in each case, in form and substance
      reasonably satisfactory to the Agents 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 efforts 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;

                        (xx)  copies of the 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;

                        (xxi) 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 thereunder (the
      "Existing Agent"), on behalf of itself and the lenders thereunder and
      authorization by the Existing Agent to the Agents to file UCC termination
      statements for all UCC financing statements filed by the Existing Agent,
      on behalf of such lenders, and covering any portion of the Collateral;

                        (xxii) evidence satisfactory to the Agents of the
      conversion of the Series A Notes and Series B Notes issued pursuant to the
      Mizuho/Glencore Transaction Documents into 6.0% Series B Convertible
      Preferred Stock of the Parent in accordance with the terms thereof, and
      all related agreements, instruments or other documents, duly executed by
      the parties necessary to effect such conversion;

                        (xxiii) the Intercompany Subordination Agreement, duly
      executed by each Loan Party and its Subsidiaries;

                        (xxiv) copies of all of the Senior Secured Notes
      Documents 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, to the
      knowledge of such Authorized Officer,

                                       62





      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;

                        (xxv) the Intercreditor Agreement, duly executed by each
      of the parties thereto and acknowledged by the Administrative Borrower;

                        (xxvi) a Borrowing Base Certificate in form and
      substance reasonably satisfactory to the Agents;

                        (xxvii) [Reserved];

                        (xxviii) an appraisal or appraisals of the Accounts and
      Inventory of the Loan Parties reasonably satisfactory to the Agents
      performed by Hilco or such other appraiser reasonably acceptable to the
      Agents after consulting with the Administrative Borrower; and

                        (xxix) such other agreements, instruments, approvals,
      opinions and other documents, each reasonably satisfactory to the Agents
      in form and substance, as the Agents may reasonably request.

                  (e) Availability. After giving effect to all Loans to be made
on the Effective Date and the Letters of Credit to be issued on the Effective
Date, the sum of, without duplication, (i) Availability plus (ii) the Opening
Availability Loan shall not be less than $30,000,000, provided that this
calculation shall not deduct the Availability Reserve. The Parent shall deliver
to the Agents a certificate of the chief financial officer of the Parent
certifying as to the matters set forth in this clause (e) and containing the
calculation of Availability.

                  (f) Material Adverse Effect. The Agents shall have determined,
in their reasonable discretion, that since December 31, 2003, there has not
occurred and is not reasonably expected to occur any material adverse condition
or material adverse change in or affecting the business, operations, property,
condition (financial or otherwise) or prospects of the Parent and its
subsidiaries, taken as a whole.

                  (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 and the granting of the Liens contemplated by the
Loan Documents shall have been obtained and shall be in full force and effect
(other than, in connection with the granting of a Lien only, consents,
authorizations and approvals of, and filings and registrations with, and all
other actions in respect of any Person with respect to 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 shall be in full force and effect.

                  (h) Proceedings; Receipt of Documents. All proceedings in
connection with the making of the initial Loans or the issuance of the initial
Letters of Credit 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 Agents and their counsel, and the Agents and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents as the Agents or such
counsel may reasonably request.

                                       63





                  (i) Due Diligence. The Agents 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 Agents.

                  (j) Financial Assistance. The Administrative Borrower shall
deliver to the Agents 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 Milacron B.V. or to
refinance existing Indebtedness used for such purpose. The Agents 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) [Reserved];

                  (l) Senior Secured Notes Transactions. The Parent shall have
issued the Senior Secured Notes on terms and conditions substantially similar to
those set forth in that certain confidential information memorandum dated as of
May 12, 2004 (the "Offering Memorandum") or otherwise reasonably satisfactory to
the Agents and (A) shall have received gross proceeds from such issuance in an
amount no less than $215,000,000 or (B) in the event that the gross proceeds of
such issuance are less than $215,00,000, shall have drawn funds from sources
other than the proceeds of Loans in the amount that the gross proceeds of such
issuance are less than $215,000,000 to complete the refinancing transactions
contemplated thereby.

                  (m) The "Escrow Period" described in the Offering Memorandum
shall have terminated and the proceeds of the Senior Secured Notes shall have
been released from escrow, and, in each case, all conditions precedent set forth
in the Offering Memorandum with respect to such event shall have been satisfied.

            Section 5.02 Conditions Precedent to All Loans and Letters of
Credit. The obligation of any Agent or any Lender to make any Loan or of the
Issuing Bank to issue any Letter of Credit 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) Senior Secured Notes. The making of such Loan or the
issuance of such Letter of Credit shall not contravene, violate or result in a
default under the Senior Secured Note Documents.

                  (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, 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 that: (i) the representations and
warranties contained in ARTICLE VI and in each other Loan Document, certificate
or other writing delivered to any Agent, the Issuing Bank or any Lender pursuant
hereto or thereto on or prior to the date of such Loan or such Letter of Credit
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, 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 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.

                                       64





                  (c) Legality. The making of such Loan or the issuance of such
Letter of Credit shall not contravene any law, rule or regulation applicable to
any Agent, any Lender or the Issuing Bank.

                  (d) Notices. The Administrative Agent shall have received a
Notice of Borrowing to the extent required by Section 2.02 hereof.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

            Section 6.01 Representations and Warranties. Each Loan Party hereby
represents and warrants to the Agents, the Lenders and the Issuing Bank 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, rule or regulation, any
applicable order, judgment or decree of any Governmental Authority or any
material contractual restriction binding on or otherwise affecting it or any of
its properties (including, without limitation, the Senior Secured Notes
Documents), (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.

                                       65




                  (e) Subsidiaries. Schedule 6.01(e) is a complete and correct
description of the name, jurisdiction of organization 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
(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 each of the Agents 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 31, 2003, 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 is not aware of any facts or 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 agreement
or instrument in respect of Indebtedness in excess of $4,000,000 and 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

                                       66





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 Administrative 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 Administrative 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.

                  (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 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 most recently available
consolidated financial statements of the Parent 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.

                                       67





                        (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,
      2003 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 (i) related to the Euro
      Notes, (ii) in connection with the Mizuho/Glencore Transactions and (iii)
      related to 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.

                  (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.

                  (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.

                                       68





                        (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.

                        (iii) Except with respect to transfers made in
      compliance with this Agreement and other than a Permitted Lien that is an
      inchoate Lien securing obligations for the payment of money not overdue or
      not otherwise due and payable, Milacron Marketing Company (the "Misplaced
      Note Holder") is the legal and beneficial owner of certain originals of
      notes identified by an asterisk as missing in Schedule I to the Pledge
      Agreement (the "Misplaced Notes") free and clear of all Liens, except for
      the Lien created by the Loan Documents. As of the Effective Date, the
      Misplaced Notes are lost, destroyed or misplaced through inadvertence or
      otherwise and after conducting a diligent search of its records, no Loan
      Party has been able to locate the Misplaced Notes.

                  (p) Full Disclosure. Each Loan Party has disclosed to the
Administrative 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 Administrative Agent, the Collateral Agent or any Lender 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 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;

                                       69





                        (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 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

                                       70





      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, and (B) 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, including without limitation to pay interest on
      the Senior Secured Notes, provided, however, no proceeds of any Loan or
      proceeds of any ABL Priority Collateral shall be used to repay, acquire,
      redeem, or retire any Senior Secured Notes. The Letters of Credit will be
      used for general corporate and working capital purposes of the Loan
      Parties and their Subsidiaries.

                  (u) Location of Bank Accounts. Schedule 6.01(u), as amended
from time to time by the Administrative Borrower (by delivery of a revised
Schedule 6.01(u) to the Administrative Agent), sets forth a complete and
accurate list 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). 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 material licenses, patents,
      patent applications, trademark and servicemark registrations and
      applications, tradenames, copyright registrations and applications and
      internet domain names. 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

                                       71





      third-party intellectual property, 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
thereto in accordance with its terms, (ii) has not been otherwise amended or
modified (other than pursuant to the Euro Note Transactions 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.

                  (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 supplier thereof, on

                                       72





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 Effective Date 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), (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 Agents 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, to the
extent governed by United States federal law, upon the recording of the Patent
Security Agreements, Trademark Security Agreements and Copyright Security
Agreements, each as defined in and 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, as to
priority, 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, with respect to Senior Secured
Priority Collateral only, Liens in favor of the Senior Secured Notes), 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, trademark and copyright applications and registrations and (iii)
the recordation of appropriate evidence of the security interest in the
appropriate foreign registry with respect to all foreign intellectual property.

                  (ee) [Reserved].

                                       73





                  (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.

                  (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.

                  (hh) Canadian Pension and Benefit Plan Matters. The Canadian
Pension Plans are duly registered under the ITA and all other applicable laws
which require registration and no event has occurred which is reasonably likely
to cause the loss of such registered status. All material statutory obligations
of any Loan Party (including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the Canadian Pension
Plans and the funding agreements therefor have been performed in a timely
fashion. There are no outstanding suits concerning the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. Each of the Canadian Pension Plans
is fully funded on a solvency basis (using actuarial methods and assumptions
which are consistent with the valuations last filed with the applicable
governmental authorities and which are consistent with generally accepted
actuarial principles). None of the Canadian Borrowing Base Guarantor employs any
employees outside of Canada.

