-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQqk8RajBt6bF1iEqy/yLV2/IlyUJH67rTkeTTjpRXo5KWGK/6xKM0C2jIy0rdFG DVg+xWvmflIWZiJkl793kg== 0000950124-97-001815.txt : 19970328 0000950124-97-001815.hdr.sgml : 19970328 ACCESSION NUMBER: 0000950124-97-001815 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCOTECH INC CENTRAL INDEX KEY: 0000745448 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382513957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-12068 FILM NUMBER: 97564261 BUSINESS ADDRESS: STREET 1: 21001 VAN BORN RD CITY: TAYLOR STATE: MI ZIP: 48180 BUSINESS PHONE: 3132747405 MAIL ADDRESS: STREET 1: 21001 VAN BORN ROAD CITY: TAYLOR STATE: MI ZIP: 48180 FORMER COMPANY: FORMER CONFORMED NAME: MASCO INDUSTRIES INC DATE OF NAME CHANGE: 19930629 10-K405 1 10-K405 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER 1-12068 MASCOTECH, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 38-2513957 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC. $1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC. 4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X] THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT ON FEBRUARY 28, 1997 (BASED ON THE CLOSING SALE PRICE OF $19 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $489,375,000. NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT FEBRUARY 28, 1997: 37,123,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1997 ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K. ================================================================================ 2 TABLE OF CONTENTS
ITEM PAGE - ---- ---- PART I 1. Business.................................................... 2 2. Properties.................................................. 6 3. Legal Proceedings........................................... 7 4. Submission of Matters to a Vote of Security Holders......... 7 Supplementary Item. Executive Officers of Registrant........ 8 PART II 5. Market for Registrant's Common Equity and Related Stockholder Matters......................................... 9 6. Selected Financial Data..................................... 10 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 12 8. Financial Statements and Supplementary Data................. 17 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.................................... 40 PART III 10. Directors and Executive Officers of the Registrant.......... 40 11. Executive Compensation...................................... 40 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 40 13. Certain Relationships and Related Transactions.............. 40 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................................... 41 Signatures.................................................. 45 FINANCIAL STATEMENT SCHEDULES MascoTech, Inc. Financial Statement Schedule................ F-1 TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial Statement Schedule................. F-3
1 3 PART I ITEM 1. BUSINESS. MascoTech, Inc. is a leading supplier of metalworked and aftermarket products for the transportation industry. Sophisticated technology plays a significant role in the Company's businesses and in the design, engineering and manufacturing of many of its products. Products are manufactured utilizing a variety of metalworking and other process technologies. Although published industry statistics are not available, the Company believes that it is a leading independent producer of many of the component parts that it produces using cold, warm or hot forming processes. MascoTech was incorporated under the laws of Delaware in 1984 as a wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to MascoTech its industrial businesses. The Company became a separate public company in July, 1984 when Masco Corporation distributed shares of Company Common Stock as a special dividend to its stockholders. In late 1996, the Company purchased from Masco Corporation 17 million shares of Company Common Stock and warrants to acquire 10 million shares of Company Common Stock, thereby reducing Masco Corporation's equity ownership from approximately 45 percent to approximately 21 percent of the Company's outstanding Common Stock. In June, 1993, the Company changed its name to MascoTech, Inc. from Masco Industries, Inc. to reflect the significance of technology in the design, engineering and manufacturing of many of the Company's products and services. Except as the context otherwise indicates, the terms "MascoTech" and the "Company" refer to MascoTech, Inc. and its consolidated subsidiaries. During the last decade, MascoTech pursued diversified growth in the transportation-related, architectural and defense markets. Structural changes in recent years in the markets served by the Company, combined with the growth opportunities and the capital requirements of certain of the Company's Transportation-Related businesses, led the Company to an evaluation of the prospects for all its businesses. This evaluation resulted in the Company's strategic plan to focus on its core operating capabilities and divest certain other businesses. The Company's engine and drivetrain group and aftermarket group constitute the Company's core operating businesses. In late 1994, the Company adopted a plan to dispose of its architectural products, defense and certain of its Transportation-Related businesses. The disposition of these businesses was completed in 1996. In addition, in 1996, the Company disposed of its heavy-gauge stamping operations and in early 1997, the Company completed the sale of its engineering and technical services businesses to MSX International, Inc. As part of that transaction, the Company purchased an approximate 45 percent common equity interest in MSX International, Inc. See "Equity Investments -- Other Equity Investments," elsewhere in Item 1 of this Report. The cash portion of the proceeds from the disposition of these businesses has been applied to reduce the Company's indebtedness and to provide capital to invest in its core businesses. The disposition of these businesses did not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses are included in the results of continuing operations through the date of disposition. Businesses held for sale or sold, including the engineering and technical services businesses and the heavy-gauge stamping operations, had sales of approximately $412 million in 1996. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Disposition of Non-Core Businesses," included in Item 7 of this Report. 2 4 INDUSTRY SEGMENTS The following table sets forth for the three years ended December 31, 1996, the net sales and operating profit (loss) for the Company's industry segments (including businesses held for sale or sold).
(IN THOUSANDS) NET SALES ------------------------------------ 1996 1995 1994(1) ---------- ---------- ---------- Transportation-Related Products.......................... $1,151,000 $1,340,000 $1,332,000 Specialty Products: Other Industrial....................................... 130,000 338,000 370,000 ---------- ---------- ---------- $1,281,000 $1,678,000 $1,702,000 ========== ========== ==========
OPERATING PROFIT (LOSS)(2) ------------------------------------ 1996(3) 1995(4) 1994(1)(5) ---------- ---------- ---------- Transportation-Related Products.......................... $ 90,000 $ 144,000 $ (55,000) Specialty Products: Other Industrial....................................... 1,000 (3,000) (196,000) ---------- ---------- ---------- $ 91,000 $ 141,000 $ (251,000) ========== ========== ==========
Net sales include the sales of businesses held for sale or sold, including the engineering and technical services businesses and heavy-gauge stamping operations, of approximately $412 million in 1996, $874 million in 1995 and $964 million in 1994. Additional financial information concerning the Company's operations by industry segments as of and for the three years ended December 31, 1996 is set forth in the Note to the Company's Consolidated Financial Statements captioned "Segment Information," included in Item 8 of this Report. (1) Results exclude the energy segment which is treated as discontinued operations. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. (2) Amounts are before general corporate expense. (3) Includes a $32 million pre-tax loss principally from the sale of MascoTech Stamping Technologies, Inc. This charge impacted the Company's Transportation-Related Products industry segment. (4) Includes $25 million in net gains resulting from sales of non-core businesses. These net gains were substantially offset by reductions in the estimated proceeds the Company expected to receive from businesses to be sold, aggregating $12 million, and by certain exit costs incurred in 1995 aggregating approximately $8 million. The net gains (charge) impacts the Company's industry segments as follows: Transportation-Related Products -- $21 million and Specialty Products -- $(2) million. The remaining $(14) million of the net gains (charge) was allocated to General Corporate Expense, which is not included above. (5) Includes the impact of a pre-tax charge of $400 million for the disposition of businesses. The charge impacts the Company's industry segments for 1994 as follows: Transportation-Related Products -- $196 million and Specialty Products -- $191 million. The remaining $13 million of the charge was allocated to General Corporate Expense, which is not included above. The Company manufactures a broad range of semi-finished components, subassemblies and assembled products for the original equipment and aftermarket segments of the global transportation industry. Transportation-Related Products represented approximately 90 percent of 1996 sales. The Company provides components and products for which reliability, quality and certainty of supply are major factors in customers' selection of suppliers. The Company's Transportation-Related businesses manufacture engine, drivetrain and aftermarket products. Engine and drivetrain products include semi-finished transmission shafts, drive gears, engine 3 5 connecting rods, wheel spindles and front wheel drive components. Aftermarket products include fuel and emission systems components, windshield wiper blades, constant-velocity joints, brake hardware repair kits and other automotive accessories. The Company's metalworked products are manufactured using various process technologies, including cold, warm and hot forming, powdered metal forming, value-added machining, tubular steel fabricating and hydroforming. Approximately 50 percent of the Company's 1996 sales of Transportation-Related Products (including businesses held for disposition) resulted from sales of products made using cold, warm or hot metal forming technologies. The Company believes that its metalworking technologies provide cost-competitive, high-performance, quality components required to meet the increasing demands of the automotive and truck markets it serves. Approximately 80 percent of the Company's Transportation-Related Products sales in 1996 (including businesses held for disposition) were original equipment automotive products and services. Sales to original equipment manufacturers are made through factory sales personnel and independent sales representatives. During 1996, sales to various divisions and subsidiaries of Ford Motor Company, Chrysler Corporation, General Motors Corporation and New Venture Gear, Inc. accounted for approximately 18 percent, 11 percent, 10 percent and 12 percent, respectively, of the Company's net sales (including businesses held for disposition). Sales to the automotive aftermarket are made primarily to distributors utilizing factory sales personnel. Aftermarket products are