                                   ARTICLE VII

                          COVENANTS OF THE LOAN PARTIES

            Section 7.01 Affirmative Covenants. So long as any principal of or
interest on any Loan, LC Exposure (other than any LC Exposure 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 each 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 (or, if earlier, the date five Business Days after the Parent
      files its Form 10-Q with the SEC) commencing with the first fiscal quarter
      of the Parent and its Subsidiaries ending after the Effective Date,
      balance sheets, statements of operations and retained earnings and
      statements of cash flow of the Parent and its Subsidiaries as at the end
      of such quarter, in each case, on a consolidated and, to the extent
      prepared, consolidating basis (on a basis consistent with the business
      unit financial projections provided to the Administrative Agent on the
      Effective Date), 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 Administrative Agent and the Lenders, subject to normal
      year-end adjustments and the absence of footnotes;

                                       74





                        (ii)  as soon as available, and in any event within 90
      days after the end of each Fiscal Year of the Parent and its Subsidiaries
      (or, if earlier, the date five Business Days after the Parent files its
      form 10-K with the SEC), balance sheets, statements of operations and
      retained earnings and statements of cash flow of the Parent and its
      Subsidiaries as at the end of such Fiscal Year, in each case, on a
      consolidated and, to the extent prepared in connection with the audit
      thereof, consolidating basis (on a basis consistent with the business unit
      financial projections provided to the Administrative Agent on the
      Effective Date), and 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 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 Administrative
      Agent (which opinion on such consolidated information shall be without (A)
      a "going concern" or like qualification or exception, (B) any
      qualification or exception as to the scope of such audit, or (C) 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 Administrative 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 with a view to
      determining whether the Parent and its Subsidiaries are in compliance with
      all of the provisions of this Agreement and such Loan Documents at the
      time of such review, and that such review has not disclosed, and such
      Authorized Officer has no knowledge of, the existence at the date of such
      certification 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)   upon the Administrative Agent's reasonable
      request, reports as required by Section 8.05(a)(ii), in form and detail
      reasonably satisfactory to the Administrative

                                       75





      Agent and certified by an Authorized Officer of the Administrative
      Borrower as being accurate and complete in all material respects;

                        (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 (before deducting the Availability Reserve) would be
      less than Required Availability, 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 Administrative 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
      Administrative Agent but not including the date on which a subsequent
      Borrowing Base Certificate is received by the Administrative Agent, unless
      the Administrative 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
      Administrative 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 any Authorized Officer has knowledge of the occurrence
      of an Event of Default or Default that is continuing or the occurrence of
      any event or development that could reasonably be expected 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 Administrative 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

                                       76





      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 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
      Business Days after any Authorized Officer has knowledge of the 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 Administrative Agent of the Lenders;

                        (xii) as soon as possible and in any event within 5
      Business Days after execution, receipt or delivery thereof, copies of any
      notices that any Loan Party executes or receives in connection with 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
      Administrative Agent or the Lenders; provided that nothing in this clause
      (xii) shall be deemed to permit any such Disposition;

                        (xiii) as soon as possible and in any event within 5
      Business Days after execution, receipt or delivery thereof, copies of all
      statements, reports and other information any Loan Party sends to or
      receives from any the holder of the Senior Secured Notes or files with the
      SEC or any national (domestic or foreign) securities exchange;

                        (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;

                        (xv)  not later than 30 days prior to the end of each
      Fiscal Year of the Parent and its Subsidiaries, a copy of the annual
      operating plan of the Parent and its Subsidiaries, which shall include
      without limitation, a forecast of the balance sheet, income statement and
      statement of cash flows for the subsequent Fiscal Year of the Parent and
      its Subsidiaries in a form reasonably acceptable to the Administrative
      Agent and prepared on a monthly basis by management;

                                       77





                        (xvi) promptly upon request, such other information
      concerning the condition or operations, financial or otherwise, of any
      Loan Party as any Agent may from time to time may reasonably request.

            (b) Additional Guaranties and Collateral Security. Cause:

                        (i)   each wholly owned 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; provided that (i) the provisions contained in clauses (x) and (y)
      of this clause (C) shall not apply until the date upon which the Discharge
      of Term Obligations has occurred, and (ii) until the date upon which the
      Discharge of Term Obligations has occurred, the opinion and certificate
      referred to in clause (z) of this clause (C) shall be, in each case,
      limited in scope and substance to the opinion and certificate, if any,
      delivered to the trustee for the holders of the Senior Secured Notes in
      connection with such Subsidiary becoming party to any Senior Secured Notes
      Document, (D) (1) prior to the Discharge of Term Obligations, to the
      extent mortgages are delivered creating on the owned real property of such
      Subsidiary a perfected first priority security interest securing the
      Senior Secured Notes, one or more Mortgages creating on such real property
      a perfected second priority Lien on such property, and thereafter, at the
      request of the Collateral Agent, one or more Mortgages creating on such
      real property a perfected, first priority Lien on such real property and
      (2) prior to the Discharge of Term Obligations, to the extent delivered to
      the trustee for the holders of the Senior Secured Notes, and thereafter,
      at the request of the Collateral Agent, 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(v) or otherwise, (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 or Pledge Agreement 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 (a) any Loan Party
      be required to grant a Lien on any Excluded Assets or (b) 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,

                                       78





      (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) prior to the Discharge of Term
      Obligations, to the extent delivered to the trustee for the holders of the
      Senior Secured Notes, and thereafter, at the request of the Collateral
      Agent, such other agreements, instruments, approvals, legal opinions or
      other documents reasonably requested by the Collateral Agent; provided
      that (i) the provisions contained in clauses (A) and (B) of this paragraph
      shall not apply until the date upon which the Discharge of Term
      Obligations has occurred, (ii) until the date upon which the Discharge of
      Term Obligations has occurred, the opinion and certificate referred to in
      clause (C) of this paragraph shall be, in each case, limited in scope and
      substance to the opinion and certificate, if any, delivered to the trustee
      for the holders of the Senior Secured Notes in connection with any pledge
      of such Subsidiary pursuant to the Senior Secured Notes Documents and
      (iii) in no event shall any Loan Party be required to grant a Lien on any
      Excluded Assets,

                  (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, (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).

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                  (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 (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 Agents 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 use
reasonable efforts to cause its insurance providers 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 Collateral 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

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and by proper proceedings which stay the imposition of any penalty, fine or Lien
resulting from the non-performance thereof and adequate reserves, if any, are
being maintained with respect to such circumstances in accordance with GAAP;
(iv) provide the Collateral 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 Collateral 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 presently or, during the period of
ownership or operation by any Loan Party or any of its Subsidiaries, formerly
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
Collateral Agent or any Lender; provided that, the Loan Parties shall not have
any obligation to indemnify and hold harmless the Collateral 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 Collateral 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 Collateral 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
Collateral 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 on a consolidated basis, the Loan Parties shall,
at the Collateral Agent's request and Borrowers' expense: (i) cause an
independent environmental engineer reasonably acceptable to the Collateral 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 Collateral Agent a report as to such non-compliance setting

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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 Collateral 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 Collateral Agent or any Lender pursuant thereto
shall operate or be deemed (i) to place upon the Collateral 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 Collateral 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 Administrative 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 Administrative Agent, the Collateral
Agent, each Lender and the Issuing Bank 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 Administrative Agent and the Collateral 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 and, (ii) authorizes the Administrative Agent and the
Collateral 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).

                  (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 $500,000,
other than to locations set forth on Schedule 6.01(cc) 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 Agents 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.

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                        (i)   At any time any Collateral with a book value in
      excess of $500,000 (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) [Reserved].

                  (o) Fiscal Year. Cause the Fiscal Year of the Parent and its
Subsidiaries to end on December 31 of each calendar year unless the
Administrative Agent consents to a change in such Fiscal Year (and appropriate
related changes to this Agreement).

                  (p) Borrowing Base. Maintain all Revolving Credit Loans and LC
Exposure in compliance with the then current Borrowing Base.

                  (q) Use of Proceeds. Use the proceeds of the Loans and the
Letters of Credit in accordance with Section 6.01(t).

                  (r) Post-Closing Matters.

                        (i)   Cash Management System. On or prior to the Cash
      Management Date, establish and maintain a cash management system
      reasonably acceptable to the Administrative Agent that provides for the
      Loan Parties' account debtors to remit all payments in respect of
      receivables and other amounts due to the Loan Parties to lockbox and
      accounts maintained by the Loan Parties with the Administrative Agent, an
      Affiliate of the Administrative Agent, any Lender or any bank providing
      cash management services to the Loan Parties on the Effective Date.

                        (ii)  Inactive Subsidiaries. On or prior to the date
      that is 90 days after the Effective Date, either (i) dissolve each of the
      Inactive Subsidiaries (other than Cincinnati Milacron UK Holdings Co.) or
      (ii) (A) cause each such Inactive Subsidiary (other than Cincinnati
      Milacron UK Holdings Co.) to execute and deliver to the Collateral Agent,
      a Guaranty, Security Agreement, Pledge Agreement and Mortgage in
      accordance with the terms of Section 7.01(b) (notwithstanding the fact
      that such Subsidiary was in existence on the Effective Date) and (B) cause
      the owner of the Capital Stock of such Subsidiary to execute and deliver
      to the Collateral Agent a Pledge Agreement pledging the shares of such
      Subsidiary in accordance with the terms of Section 7.01(b)
      (notwithstanding the fact that such Subsidiary was in existence on the
      Effective Date); provided, however, that, in the case of Cincinnati
      Milacron UK Holdings Co., on or prior to the date that is 90 days after
      the Effective Date, the Loan Parties shall have filed with the appropriate
      governmental authorities all filings, recordations or other documents
      necessary for dissolving or terminating the existence of such company in
      accordance with the laws of the

                                       83





      United Kingdom and shall have provided evidence thereof to the
      Administrative Agent which shall be reasonably satisfactory to the
      Administrative Agent.

                        (iii) Comerica and Bank of America Accounts. On or prior
      to the date that is 180 days after the Effective Date, close all accounts
      held by any Loan Party at Comerica Bank or Bank of America as of the
      Effective Date and, in each case, cause all payments in respect of
      receivables and other amounts due to the Loan Parties being remitted to
      such accounts to be remitted to another account at a bank which is subject
      to a Control Agreement in favor of the Collateral Agent.

                        (iv)  Control Agreements for the Bank One Account and
      the Deutsche Securities Account. On or prior to the date that is 5
      Business Days after the Effective Date (or such later date as is
      acceptable to the Collateral Agent in its sole discretion), deliver
      Control Agreements to the Collateral Agent, duly executed by the
      applicable parties, with respect to each of the Bank One Account and the
      Deutsche Securities Account (as each such term is defined in Section
      5.01(d)(vi).

                  (s) Conference Calls. If requested by the Administrative Agent
upon reasonable advance notice, conduct a monthly conference call to update the
Administrative Agent and the Lenders the Borrowers' and their Subsidiaries'
consolidated financial condition, operations, prospects and respective
businesses.