sold to companies distributing into the traditional, retail and heavy duty segments of the automotive aftermarket. The disposition of the Company's Specialty Products businesses was complete at December 31, 1996. Since the disposition of these businesses did not meet the criteria for discontinued operations treatment for accounting purposes, sales and results of operations for these businesses are included in the Company's continuing operations through the dates of disposition. GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS No material portion of the Company's business is seasonal or has special working capital requirements. The Company does not consider backlog orders to be a material factor in its industry segments. Except as noted above under "Industry Segments," no material portion of its business is dependent upon any one customer or subject to renegotiation of profits or termination of contracts at the election of the federal government. Compliance with federal, state and local regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, is not expected to result in material capital expenditures by the Company or to have a material effect on the Company's earnings or competitive position. See, however, "Legal Proceedings," included as Item 3 of this Report, for a discussion of certain pending proceedings concerning environmental matters. In general, raw materials required by the Company are obtainable from various sources and in the quantities desired. INTERNATIONAL OPERATIONS The Company, through its subsidiaries, has businesses located in Germany, Italy, England and the Czech Republic. Products manufactured by the Company outside of the United States include forged automotive component parts and constant-velocity joints. In early 1997, the Company acquired Neumeyer Fliesspressen GmbH, a manufacturer of extruded products. See the Note to the Company's Consolidated Financial Statements captioned "Segment Information," included in Item 8 of this Report for a discussion of the Company's foreign operations and export sales. The Company's foreign operations are subject to political, monetary, economic and other risks attendant generally to international businesses. These risks generally vary from country to country. 4 6 EQUITY INVESTMENTS TriMas Corporation At December 31, 1996, the Company owned approximately 41 percent of the outstanding common stock of TriMas Corporation ("TriMas"). See the Note to the Company's Consolidated Financial Statements captioned "Equity and Other Investments in Affiliates," included in Item 8 of this Report. TriMas is a diversified proprietary products company with leadership positions in commercial, industrial and consumer niche markets. TriMas manufactures a number of industrial products, including standard and custom-designed ferrous, non-ferrous and special alloy fasteners for the building construction, farm implement, medium and heavy-duty truck, appliance, aerospace, electronics and other industries. TriMas manufactures towing systems products, including vehicle hitches, jacks, winches, couplers and related accessories for the passenger car, light truck, recreational vehicle, marine, agricultural and industrial markets. TriMas also manufactures: specialty container products, including industrial container closures and dispensing products primarily for the chemical, agricultural, refining, food, petrochemical and health care industries; high-pressure seamless compressed gas cylinders primarily used for shipping, storing and dispensing oxygen, nitrogen, argon and helium and a complete line of low-pressure welded cylinders used to contain and dispense acetylene gas for the welding and cutting industries; and specialty industrial gaskets for refining, petrochemical and other industrial applications. In addition, TriMas manufactures flame-retardant facings and jacketings used in conjunction with fiberglass insulation, principally for commercial and industrial construction applications, pressure-sensitive specialty tape products and a variety of specialty precision tools such as center drills, cutters, end mills, reamers, master gears, gages and punches. TriMas also provides metal treating services for manufacturers of fasteners and comparable products. Emco Limited The Company owns convertible debentures, subordinated debentures and approximately 43 percent of the outstanding common stock of Emco Limited ("Emco"), as a result of the transactions described in "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Corporate Development," included in Item 7 of this Report. Emco is a Canadian-based manufacturer and distributor of building and other industrial products, including roofing materials, wood fiber products, sinks, and a distributor of plumbing and related products. In addition, Emco manufactures custom components, brass and aluminum forgings, plastic components, tools, dies and molds. The Company has the option to transfer its holdings in Emco to Masco Corporation in