                  (t) Misplaced Notes. If found, the Misplaced Note Holder
agrees to promptly pledge, or cause to be pledged, the Misplaced Notes in favor
of the Collateral Agent, for the benefit of Lenders, as required under the
Pledge Agreement.

                  (u) Canadian Pension and Benefit Plans.

                        (i)   For each existing Canadian Pension Plan of any
      Canadian Borrowing Base Guarantor, such Canadian Borrowing Base Guarantor
      shall ensure that such plan retains its registered status under and is
      administered in all material respects in accordance with the applicable
      pension plan text, funding agreement, the ITA and all other applicable
      laws.

                        (ii)  For each Canadian Pension Plan hereafter adopted
      by any Canadian Borrowing Base Guarantor that is required to be registered
      under the ITA or any other applicable laws, that Canadian Borrowing Base
      Guarantor shall use its best efforts to seek and receive confirmation in
      writing from the applicable governmental authorities to the effect that
      such plan is unconditionally registered under the ITA and such other
      applicable laws.

                        (iii) For each existing and hereafter adopted Canadian
      Pension Plan and Canadian Benefit Plan of any Canadian Borrowing Base
      Guarantor, such Canadian Borrowing Base Guarantor shall in a timely
      fashion perform in all material respects all statutory obligations
      (including fiduciary, funding, investment and administration obligations)
      required to be performed in connection with such plan and the funding
      media therefor.

                        (iv)  Each Canadian Borrowing Base Guarantor shall
      deliver to the Administrative Agent if requested by the Administrative
      Agent, promptly after the filing thereof by such Canadian Borrowing Base
      Guarantor with any applicable governmental authority, (i) copies of each
      annual and other return, report or valuation with respect to each Canadian
      Pension Plan of such Canadian Borrowing Base Guarantor; (ii) promptly
      after receipt thereof, a copy of any direction, order, notice, ruling or
      opinion that such Canadian Borrowing Base Guarantor may

                                       84





      receive from any applicable governmental authority with respect to any
      Canadian Pension Plan of such Canadian Borrowing Base Guarantor; and (iii)
      notification within 30 days of any increases having a cost to such
      Canadian Borrowing Base Guarantor in excess of Cdn.$250,000 per annum, in
      the benefits of any existing Canadian Pension Plan or Canadian Benefit
      Plan, or the establishment of any new Canadian Pension Plan or Canadian
      Benefit Plan, or the commencement of contributions to any such plan to
      which such Canadian Borrowing Base Guarantor was not previously
      contributing.

                  (v) After Acquired Real Property. Upon the acquisition by it
or any of its Domestic Subsidiaries after the Effective Date of any interest
(whether fee or leasehold) in any real property (wherever located), but
excluding any Excluded Assets (each such interest being an "After Acquired
Property") (x) with a Current Value (as defined below) in excess of $750,000 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, in each case, prior to the Discharge of Term
Obligations, to the extent delivered to the trustee for the holders of the
Senior Secured Notes, and thereafter, at the request of the Collateral Agent,
and 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 second
priority (or, in the event that the Senior Secured Notes have been paid in full,
first priority) lien on the property purported to be covered thereby or to
otherwise protect the rights of the Collateral 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 surveyor reasonably satisfactory to the Collateral Agent,
(v) at the Collateral Agent's reasonable request, Phase I Environmental Site
Assessments, or such other non-intrusive and non-Phase II environmental
assessment as the Collateral 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(v).

                  (w) Senior Secured Priority Collateral. (i) Cause any and all
proceeds of a Sale of Senior Secured Note Priority Collateral (as defined in the
Senior Secured Notes Indenture) received by such Loan Party or any of its
Subsidiaries or any other amounts payable to the holders of the Senior Secured
Notes or required to be held as Senior Secured Priority Collateral or otherwise
applied in accordance with the Senior Secured Notes Indentures to be deposited
into a Senior Secured Priority Account in accordance with the terms of Section
4.10(3) of the Senior Secured Notes Indenture, (ii) promptly after such deposit,
deliver (or cause to be delivered) to the Administrative Agent an officer's

                                       85





certificate of an Authorized Officer of the Administrative Borrower certifying
that all such amounts have been deposited into a Senior Secured Priority
Account, provided that, at no time shall any of such amounts be deposited to any
other deposit or securities account maintained by the Loan Parties and (iii)
within 5 Business Days after the date upon which the Discharge of Term
Obligations has occurred, transfer (or cause to be transferred) all amounts
deposited to any Senior Secured Priority Account to a deposit account subject to
a Control Agreement in favor of the Collateral Agent. The Administrative
Borrower shall give the Administrative Agent prompt written notice of any
withdrawal from any Senior Secured Priority Account.

            Section 7.02 Negative Covenants. So long as any principal of or
interest on any Loan, LC Exposure (other than any LC Exposure 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.

                  (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, license or sublicense, 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

                        (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 (excluding Accounts
      and Inventory) for cash in an aggregate amount not less than the fair
      market value of such property or assets, (D) sell or otherwise dispose of
      the Designated Real Property to a third party (the "Designated Real
      Property Disposition"), (E) dispose of cash or sell or liquidate Permitted
      Investments or other cash equivalents, (F) enter, in the ordinary course
      of business and consistent with past practices, into operating leases and
      subleases or licenses or sublicenses of any property and (G) sell notes
      receivable with a maturity of not less than 2 years to PNC Bank, National
      Association on term and conditions and pursuant to documentation
      satisfactory to the

                                       86





      Administrative Agent in its sole discretion, provided that the Net Cash
      Proceeds of any disposition (x) in the case of clause (B) above, do not
      exceed $3,000,000 in the aggregate, (y) in the case of clauses (C) and (G)
      above, respectively, do not exceed $10,000,000 in the aggregate for each
      such clause and (z) in all cases, are paid to the Administrative Agent for
      the benefit of the Agents and the Lenders to be applied, to the extent
      required, pursuant to the terms of Section 2.05(c)(iii); and provided,
      further however, that in the case of any Sale of Senior Secured Note
      Priority Collateral (as defined in the Senior Secured Notes Indenture),
      the Loan Parties shall (A) give the Administrative Agent prior notice of
      all such sales or dispositions, (B) certify that all proceeds thereof
      shall be deposited into a Senior Secured Priority Account in accordance
      with Section 7.01(w) and as otherwise required by the Senior Secured Notes
      Indenture, the Intercreditor Agreement or the Loan Documents and (C)
      notify the Administrative Agent in accordance with Section 7.01(w) prior
      to any withdrawals from or deposits to any such account.

                        (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 Administrative 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
      Administrative 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
      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;

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                        (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:

                        (i)   investments existing on the Effective Date, 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,

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                        (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 $1,000,000 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 (A) the aggregate market value of all
      such issuances (measured at the time of each such issuance) does not
      exceed $5,000,000, (B) immediately before and after the making of any such
      investment, there shall exist no Event of Default, (C) the Loan Parties do
      not incur any material liabilities related to such investment, (D) the
      rights of the Administrative Agent and the Lenders are not adversely
      affected by any such investment, (E) the Administrative Agent shall have
      received at least 15 days' prior written notice of such investment and (F)
      on the date of consummation of such investment, the Administrative Agent
      shall have received a certificate of an Authorized Officer of the Parent
      certifying, as of such date, that the conditions set forth in the
      foregoing clauses (A) through (D) of this subsection (xi) have been
      satisfied,

                        (xii) (A) 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; and (B) investments in any joint venture to
      which the Parent or any of its Subsidiaries is a party (other than the
      China JV) by the Parent or any of its Subsidiaries 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 not exceeding $3,500,000,

                        (xiii) investments in a wholly-owned Foreign Subsidiary
      organized under the laws of China by the Parent or any Subsidiary of the
      Parent in an aggregate amount not exceeding $500,000;

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                        (xiv) other investments not otherwise permitted under
      clauses (i) through (xiii) above or (xv) through (xvii) below in an
      aggregate amount not exceeding $1,500,000 and to the extent such
      investments are made within the United States,

                        (xv)  investments constituting Contingent Obligations to
      the extent permitted under clause (m) of the definition of Permitted
      Indebtedness,

                        (xvi) investments constituting Accounts arising in the
      ordinary course of business, and

                        (xvii) 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 $20,000,000 (exclusive of replacements, renewals and
extensions, no more than $3,000,000 of which, on an annualized basis, will be
incurred after the Effective Date).

                  (g) [Reserved].

                  (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 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 preferred stock issued and outstanding on the Effective Date,
(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

                                       90





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 $31,500,000 of the Net Cash Proceeds of a "Rights
Offering" (as defined in the Mizuho/Glencore Transaction Documents as in effect
on the Effective Date) to redeem preferred stock in accordance with the terms of
the Mizuho/Glencore Transaction Documents (a "Rights Offer Redemption"), (I) the
Parent may make quarterly dividend payments on the New US Securities, if before
and after giving effect thereto, Excess Availability exceeds Required
Availability and (J) the Parent may at any time after the first anniversary of
the Effective Date redeem or repurchase shares of its preferred stock issued and
outstanding on the Effective Date, so long as: (i) immediately before and after
consummation of such redemption or repurchase, no Default or Event of Default
shall have occurred and be continuing, (ii) immediately before and after
consummation of such redemption or repurchase, the Borrowers and their
Subsidiaries shall have pro forma Availability (without deducting the
Availability Reserve) of not less than $35,000,000 for the 90 day period
preceding such transaction and no later than the date on which such redemption
or repurchase is to be consummated, the Administrative Borrower shall submit a
certificate of the chief financial officer of the Administrative Borrower
setting forth reasonably detailed calculations demonstrating compliance with
such required pro forma Availability and certifying that the other conditions
set forth in this clause (J) have been satisfied and (iii) the aggregate
purchase price paid for all redemptions and repurchases pursuant to this clause
(J) shall not exceed $6,300,000.

                  (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)
the Mizuho/Glencore Transactions (including any Rights Offering as defined
therein), and (v) compensation, retirement, 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, retirement plans and
stock ownership plans approved by the Board of Directors of the Parent made in
the ordinary course of business consistent with past practices.