partial payment of the indebtedness due Masco Corporation as a result of the transaction described in the Note to the Company's Consolidated Financial Statements captioned "Shareholders' Equity," included in Item 8 of this Report. Titan Wheel International, Inc. The Company owns approximately 12 percent of the outstanding common stock of Titan Wheel International, Inc. ("Titan"). See the Note to the Company's Consolidated Financial Statements captioned "Equity and Other Investments in Affiliates," included in Item 8 of this Report. Titan is a manufacturer of wheels, tires and other products for agricultural, construction and other off-highway equipment. Other Equity Investments In addition to its equity and other investments in the publicly traded affiliates described in the preceding paragraphs, the Company owns approximately 45 percent of the outstanding common stock of MSX International, Inc., a corporation formed in January, 1997 by an investor group consisting of the Company, Citicorp Venture Capital and senior management of MSX International. MSX International purchased the assets of the Company's engineering and technical services businesses and the businesses of APX International which were acquired by the Company in late 1996. MSX International provides engineering and technical services primarily to the transportation industry in North and South America, Europe and Asia. The Company also has investments in privately held manufacturers of automotive components, including the Company's common equity ownership interest in Delco Remy International, Inc., a manufacturer of automotive electric motors and other components, and Saturn Electronics & Engineering, Inc., a manufacturer of electromechanical and electronic automotive components. 5 7 PATENTS AND TRADEMARKS The Company holds a number of patents, patent applications, licenses, trademarks and trade names. The Company considers its patents, patent applications, licenses, trademarks and trade names to be valuable, but does not believe that there is any reasonable likelihood of a loss of such rights which would have a material adverse effect on the Company's industry segments or on its present business as a whole. COMPETITION The major domestic and foreign markets for the Company's products are highly competitive. Competition is based primarily on price, product engineering and performance, technology, quality and overall customer service, with the relative importance of such factors varying among products. The Company's global competitors include a large number of other well-established independent manufacturers as well as certain customers who have their own internal manufacturing capabilities. Although a number of companies of varying size compete with the Company, no single competitor is in substantial competition with the Company with respect to more than a few of its product lines and services. EMPLOYEES The Company employs approximately 5,100 people after reflecting the sale of the engineering and technical services businesses. Satisfactory relations have generally prevailed between the Company and its employees. ITEM 2. PROPERTIES. The following list sets forth the location of the Company's principal manufacturing facilities: Florida........................ Deerfield Beach and Ocala Indiana........................ Elkhart, Fort Wayne and North Vernon Kentucky....................... Nicholasville Michigan....................... Burton, Canton, Detroit, Farmington Hills, Fraser, Green Oak Township, Hamburg, Holland, Livonia, Royal Oak, St. Clair, Troy and Ypsilanti Ohio........................... Bucyrus, Canal Fulton, Lima, Minerva and Port Clinton Oklahoma....................... Tulsa Pennsylvania................... Ridgway Virginia....................... Duffield Czech Republic................. Brno England........................ Wolverhampton Germany........................ Nurnberg and Zell am Harmersbach Italy.......................... Poggio Rusco
All of the Company's manufacturing facilities are primarily engaged in the Company's Transportation -- Related Products operations. The Company's principal manufacturing facilities range in size from approximately 10,000 square feet to 320,000 square feet, substantially all of which are owned by the Company and are not subject to significant encumbrances. The Company's executive offices are located in Taylor, Michigan, and are provided by Masco Corporation to the Company under a corporate services agreement. The Company's buildings, machinery and equipment have been generally well maintained, are in good operating condition, and are adequate for current requirements. 6 8 The following list sets forth the location of the manufacturing facilities of TriMas and identifies the industry segments utilizing facilities in such locations: California...................................... Commerce (a) Illinois........................................ Wood Dale (a) Indiana......................................... Auburn (c), Elkhart (b), Frankfort (a), Goshen (b) and Mongo (b) Louisiana....................................... Baton Rouge (c) Massachusetts................................... Plymouth (d) Michigan........................................ Canton (b), Detroit (a) and Warren (d) New Jersey...................................... Edison (d) and Netcong (d) Ohio............................................ Lakewood (a) Texas........................................... Beaumont (c), Houston (c) and Longview (c) Wisconsin....................................... Mosinee (b) Australia....................................... Hampton Park, Victoria (b) and Wakerley, Queensland (b) Canada.......................................... Fort Erie, Ontario (c), Oakville, Ontario (b) and Sarnia, Ontario (c) England......................................... Leicester (c) Germany......................................... Neunkirchen (c) Mexico.......................................... Mexico City (c)
Industry segments in the preceding table are identified as follows: (a) Specialty Fasteners, (b) Towing Systems, (c) Specialty Container Products, and (d) Corporate Companies. TriMas' buildings, machinery and equipment have been generally well maintained, are in good operating condition, and are adequate for current requirements. ITEM 3. LEGAL PROCEEDINGS. A civil suit was filed in the United States District Court for the Central District of California in April, 1983 by the United States of America and the State of California against over 30 defendants, including the Company's NI Industries, Inc. subsidiary ("NI"), for alleged release into the environment of hazardous waste disposed of at the Stringfellow Disposal Site in California. The plaintiffs have requested, among other things, that the defendants clean up the contamination at that site. A consent decree has been entered into by the plaintiffs and the defendants, including NI, providing that the consenting parties perform partial remediation at the site. Another civil suit was filed in the United States District Court for the Central District of California in December, 1988 by the United States of America and the State of California against more than 180 defendants, including NI, for alleged release into the environment of hazardous waste disposed of at the Operating Industries, Inc. site in California. This site served for many years as a depository for municipal and industrial waste. The plaintiffs have requested, among other things, that the defendants clean up the contamination at that site. Two partial consent decrees have been entered into by the plaintiffs and a group of the defendants, including NI, providing that the consenting parties perform certain interim remedial work at the site and reimburse the plaintiffs for certain past costs incurred by the plaintiffs at the site. Based upon its present knowledge and subject to future legal and factual developments, the Company does not believe that any of this litigation will have a material adverse effect on its consolidated financial position, results of operations or cash flow. The Company is subject to other claims and litigation in the ordinary course of its business, but does not believe that any such claim or litigation will have a material adverse effect on its consolidated financial position, results of operations or cash flow. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. 7 9 SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3 TO ITEM 401(B) OF REGULATION S-K).
OFFICER NAME POSITION AGE SINCE ---- -------- --- ------- Richard A. Manoogian................... Chairman of the Board and Chief Executive Officer 60 1984 Lee M. Gardner......................... President and Chief Operating Officer 50 1992 Timothy Wadhams........................ Vice President -- Controller and Treasurer 48 1984
Each of the executive officers is elected to a term of one year or less and serves at the discretion of the Board of Directors. Mr. Manoogian has served for more than five years as Director, Chairman of the Board and the Chief Executive Officer of Masco Corporation, an affiliate of the Company that is a manufacturer of home improvement and building products. Mr. Manoogian is also a Director and Chairman of the Board of TriMas Corporation. 8 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MSX." The following table sets forth for the periods indicated the high and low sale prices of the Company's Common Stock as reported on the NYSE Composite Tape and Common Stock dividends declared for the periods indicated:
DIVIDENDS HIGH LOW DECLARED ------------ ------------ --------- 1995 First Quarter............................................. $13 1/2 $11 3/8 $ * Second Quarter............................................ $12 7/8 $10 1/2 .03 Third Quarter............................................. $13 3/4 $11 1/4 .04 Fourth Quarter............................................ $12 1/2 $10 .04 ---- $.11 ==== DIVIDENDS HIGH LOW DECLARED ------------ ------------ --------- 1996 First Quarter............................................. $13 5/8 $10 3/8 $.04 Second Quarter............................................ $16 1/8 $12 1/2 .04 Third Quarter............................................. $15 1/2 $13 .05 Fourth Quarter............................................ $17 $13 1/2 .05 ---- $.18 ====