                  (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 Loan Party or 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;

                                       91





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 described in
      clause (e)(i) of the definition of "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;

                        (G)   the Mizuho/Glencore Transaction Documents and any
      New US Securities; or

                        (H)   the governing agreement and other agreements,
      instruments or documents entered into in connection with the formation of
      (i) the China JV or (ii) any other joint venture to which the Parent or
      any of its Subsidiaries is a party and which is permitted pursuant to
      Section 7.02(e)(xii)(B) and, in each case, any renewal, extension,
      refinancing or replacement thereof that does not expand the scope of any
      such encumbrance or restriction.

                  (l) Limitation on Issuance of Capital Stock. Issue or sell or
enter into any agreement or arrangement for the issuance or sale of, or permit
any of its Subsidiaries to issue or sell or enter into any agreement or
arrangement for the issuance or sale of, any shares of its Capital Stock, any
securities convertible into or exchangeable for its Capital Stock or any
warrants other than (x) 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), Section 7.02(j)(v) or
Section 7.02(m)(iv) (including, without limitation, issuances pursuant to the
Mizuho/Glencore Transaction Documents) and (y) issuances by any joint venture
permitted by Section 7.02(e)(xii) of Capital Stock to the owners of such joint
venture.

                  (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

                                       92





      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 Agents or the Lenders or the issuer of such Indebtedness
      in any respect, provided that, in the case of the Senior Secured Notes
      Indenture and the Senior Secured Notes, any amendment, modification or
      other change may be made to any of such documents, if after giving effect
      to such amendment, modification or change (A) such Indebtedness shall
      require no amortization, sinking fund payment or any other scheduled
      maturity of the principal amount thereof on any date which is earlier than
      the date occurring six months after the then latest Final Maturity Date,
      (B) the interest rate applicable to the Senior Secured Notes shall not be
      higher than such interest rate as in effect on the Effective Date, (C) the
      defined terms "Credit Facility Document," "Credit Facility Liens," "Credit
      Facility Priority Collateral," "Discharge of Credit Facility Obligations,"
      and "Discharge of Senior Secured Note Obligations," appearing in the
      Senior Secured Notes Indenture and Section 4.10(3) of the Senior Secured
      Notes Indenture shall not be changed, in each case, from those appearing
      in the Senior Secured Notes Indenture as in effect as of the Effective
      Date and (D) the terms governing any such Indebtedness shall not contain
      any provision (including, without limitation, covenants, mandatory
      redemptions or offers to purchase or prepay, defaults and remedies) which,
      in the reasonable judgment of the Administrative Agent is materially more
      adverse to the Agents or the Lenders than the provisions in the Senior
      Secured Notes Documents as of the Effective Date;

                        (ii)  except for the Obligations and Indebtedness
      permitted under clause (j) of the definition Permitted Indebtedness (but
      excluding the Opening Availability Loan), make any voluntary or optional
      payment, prepayment, redemption, defeasance, sinking fund payment or other
      acquisition for value of, or otherwise voluntarily satisfy prior to the
      scheduled maturity thereof in any manner, 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 pursuant to Section 3.07 of the
      Senior Secured Notes Indenture or is otherwise expressly permitted by the
      definition of Permitted Indebtedness, the Intercreditor Agreement or
      referred to in 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 the Euro Note Transactions 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;
      provided, however, that the Loan Parties may prepay, defease or otherwise
      voluntarily satisfy prior to the scheduled maturity thereof, the Opening
      Availability Loan so long as: (1) immediately before and after
      consummation of such repayment, defeasance or satisfaction, no Default or
      Event of Default shall have occurred and be continuing, (2) immediately
      before and after consummation of such repayment, defeasance or
      satisfaction, the Borrowers and their Subsidiaries shall have pro forma
      Availability (without deducting the Availability Reserve) of not less than
      $30,000,000 for the 30 day period preceding such transaction and no later
      than the date on which such transaction is to be consummated, the
      Administrative Borrower shall submit a certificate of the chief financial
      officer of the Administrative Borrower setting forth reasonably detailed
      calculations demonstrating compliance with such required pro forma
      Availability and certifying that the other

                                       93





      conditions set forth in this proviso have been satisfied and (3) the
      aggregate amount of principal that may be so prepaid, defeased or
      satisfied from and after the Effective Date shall not exceed $5,000,000;

                        (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
      (B) either individually or in the aggregate, could not reasonably be
      expected to have a Material Adverse Effect; provided, however, that, in no
      event shall Parent permit any Subsidiaries' certificate of incorporation,
      bylaws or other similar organizational document (other than D-M-E U.S.A.
      INC. or Uniloy Milacron U.S.A. Inc.) to contain any provision of the type,
      or having the purpose of, clause Ninth of Parent's certificate of
      incorporation as in effect on the Effective Date.

                  (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.

                  (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 unless (i) no Default or
Event of Default has occurred and is continuing and (ii) such compromise,
adjustment or grant is made in the ordinary course of its business in accordance
with its practices and policies.

                  (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.

                                       94





                  (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
Transactions.

                  (s) Misplaced Notes. Create or suffer to exist any Lien upon
or with respect to any of the Misplaced Notes except for the Lien created by the
Loan Documents.

                  (t) Wholly-Owned Subsidiaries. Permit any Subsidiary that is a
wholly-owned, directly or indirectly, by the Parent or any of its other
Subsidiaries as of the Effective Date to cease to be wholly-owned, directly or
indirectly, by the Parent or any of such other Subsidiaries.

                  (u) Restrictions in Organizational Documents. None of Parent,
D-M-E U.S.A. INC. or Uniloy Milacron U.S.A. Inc. shall invoke or otherwise apply
the provisions of (i) in the case of the Parent, clause Ninth of its certificate
of incorporation, (ii) in the case of D-M-E U.S.A. INC., Article VI of its
restated articles of incorporation or (iii) in the case of Uniloy Milacron
U.S.A. Inc., Article VI of its articles of incorporation, in each case, as in
effect on the Effective Date, in any manner that would impair, compromise or
diminish the rights of the Agents, the Issuing Bank and the Lenders under the
Loan Documents.

            Section 7.03 Financial Covenants. So long as any principal of or
interest on any Loan, LC Exposure (other than any LC Exposure 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) Minimum Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio as of the end of each fiscal quarter of the Parent ending
on the dates set forth in the table below to be less than the applicable
corresponding ratio set forth below:



                                                                   Minimum Fixed Charge
                    Quarter End                                       Coverage Ratio
                    -----------                                       --------------
                                                                
December 31, 2005                                                      1.00 to 1.00

March 31, 2006                                                         1.00 to 1.00

June 30, 2006                                                          1.00 to 1.00

September 30, 2006                                                     1.00 to 1.00

December 31, 2006 and each quarter end occurring thereafter            1.25 to 1.00


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                  (b) 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 corresponding amount set forth below:



                                                                                 Cumulative Consolidated
                      Period                                                               EBITDA
                      ------                                                               ------
                                                                              
Three complete calendar months ending September 30, 2004                              $  11,600,000

Six complete calendar months ending December 31, 2004                                 $  25,900,000

Nine complete calendar months ending March 31, 2005                                   $ 32, 300,000

Twelve complete calendar months ending June 30, 2005                                  $  43,000,000

Twelve complete calendar months ending September 30, 2005                             $  48,400,000


                  (c) 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 on a cumulative basis during any period set
forth in the table below to exceed the amount set forth opposite such period
below:



                      Period                                               Cumulative Capital Expenditures
                      ------                                               -------------------------------
                                                                        
Three complete calendar months ending September 30, 2004                               $  6,100,000

Six complete calendar months ending December 31, 2004                                  $ 11,300,000

Nine complete calendar months ending March 31, 2005                                    $ 15,900,000

Twelve complete calendar months ending June 30, 2005                                   $ 20,500,000

Twelve complete calendar months ending September 30, 2005                              $ 20,500,000


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                                  ARTICLE VIII

                      MANAGEMENT, COLLECTION AND STATUS OF
                    ACCOUNTS RECEIVABLE AND OTHER COLLATERAL

            Section 8.01 Collection of Accounts; Management of Collateral.

                  (a) In accordance with Section 7.01(r), within 120 days after
the Effective Date (or such later time as may be agreed to by the Administrative
Agent), (the "Cash Management Date") the Domestic Loan Parties shall (i)
establish and maintain cash management services of a type and on terms
reasonably satisfactory to the Administrative Agent at the Administrative Agent,
an Affiliate thereof, any Lender or any bank providing cash management services
to the Loan Parties on the Effective Date (each, a "Cash Management Bank"), and
shall take such reasonable steps to enforce, collect, receive and cause all
amounts owing on the Accounts of the Domestic Loan Parties or any of their
Domestic Subsidiaries to be remitted directly to a Cash Management Account
(other than any payroll, operating, checking or disbursement account) or the
Administrative Agent's Account, 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 Administrative Agent's Account; provided,
however, that, (A) at all times prior to the Cash Management Date, the Domestic
Loan Parties shall cause the amounts referred to in the foregoing clauses (i)
and (ii) to be remitted or deposited to one or more of the accounts listed on
Schedule 6.01(u) which shall be subject to a Control Agreement in favor of the
Administrative Agent as of the Effective Date and (B) subject to the limitations
set forth in this Agreement, the Domestic Loan Parties and their Domestic
Subsidiaries shall be permitted to maintain and fund (i) deposit accounts of
Domestic Loan Parties and their Domestic Subsidiaries other than Cash Management
Accounts in an aggregate amount not in excess of $4,000,000 at any one time and
(ii) the Excluded Deposit Accounts (as defined in the Security Agreement).

                  (b) Prior to the Cash Management Date (or such later time as
may be agreed to by the Administrative 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, among
other things, that the Cash Management Bank shall, from and after the Effective
Date forward all cash deposited into the Cash Management Accounts covered
thereby by electronic funds transfer (including, but not limited to, ACH
transfers) on each Business Day to the Administrative Agent's Account; provided,
however any such agreement covering any Disbursement Account shall provide that
such amounts shall only be transferred to the Administrative Agent's account
following the Cash Management Bank's receipt of a notice (an "Activation
Notice") from the Administrative Agent which may only be given during the
occurrence and continuance of an Event of Default.

                  (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

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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 Administrative 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 Administrative 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 Administrative Agent's 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 Administrative 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 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
Administrative Agent or its designee on behalf of such Administrative 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 Administrative 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

                                       98





judgment or mistake of fact or law; this power being coupled with an interest is
irrevocable until all of the Loans, LC Exposure (other than LC Exposure that is
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 Administrative Agent as agent of any Loan Party for any purpose whatsoever,
and the Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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. The Borrowers shall notify the Administrative Agent if any Account
includes taxes due to such Governmental Authority and, in the absence of such
notice, the Administrative Agent shall have the right to retain the full
proceeds of such Account and shall not be liable for any taxes that may be due
by reason of the sale and delivery creating such Account.

                  (i) No Loan Party shall, or shall cause or permit any
Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts as
of any date of determination in excess of checks outstanding against such
accounts as of that date and amounts necessary to meet minimum balance
requirements. To the extent cash has accumulated in D-M-E Company's account no.
1XXXX01 at Comerica Bank as of any date of determination in excess of checks
outstanding against such account as of that date and amounts necessary to meet
minimum balance requirements, D-M-E Company shall, within one (1) Business Day,
transfer such excess cash out of such account and into an account subject to a
Control Agreement in favor of the Administrative Agent.

                  (j) Notwithstanding any other terms set forth in the Loan
Documents, the rights and remedies of the Administrative 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, and are not
exclusive of, any other rights, remedies or obligations set forth in any other
Loan Document or as provided by law.

                  (k) Notwithstanding any other terms set forth herein or in any
other Loan Document, the Administrative Agent shall have the right at any time
to require the Canadian Borrowing Base Guarantors to provide Control Agreements
and/or Cash Management Agreements with respect to any account into which the
proceeds of Accounts of the Canadian Borrowing Base Guarantors are deposited
and, each Canadian Borrowing Base Guarantor will so provide such agreements
within 120 days after receiving any such request. Without limiting the
provisions of this Section 8.01, the parties agree that the provisions of this
Section 8.01 shall apply to the Canadian Borrowing Base Guarantors to

                                       99





the same extent as the Domestic Loan Parties at any time when such Control
Agreements and/or Cash Management Agreements are in effect.

            Section 8.02 Accounts Documentation. The Domestic Loan Parties and
Canadian Borrowing Base Guarantors will at such intervals as the Administrative
Agent may reasonably require, execute and deliver confirmatory written
assignments of the Accounts to the Administrative Agent and furnish such further
schedules and/or information as the Administrative 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
Administrative 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
Administrative Agent and are to be executed and delivered to the Administrative
Agent from time to time solely for its convenience in maintaining records of the
Collateral. The Domestic Loan Parties' or Canadian Borrowing Base Guarantors'
failure to give any of such items to the Administrative Agent shall not affect,
terminate, modify or otherwise limit the Collateral Agent's Lien on the
Collateral. The Domestic Loan Parties and the Canadian Borrowing Base Guarantors
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 Administrative Agent and
providing the Administrative Agent with a copy of such re-billing, identifying
the same as such. If the Domestic Loan Parties or the Canadian Borrowing Base
Guarantors become aware of anything materially detrimental to any of such Loan
Parties' material customers' credit, such Loan Parties will promptly advise the
Administrative Agent thereof.

            Section 8.03 Status of Accounts and Other Collateral. With respect
to any Account of any Domestic Loan Party or any Canadian Borrowing Base
Guarantor 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 Collateral 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 Collateral 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 Collateral Agent shall reasonably require; (h) such Loan Party shall
promptly notify the Collateral 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 Collateral Agent in order that all monies due or to
become due under any such contract 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 Collateral Agent any material
loss or destruction of, or substantial damage to, any of

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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
Collateral Agent and the Lenders as additional Collateral; and (k) such Loan
Party is not and shall not be entitled to pledge any Collateral 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 in form and substance reasonably
      acceptable to the Administrative Agent, (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 (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 and Accounts and Receivables of the Canadian Borrowing Base
      Guarantors 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

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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 or
any Canadian Borrowing Base Guarantor 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 or any Canadian Borrowing Base Guarantor'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 or any
Canadian Borrowing Base Guarantor'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 as
provided in Section 7.02(o). Subject to Section 7.02(o), as long as no Event of
Default has occurred and is continuing, Domestic Loan Parties and Canadian
Borrowing Base Guarantors 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 or
any Canadian Borrowing Base Guarantor that is included by 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 provided in Section 7.02(o), (iv) there
shall be promptly reported to the Administrative Agent in accordance with the
terms of this Agreement any setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto and (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 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

                                      102





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 Administrative Agent and Lenders and upon
which Administrative 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 shall
constitute 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.

                                   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 any Agent, any Lender or the Issuing
Bank 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), (d), (h),
      (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 or
      any Pledge Agreement to which it is a party,

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                        (ii)  clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) or
      (a)(vii) of Section 7.01 and such failure shall remain unremedied for 5
      Business Days,

                        (iii) clauses (a)(v), (a)(vi) (at a time when Borrowing
      Base Certificates are required to be delivered on a monthly basis),
      (a)(viii), (a)(ix), (a)(x), (a)(xi), (a)(xii), (a)(xiii) and (a)(xiv) of
      Section 7.01 or Section 8.05(a)(ii) and such failure shall remain
      unremedied for 3 Business Days and

                        (iv)  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 Administrative
      Agent, as and to the extent Administrative 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 Administrative Agent to the Administrative
Borrower;

                  (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 in excess of $2,500,000, 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;
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 , any Subsidiary of 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,
any Subsidiary of 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

                                      104





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 Agents 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;

                  (i) any Security Agreement, any Pledge Agreement, any Cash
Management Agreement , Control 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 Agents and the Lenders on any Collateral purported to be covered thereby;

                  (j) one or more judgments, orders or awards for the payment of
money exceeding $2,500,000 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 30 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) 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;

                  (l) (i) any Termination Event with respect to any Employee
Plan shall have occurred which could reasonably be expected to have a Material
Adverse Effect or (ii) there exists any fact or circumstance that reasonably
could be expected to result in the imposition of a Lien under Section 412(n) of
the Internal Revenue Code or under ERISA; or

                  (m) a Change of Control shall have occurred;

                  (n) an event or development occurs which could reasonably be
expected to have a Material Adverse Effect; or

                  (o) (i) any of the Obligations of any Loan Party under the
Loan Documents for any reason shall cease to qualify as a part of a "Qualified
Credit Facility" (or any similar term) under, and as defined in, the Senior
Secured Notes Indenture or in any agreement evidencing any refinancing thereof
as permitted under the terms of the Loan Documents, other than as a result,
directly or indirectly, of any

                                      105





acts or omissions of the Agents or the Lenders or (ii) the Intercreditor
Agreement shall, in whole or in part, cease to be effective or cease to be
legally valid, binding and enforceable against the holders of the Senior Secured
Notes or any refinanced Indebtedness thereof as permitted under the terms of the
Loan Documents other than as a result, directly or indirectly, of any acts or
omissions of the Administrative Agent;

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;
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 then outstanding cash in an amount equal to 105% of the greatest
amount for which such Letter of Credit 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 LC Exposure.

                                    ARTICLE X

                                      AGENT

            Section 10.01 Appointment. Each Lender (and each subsequent maker of
any Loan by its making thereof) hereby irrevocably appoints JPMorgan (and its
successors and assigns) as its agent under the Loan Documents and authorizes
JPMorgan (and its successors and assigns) 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 Administrative Agent or the Collateral Agent, as the case
may be, is hereby expressly authorized by the Lenders to execute any and all
documents (including releases, the Cash Management Agreements and the
Intercreditor Agreement) with respect to the Collateral and the rights of the
Lenders with respect thereto. Each of the Lenders and the Issuing Bank 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 Intercreditor Agreement.

            Section 10.02 Nature of Duties. Neither Agent shall have any duties
or obligations except those expressly set forth in the Loan Documents. Without
limiting the generality of the foregoing, (a) no Agent shall 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) no Agent shall 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

                                      106





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. No Agent shall 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. No Agent shall be deemed to have
knowledge of any Default or Event of Default unless and until written notice
thereof is given to such Agent by any Loan Party or a Lender, and such 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 such Agent.

            Section 10.03 Rights, Exculpation, Etc.

                  (a) Neither Agent nor its directors, officers, agents or
employees shall 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, each 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 such 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 any Agent be responsible or liable to
the Lenders for any failure to monitor or maintain any portion of the
Collateral. No Agent shall be liable for any apportionment or distribution of
payments made in good faith pursuant to Sections 2.05 or 4.04, 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. Each 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 such Agent are
permitted or required to take or to grant, and if such instructions are promptly
requested, such 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

                                      107





shall have any right of action whatsoever against any Agent as a result of such
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 any
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 any 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. Each 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. Each
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. Each Agent may consult with legal counsel
(including, without limitation, counsel to such Agent or counsel to the Loan
Parties), 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. Each 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, each 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 such 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 Administrative Agent or
Collateral Agent, as the case may be.

            Section 10.05 Indemnification. To the extent that any Agent or the
Issuing Bank is not reimbursed and indemnified by any Loan Party, the Lenders
will reimburse and indemnify such Agent and the Issuing Bank 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 such
Agent or the Issuing Bank 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
such Agent or the Issuing Bank 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,
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 such Agent's or the Issuing
Bank'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.

                                      108





            Section 10.06 Agent Individually. With respect to its Pro Rata Share
of the Total Revolving Credit Commitment hereunder and the Loans made by it,
each 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" or
"Required Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include such Agent in its individual capacity as a Lender
or one of the Required Lenders. Each 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) Each 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 Administrative Agent or Collateral Agent, as the
case may be, 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 with the consent of the Administrative Borrower
(which consent shall not be unreasonably withheld or delayed). Upon the
acceptance of any appointment as any 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 resignation of the Administrative Agent
or Collateral Agent, as the case may be, hereunder as an Agent, the provisions
of this ARTICLE X shall inure to the benefit of such Agent, its sub-agents and
their respective Related Parties as to any actions taken or omitted to be taken
by any of them 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 (with the consent of the Administrative Borrower,
which consent shall not be unreasonably withheld or delayed), 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 Administrative Agent and the Lenders, the Administrative Agent may from time
to time make such disbursements and advances ("Agent Advances") which the
Administrative 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, LC Exposure and other Obligations or to pay any
other amount chargeable to the Borrowers 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
Administrative 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 Administrative Agent making the Agent Advance,
upon such Administrative Agent's demand, in Dollars in immediately available
funds, the amount equal

                                      109





to such Lender's Pro Rata Share of each such Agent Advance. If such funds are
not made available to the Administrative Agent making an Agent Advance by such
Lender, the Administrative 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
Administrative Agent, at the Federal Funds Effective Rate for three Business
Days and thereafter at the Alternate Base 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
Revolving Credit Commitment and payment and satisfaction of all Loans, LC
Exposure, 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; or constituting property that
is Senior Secured Priority Collateral and which is being released from the lien
securing the Senior Secured Notes in accordance with the terms of the Senior
Secured Notes Indenture, provided that the Collateral Agent receives a
certification by the trustee for the holders of the Senior Secured Notes to the
effect that such Senior Secured Priority Collateral has been released in
accordance with the terms of the Senior Secured Notes Indenture, and provided,
further, that at the time of such release (and immediately after giving effect
thereto) the aggregate principal amount of Senior Secured Notes outstanding (or
issued in replacement thereof) exceeds $112,000,000. 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 Agents 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 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.

                                      110





                  (e) Agency for Perfection. Each 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 each Agent and each Lender hereby acknowledges that it holds
possession of or otherwise controls any such Collateral for the benefit of the
Agents 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, as primary obligor and not
merely as a surety, the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all Obligations of the Borrowers (and any one
or more of them) 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), LC
Exposure, fees, commissions, expense reimbursements, indemnifications or
otherwise (such obligations 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 Agents, the Lenders and the Issuing Bank in
protecting or 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 Agents, the Lenders and the Issuing
Bank under any Loan Document but for the fact that they are 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 Agents, the Lenders or the Issuing Bank 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 any Agent or any Lender to any Borrower or
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;

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                  (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 security interest therein, 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 Issuing Bank;

                  (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 Agents, the Lenders or the Issuing Bank 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 and to the extent that for any reason any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Agents
the Lenders, the Issuing Bank or any other Person, whether as a result of the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.

            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 Agents, the Lenders or the Issuing Bank 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 any Agent, any Lender or the Issuing Bank 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 any
Agent, any Lender or the Issuing Bank 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 Agents, the Lenders and the Issuing Bank 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 Agents, the Lenders and the Issuing Bank
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

                                      112





(including, without limitation, all or any portion of its Commitments, its Loans
and the LC Exposure 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.
Notwithstanding the foregoing, the Administrative Borrower shall have the right
to release Milacron Capital from its Guarantees at any time so long as any of
the proceeds of the Revolving Credit Loans or ABL Priority Collateral that have
been invested in or loaned to Milacron Capital after the Effective Date have
been repaid or returned.

            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
Agents, the Lenders and the Issuing Bank 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 benefit of the Agents, the Lenders and the Issuing Bank
and shall forthwith be paid to the Agents, the Lenders and the Issuing Bank 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 Agents, the Lenders and the
Issuing Bank 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 Agents, the Lenders and the Issuing Bank 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 Agents, the Lenders
or the Issuing Bank of the full amount of the Obligation Currency expressed to
be payable to the Agents, the Lenders or the Issuing Bank 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 Agents, the
Lenders or the Issuing Bank could, in accordance with normal banking procedures,
purchase Dollars with the Judgment 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 Agents, the Lenders or the Issuing Bank
hereunder shall, notwithstanding any judgment in such Judgment Currency, be
discharged only to the extent that, on the Business Day immediately following
the date on which the Agents, the Lenders or the Issuing Bank receives any sum
adjudged to be so due in the Judgment Currency, the Agents, the Lenders or the
Issuing

                                      113





Bank may, in accordance with normal banking procedures, purchase Dollars with
the Judgment Currency. If the Dollars so purchased are less than the sum
originally due to the Agents, the Lenders or the Issuing Bank in Dollars, such
Loan Party agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Agents, the Lenders or the Issuing Bank against such
loss, and if the Dollars so purchased exceed the sum originally due to the
Agents, the Lenders or the Issuing Bank in Dollars, the Agents, the Lenders or
the Issuing Bank agrees to remit to such Loan Party such excess.

            Section 11.07 General Limitation on Guarantee Obligations. In any
Insolvency Proceeding, if the obligations of any Guarantor under Section 11.01
would otherwise, taking into account the provisions of Section 11.07, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under Section
11.01, then, notwithstanding any other provision hereof to the contrary, the
amount of such liability shall, without any further action by any Guarantor, the
Agents, the Lenders, the Issuing Bank or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such Insolvency
Proceeding.

            Section 11.08 Dutch Financial Assistance Rules. Notwithstanding any
other provision of this ARTICLE XI, the guarantee, indemnity and other
obligations of any Guarantor incorporated in The Netherlands ("Dutch Guarantor")
expressed to be assumed in this ARTICLE XI or elsewhere in the Loan Documents
shall be deemed not to be assumed by such Dutch Guarantor to the extent that the
same would constitute unlawful financial assistance within the meaning of
Section 2:207(c) or 2:98(c) of the Dutch Civil Code and the provisions of the
Loan Documents shall be construed accordingly.

                                   ARTICLE XII

                                  MISCELLANEOUS

            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
         Telephone: 212-474-1000
         Telecopier: 212-474-3700
         Attention: Paul Michalski, Esq.

         if to JPMorgan, to it at the following address:

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         JPMorgan Chase Bank
         c/o J.P. Morgan Business Credit Corp.
         One Chase Square, CS-5
         Rochester, New York  14643
         Telephone:
         Telecopier: (585) 258-7440
         Attention: Milacron Relationship Manager

         with a copy to:

         Skadden, Arps, Slate, Meagher & Flom LLP
         333 West Wacker Drive
         Chicago, IL  60606
         Telephone: 312- 407-0889
         Telecopier: 312-407-8511
         Attention: Seth E. Jacobson, 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 Agents or the Issuing Bank pursuant to ARTICLE II and ARTICLE III
shall not be effective until received by the Agents or the Issuing Bank, as the
case may be.

            Section 12.02 Amendments, Etc. Except as provided in Section 6.01(u)
of this Agreement, 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 Agents and
the Required Lenders or by the Agents 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 Credit Commitment
of any Lender, reduce the principal of, or interest on, the Loans payable to any
Lender without the written consent of such Lender and the Agents, (ii), 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 LC Exposure payable to any Lender, in
each case without the written consent of each Lender directly affected thereby,
(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 Lenders" or "Pro Rata Share" without the written
consent of each Lender, (v) release all or substantially all 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 Agents and the Lenders, or release any Borrower or any Guarantor (except as
provided in Section 11.04 of this Agreement) 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) modify the
Borrowing Base to increase the advance rate percentages applicable to any
category of Collateral included therein, to add new categories of eligible
Collateral or to make less restrictive in any material respect the eligibility
criteria applicable to any category of Collateral (other than the adjustment or
elimination of Reserves in the Administrative Agent's reasonable discretion),
without the written consent of each Lender and the Administrative Agent;
provided, further, that no amendment, waiver or consent shall reduce the
Availability Reserve without the written consent of the Super Majority Required
Lenders. Notwithstanding the foregoing, no amendment, waiver or consent

                                      115





shall, unless in writing and signed by the Administrative Agent affect the
rights or duties of the Administrative Agent (but not in its capacity as a
Lender) under this Agreement or the other Loan Documents and no amendment,
waiver or consent shall, unless in writing and signed by the Collateral Agent
affect the rights or duties of the Collateral Agent (but not in its capacity as
a Lender) under this Agreement or the other Loan Documents. To the extent
permitted by applicable law, the parties agree that, notwithstanding any of the
terms of clause Ninth of the certificate of incorporation of the Parent, Article
VI of the restated articles of incorporation of D-M-E U.S.A. INC. or Article VI
of the articles of incorporation of Uniloy Milacron U.S.A. Inc., in each case,
as in effect on the Effective Date, in no event shall any amendment to this
Agreement or any other Loan Document be effective unless entered into in
accordance with the terms of this Section 12.02.

            Section 12.03 No Waiver; Remedies, Etc. No failure on the part of
any 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 Agents 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 Agents
and the Lenders under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agents 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 Agents (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 any 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, 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
Agents' 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 Agents' 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 any Agent or any Lender of
any advice from professionals with respect to any of the foregoing.

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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 any
Agent or any Lender to be payable in connection with this Agreement or any other
Loan Document, and the Borrowers agree to save each 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, any 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
Agents 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, any 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 such 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 such Agent or such Lender shall have made any demand hereunder
or thereunder and although such obligations may be contingent or unmatured. Each
Agent and each Lender agrees to notify such Loan Party promptly after any such
set-off and application made by such 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 Agents 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 Agents 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) Whenever in this Agreement or any of the Loan Documents a
party hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Loan Parties, the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Lenders that are contained in this
Agreement and any of the Loan Documents shall bind and inure to the benefit of
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 of the Agents and Lenders, and any such assignment
without such unanimous prior written consent shall be null and void.

                  (b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment(s) and the Loans at the time owing to it);
provided, however, that: (i) in the case of any assignment of a Revolving Credit
Commitment, each of the Administrative Agent and the Issuing Bank must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of Related Lender
Assignment, the amount of the Revolving Credit Commitment of the assigning
Lender subject to any such assignment (determined as of the date the Assignment
and

                                      117





Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $1,000,000 (or, if less, the entire remaining
amount of such Lender's Commitment), and (iii) the Borrowers and the
Administrative Agent shall be entitled to deal solely with the assigning Lender
unless and until the parties to such assignment execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with (in the
Administrative Agent's discretion) a processing and recordation fee of $5,000
and, unless the assignee is an existing Lender, an administrative questionnaire.
Upon acceptance and recording by the Administrative Agent of an Assignment and
Acceptance pursuant to Section 12.07(e), from and after the effective date
specified in each Assignment and Acceptance, (A) 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 (B) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an 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 2.08, 2.10, 4.05, 12.14 and
12.15, as well as to any fees accrued for its account and not yet paid).

                  (c) By executing and delivering to the Administrative Agent an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the other
parties hereto as follows: (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim and that its Revolving Credit Commitment, and the
outstanding balances of its Revolving Credit Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrowers or any Subsidiary or the
performance or observance by the Borrowers or any Subsidiary of any of their
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 6.01(g) or delivered pursuant to Section 7.01(a) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.

                  (d) The Administrative Agent, acting for this purpose as an
agent of the Borrowers, shall maintain at one of its offices in The City of New
York 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 LC Exposure 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 Issuing Bank, the Collateral
Agent and the Lenders may treat each Person whose name is recorded in the

                                      118





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 Issuing Bank, any Agent and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

                  (e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an administrative
questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder) and the written consent of the Issuing Bank and
the Administrative Agent (to the extent required) to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, and (ii)
record the information contained therein in the Register. No assignment shall be
effective unless it has been recorded in the Register, as provided in this
Section 12.07.

                  (f) Each Lender may without the consent of the Borrowers, the
Issuing Bank or the Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment(s) and the Loans);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.08 and 4.05 with respect to its participation
interest to the same extent as if they were Lenders (but, with respect to any
particular participant, to no greater extent than the Lender that sold the
participation to such participant) and (iv) the Borrowers, the Administrative
Agent, the Issuing Bank and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrowers relating to the Loans or LC Exposure
and to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans or extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans, in each case, to the extent
related to its participation interest.

                  (g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 12.07, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers; provided that, prior to any such
disclosure of information designated by the Borrowers as confidential, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 12.20.

                  (h) Any Lender may at any time assign all or any portion of
its rights under this Agreement to secure extensions of credit to such Lender or
in support of obligations owed by such Lender; provided that no such assignment
shall release a Lender from any of its obligations hereunder or substitute or
permit the substitution of any such assignee for such Lender as a party hereto.

                  (i) [Intentionally Omitted.]

                  (j) No Borrower shall assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent,
the Issuing Bank and each Lender, and any attempted assignment without such
consent shall be null and void.

                                      119





            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 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 AGENTS 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

                                      120





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 AGENTS AND THE LENDERS ENTERING
INTO THIS AGREEMENT.

            Section 12.12 Consent by the Agents and Lenders. Except as otherwise
expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
"Action") of any 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 any Agent or any Lender has succeeded thereto,
such Action shall be required to be in writing and may be withheld or denied by
such 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 any Agent, any Lender or the Issuing Bank for repayment or recovery of
any amount or amounts received by such Agent, such Lender or the Issuing Bank in
payment or on account of any of the Obligations, such Agent, such Lender or the
Issuing Bank shall give prompt notice of such claim to each other Lender and the
Administrative Borrower, and if such Agent, such Lender or the Issuing Bank
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 such Agent, such
Lender or the Issuing Bank or any of its property, or (ii) any good faith
settlement or compromise of any such claim effected by such Agent, such Lender
or the Issuing Bank 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 such
Agent, such Lender or the Issuing Bank hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by such Agent, such Lender or the Issuing Bank.

            Section 12.15 Indemnification. (a) The Loan Parties agree, jointly
and severally, to pay all reasonable out-of-pocket expenses incurred by the
Agents and the Issuing Bank, including the reasonable fees, charges and
disbursements of counsel for the Agents, 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 any Agent, the Issuing Bank or any Lender in
connection with the enforcement or protection

                                      121





of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of counsel for the
Agents, and, in connection with any such enforcement or protection, the
reasonable fees, charges and disbursements of any other counsel (including
special workout counsel) for any Agent, the Issuing Bank or any Lender.

                  (b) The Borrowers agree, jointly and severally, to indemnify
each Agent, each Lender, the Issuing Bank 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 contemplated thereby, (ii) the use of the proceeds of the Loans or
issuance of Letters of Credit, and (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto (collectively, "Indemnified Matters"); 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 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 each 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, during the period of ownership or operation by any Loan
Party or any Subsidiary of any Loan Party, 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.

                  (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

                                      122





Credit Commitments, the expiration of any Letter of Credit, 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 any Agent, any Lender or
the Issuing Bank. 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 Administrative 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 each of the Agents and
receive from each of the Agents 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 none of the Agents 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 Agents 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 Agents and the Lenders relying on any instructions
of the Administrative Borrower, or (c) any other action taken by any 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, the Unused Line Fee and Letter
of Credit Fees) payable pursuant to the terms hereof, shall at all times be
ascertained from the records of the Administrative Agent, which shall be
conclusive and binding absent manifest error.

            Section 12.18 Binding Effect. This Agreement shall become effective
as of the Effective Date when it shall have been executed by each Loan Party,
each 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
Administrative Agent, and thereafter shall be binding upon and inure to the
benefit of each Loan Party, each 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.

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            Section 12.19 Interest. It is the intention of the parties hereto
that each 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 any 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 such
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 any Agent
or any Lender that is contracted for, taken, reserved, charged or received by
such 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 such 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 such 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 any 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 such Agent or such Lender, as applicable, as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such 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 such Agent or such
Lender to the Borrowers). All sums paid or agreed to be paid to any Agent or
such Lender for the use, forbearance or detention of sums due hereunder shall,
to the extent permitted by law applicable to such 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
any Agent or such Lender on any date shall be computed at the Highest Lawful
Rate applicable to such 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 such Agent or such Lender would be less than the
amount of interest payable to such Agent or such Lender computed at the Highest
Lawful Rate applicable to such Agent or such Lender, then the amount of interest
payable to such Agent or such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Agent or such Lender until the total amount of interest
payable to such Agent or such Lender shall equal the total amount of interest
which would have been payable to such 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 Agents 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. Each Agent and each Lender agrees (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable

                                      124





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 any Agent or such Lender on a confidential basis, (iii) to
examiners, auditors or accountants on a confidential basis, (iv) in connection
with any litigation to which any Agent or such Lender is a party or (v) to any
assignee or participant (or prospective assignee or participant) 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. Each 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 each Agent and each Lender may make disclosure as
required or requested by any Governmental Authority or representative thereof
and that each 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 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, any Agent or
the Issuing Bank requests compensation under Section 4.05, or if the Borrowers
are required to pay any additional amount to any Lender or any Agent 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 Credit Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon notice
by the Administrative Borrower to such Lender or such Agent, as applicable, and
the Administrative Agent, require such Lender or such Agent, 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 or such Agent
accepts such assignment, or any other Person); provided that (i) the Borrowers
shall have received the prior written consent of the Administrative Agent, which
consent shall not be unreasonably withheld, (ii) such Lender or such Agent or
the Issuing Bank shall have received payment of an amount equal to the
outstanding principal of its Loans and Pro Rata Share of LC Exposure, 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

                                      125





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,

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 Agents or the Lenders against such
Loan Party in respect of the Corresponding Obligations payable by such Loan
Party to the Agents 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 Agents 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 Agents 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 Agents 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.

                                      126





            Section 12.24 USA PATRIOT Act. Each Lender hereby notifies the
Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of each Borrower and other information
that will allow such Lender to identify such Borrower in accordance with the
Act.

            Section 12.25 Interest Act Disclosure. For purposes of the Interest
Act (Canada) it is expressly stated that whenever interest is calculated
pursuant to this agreement at a rate or percentage per 360 day year, the yearly
rate or percentage of interest to which such interest rate is equivalent, is the
rate obtained by multiplying such rate by the actual number of days in the
relevant year and dividing by 360.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      127





                                   BORROWERS:

                                   MILACRON INC.

                                   By:  /s/ R.P. Lienesch
                                        ----------------------------------------
                                   Name: R.P. Lienesch
                                   Title: Vice-President-Finance and Chief
                                          Financial Officer





                                   CIMCOOL INDUSTRIAL PRODUCTS INC.
                                   D-M-E MANUFACTURING INC.
                                   D-M-E U.S.A. INC.
                                   MILACRON INDUSTRIAL PRODUCTS, INC.
                                   MILACRON  MARKETING COMPANY
                                   MILACRON PLASTICS TECHNOLOGIES GROUP INC.
                                   NICKERSON MACHINERY CHICAGO, INC.
                                   NORTHERN SUPPLY COMPANY, INC.
                                   OAK INTERNATIONAL, INC.
                                   PLIERS INTERNATIONAL INC.
                                   UNILOY MILACRON INC.
                                   UNILOY MILACRON U.S.A. INC.

                                   By:  /s/ R.P. Lienesch
                                       ----------------------------------------
                                   Name: R.P. Lienesch
                                   Title: Treasurer

                                       S-2





                                   INITIAL GUARANTORS:

                                   D-M-E COMPANY
                                   MILACRON RESIN ABRASIVES INC.

                                   By:  /s/ R.P. Lienesch
                                       ----------------------------------------
                                   Name: R.P. Lienesch
                                   Title: Vice President

                                       S-3





                                   MILACRON CAPITAL HOLDINGS B.V.

                                   By:  /s/ G. van Deventer
                                       -----------------------------------------
                                   Name: G. van Deventer
                                   Title: Managing Director

                                       S-4





                                   MILACRON INTERNATIONAL MARKETING COMPANY

                                   By:   /s/ R.P. Lienesch
                                       ----------------------------------------
                                   Name: R.P. Lienesch
                                   Title: Treasurer and Assistant Secretary

                                       S-5





                                   ADMINISTRATIVE AGENT, COLLATERAL AGENT AND
                                   LENDER:

                                   JPMORGAN CHASE BANK, as Administrative Agent,
                                   as Collateral Agent, and individually

                                   By:   /s/ James M. Barbato
                                       -----------------------------------------
                                   Name: James M. Barbato
                                   Title:Vice President

                                       S-6





                                   DOCUMENTATION AGENT AND LENDER:

                                   WELLS FARGO FOOTHILL, LLC, as Documentation
                                   Agent and individually

                                   By:    /s/ Sanat Amladi
                                       -----------------------------------------
                                   Name:  Sanat Amladi
                                   Title: VP

                                       S-7





                                   LENDER:

                                   PNC BANK, NATIONAL ASSOCIATION, individually

                                   By:    /s/ John J. Shields, Jr.
                                       -----------------------------------------
                                   Name:   John J. Shields, Jr.
                                   Title:  Senior Vice President
                                           100 West Rd, Suite 300
                                           Towson, Maryland 21204

                                       S-8

EX-12

                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 12

                                  MILACRON INC.
                CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
                                   (UNAUDITED)



                                                                                                              Three Months
                                               Year Ended December 31,                                       Ended March 31,
                               ---------------------------------------------------------------------  ---------------------------
                                 1999          2000          2001          2002           2003          2003           2004
                                 ----          ----          ----          ----           ----          ----           ----
                                                                        (In thousands)
                                                                                                
Earnings:
Income (loss) before taxes     $ 76,598(a)    $68,259(b)   $(51,108)(c)  $(36,701)(d)  $(111,840)(e)  $(10,226)(f)   $(14,862)(g)
Add fixed charges (see below)    24,373        26,726        27,917        30,038         29,588         7,141          9,463
                               --------       -------      --------      --------      ---------      --------       --------
Earnings as defined            $100,971       $94,985      $(23,191)     $ (6,663)     $ (82,252)     $ (3,085)      $ (5,399)
                               ========       =======      ========      ========      =========      ========       ========


Fixed Charges:
Interest expense                 20,873        22,426        24,184        25,471         24,855         5,958          8,263
Other adjustments(h)              3,500         4,300         3,733         4,567          4,733         1,183          1,200
                               --------       -------      --------      --------      ---------      --------       --------
Fixed charges as defined       $ 24,373       $26,726      $ 27,917      $ 30,038      $  29,588      $  7,141       $  9,463
                               ========       =======      ========      ========      =========      ========       ========
Ratio of earnings to fixed
charges                             4.1           3.6      $(51,108)(c)  $(36,701)(d)  $(111,840)(e)  $(10,226)(f)   $(14,862)(g)
                               ========       =======      ========      ========      =========      ========       ========





                                      PRO FORMA REFINANCING TRANSACTION             PRO FORMA RIGHTS OFFERING

                                       Year Ended        Three Months           Year Ended        Three Months
                                       December 31,     Ended March 31,         December 31,      Ended March 31,
                                       ------------     ---------------         ------------      ---------------
                                          2003              2004                   2003               2004
                                        ---------         --------               ---------          --------
                                             (In thousands)                            (In thousands)
                                                                                      
Earnings:

Income (loss) before taxes              $(115,956)         $(14,520)              $(115,956)         $(14,520)
Add fixed charges (see below)              35,135             9,355                  35,135             9,355
                                        ---------          --------               ---------          --------
Earnings as defined                     $ (80,821)         $ (5,165)              $ (80,821)         $ (5,165)
                                        =========          ========               =========          ========

Fixed Charges:
Interest expense                           30,402             8,155                  30,402             8,155
Other adjustments(h)                        4,733             1,200                   4,733             1,200
                                        ---------          --------               ---------          --------
Fixed charges as defined                $  35,135          $  9,355               $  35,135          $  9,355
                                        =========          ========               =========          ========
Ratio of earnings to fixed charges      $(115,956)         $(14,520)              $(115,956)         $(14,520)
                                        =========          ========               =========          ========


(a)      Includes restructuring costs of $7.2 million and a gain of $13.1
         million on the sale of the European extrusion systems business.

(b)      Includes restructuring costs of $1.4 million.

(c)      Includes restructuring costs of $17.5 million.

(d)      Includes restructuring costs of $13.9 million and a goodwill impairment
         charge of $1.0 million.

(e)      Includes restructuring costs of $27.1 million, a goodwill impairment
         charge of $65.6 million and refinancing costs of $1.8 million.

(f)      Includes restructuring costs of $6.0 million.

(g)      Includes restructuring costs of $1.1 million and refinancing costs of
         $6.4 million.

(h)      Other adjustments represents a portion of rental expense representative
         of an interest factor.

                                  MILACRON INC.
        CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED
                                 STOCK DIVIDENDS
                                   (UNAUDITED)



                                                                                                              Three Months
                                                   Year Ended December 31,                                   Ended March 31,
                                    ------------------------------------------------------------------  --------------------------
                                      1999         2000        2001          2002          2003           2003          2004
                                      ----         ----        ----          ----          ----           ----          ----
                                                                            (In thousands)
                                                                                                 
Earnings:
Income (loss) before taxes          $ 76,598(a)  $68,259(b)  $(51,108)(c)  $(36,701)(d)  $(111,840)(e)  $(10,226)(f)  $(14,862)(g)
Add fixed charges (see below)         24,373      26,726       27,917        30,038         29,588         7,141         9,463
                                    --------     -------     --------      --------      ---------      --------      --------
Earnings as defined                 $100,971     $94,985     $(23,191)     $ (6,663)     $ (82,252)     $ (3,085)     $ (5,399)
                                    ========     =======     ========      ========      =========      ========      ========
Fixed Charges:
Interest expense                      20,873      22,426       24,184        25,471         24,855         5,958         8,263
Other adjustments(h)                   3,500       4,300        3,733         4,567          4,733         1,183         1,200
                                    --------     -------     --------      --------      ---------      --------      --------
Fixed charges as defined            $ 24,373     $26,726     $ 27,917      $ 30,038      $  29,588      $  7,141      $  9,463
                                    ========     =======     ========      ========      =========      ========      ========
Preferred Stock Dividends           $    240     $   240     $    240      $    240      $     240      $     60      $     60

Ratio of earnings to fixed charges
 plus preferred stock dividends          4.1         3.5     $(51,348)(c)  $(36,941)(d)  $(112,080)(e)  $(10,286)(f)  $(14,922)(g)
                                    ========     =======     ========      ========      =========      ========      ========





                                     PRO FORMA REFINANCING TRANSACTION            PRO FORMA RIGHTS OFFERING

                                     Year Ended        Three Months            Year Ended        Three Months
                                    December 31,      Ended March 31,          December 31,     Ended March 31,
                                       2003                2004                   2003              2004
                                       ----                ----                   ----              ----
                                              (In thousands)                             (In thousands)
                                                                                    
Earnings:

Income (loss) before taxes            $(115,956)          $(14,520)             $(115,956)         $(14,520)
Add fixed charges (see below)            35,135              9,355                 35,135             9,355
                                      ---------           --------              ---------          --------
Earnings as defined                   $ (80,821)          $ (5,165)             $ (80,821)         $ (5,165)
                                      =========           ========              =========          ========
Fixed Charges:
Interest expense                         30,402              8,155                 30,402             8,155
Other adjustments(h)                      4,733              1,200                  4,733             1,200
                                      ---------           --------              ---------          --------
Fixed charges as defined              $  35,135           $  9,355              $  35,135          $  9,355
                                      =========           ========              =========          ========
Preferred Stock Dividends             $   6,240           $  1,560              $   4,440          $  1,110

Ratio of earnings to fixed charges
 plus preferred stock dividends      $(122,196)           $(16,080)             $(120,396)         $(15,630)
                                      =========           ========              =========          ========


(a)      Includes restructuring costs of $7.2 million and a gain of $13.1
         million on the sale of the European extrusion systems business.

(b)      Includes restructuring costs of $1.4 million.

(c)      Includes restructuring costs of $17.5 million.

(d)      Includes restructuring costs of $13.9 million and a goodwill impairment
         charge of $1.0 million.

(e)      Includes restructuring costs of $27.1 million, a goodwill impairment
         charge of $65.6 million and refinancing costs of $1.8 million.

(f)      Includes restructuring costs of $6.0 million.

(g)      Includes restructuring costs of $1.1 million and refinancing costs of
         $6.4 million.

(h)      Other adjustments represents a portion of rental expense representative
         of an interest factor.

                                  MILACRON INC.
                          CALCULATION OF CURRENT RATIO
                                   (UNAUDITED)



                                                                                           Three Months
                                                 Year Ended December 31,                  Ended March 31,
                                 ----------------------------------------------------   -------------------
                                  1999       2000        2001       2002       2003      2003        2004
                                  ----       ----        ----       ----       ----      ----        ----
                                                               (In thousands)
                                                                              
Current assets related to
 continuing operations           $440,924   $401,825   $411,786   $428,769   $364,133   $386,962   $387,320
                                 --------   --------   --------   --------   --------   --------   --------
Current liabilities related to
 continuing operations           $454,892   $309,027   $244,971   $271,280   $352,260   $356,862   $378,149
                                 --------   --------   --------   --------   --------   --------   --------
Ratio                                0.97       1.30       1.68       1.58       1.03       1.08       1.02
                                 ========   ========   ========   ========   ========   ========   ========

EX-21

                                                                               .
                                                                               .
                                                                               .


                                                                      EXHIBIT 21

                         SUBSIDIARIES OF MILACRON INC.



                                                                               DATE
                                                                           INCORPORATED
                                                                           OR (IF LATER)
                                                        INCORPORATED           DATE        PERCENTAGE
                                                      STATE OR COUNTRY       ACQUIRED        OWNED
                                                    --------------------   -------------   ----------
                                                                                  
MILACRON INC......................................  Delaware               1983
  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 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%
       Milacron Plastics Machinery (Jinangyin)
         Co., Ltd. ...............................  China                  2004                70%

EX-23.1

                                                                    EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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., in the
Registration Statement (Form S-8 No. 333-116414) pertaining to the 2004
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 June 10, 2004, with
respect to the consolidated financial statements and schedule of Milacron Inc.
and subsidiaries included in this Registration Statement (Form S-1) pertaining
to the issuance of rights to purchase up to 16,183,457 shares of Milacron Inc.
common stock.

/s/ Ernst & Young LLP

Cincinnati, Ohio
June 18, 2004