* Prior to the First Quarter of 1995, dividends were paid in the quarter following declaration. Thereafter, dividends have been paid in the same quarter as declared. Consequently, although no dividend was declared during the First Quarter of 1995, a dividend of $.03 per share was paid during the period that had been declared in the Fourth Quarter of 1994. Future declarations of dividends on the Company's Common Stock are discretionary with the Board of Directors and will depend upon the Company's earnings, capital requirements, financial condition and other factors. Dividends may not be paid on Company Common Stock if there are any dividend arrearages on the Company's outstanding Preferred Stock. In addition, certain of the Company's long-term debt instruments contain provisions that restrict the dividends that it may pay on its capital stock. See the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Financial Position and Liquidity," included in Item 7 of this Report and the Note to the Company's Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8 of this Report. On February 28, 1997, there were approximately 3,900 holders of record of the Company's Common Stock. 9 11 ITEM 6. SELECTED FINANCIAL DATA. The following table sets forth summary consolidated financial information of the Company, for the years and dates indicated:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- Net sales.......................... $1,281,220 $1,678,210 $1,702,260 $1,582,880 $1,455,320 Operating profit (loss)............ $ 69,330 $ 108,810 $ (277,850) $ 145,720 $ 111,840 From continuing operations before accounting change and extraordinary items: Income (loss).................... $ 39,920 $ 59,190 $ (234,420) $ 70,890 $ 39,040 Earnings (loss) per common share......................... $.49 $.81 $(4.20) $.91 $.49 Per share of common stock: Dividends declared............... $.18 $.11 $.11 $.06 -- Dividends paid................... $.18 $.14 $.10 $.04 -- At December 31: Total assets..................... $1,228,980 $1,438,770 $1,530,690 $1,789,910 $1,807,310 Long-term debt................... $ 752,400 $ 701,910 $ 868,240 $ 788,360 $1,065,390 Shareholders' equity............. $ 164,960 $ 415,180 $ 381,140 $ 667,630 $ 353,400
Results for 1996 include an after-tax charge of approximately $26 million ($.47 per common share) related to the sale of MascoTech Stamping Technologies, Inc. Results for 1996 are before the effect of pre-tax income of approximately $17 million ($11.7 million after-tax or $.21 per common share) related to the cumulative effect of an accounting change. Results for 1995 include net gains of approximately $5 million pre-tax related to the dispositions of businesses held for sale, and a gain of approximately $5 million pre-tax resulting from the issuance of stock through a public offering by an equity affiliate. Results for 1994 include a pre-tax charge of $400 million ($315 million after-tax or $5.35 per common share), reflecting the estimated loss on the planned disposition of a number of the Company's businesses. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. Results for 1994 include pre-tax gains of approximately $17.9 million related to the sale by the Company of a portion of its common stock holdings of an equity affiliate. Results for 1994 are before the effect of a gain aggregating approximately $18 million pre-tax ($11.7 million after-tax or $.20 per common share) related to the partial reversal of the charge established in 1993 for the disposition of the Company's energy segment. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. Results for 1994 are before the effect of $4.4 million pre-tax extraordinary income ($2.6 million after-tax or $.04 per common share) related to the early extinguishment of convertible debt. Results for 1993 and 1992 include pre-tax income of approximately $9 million and $25 million, respectively, as a result of gains associated with the sale of common stock through public offerings by equity affiliates and, in 1992, a prepayment premium related to the redemption of debentures held by the Company. This income was largely offset by costs and expenses related to cost-reduction initiatives, the restructuring of certain operations and product lines, adjustments to the carrying value of certain long-term assets, and other costs and expenses. Results for 1993 were reduced by a charge of approximately $.03 per common share reflecting the application of the increased 1993 federal corporate income tax rate to adjust deferred tax balances as of December 31, 1992. Results for 1993 are before the effect of a $5.8 million pre-tax extraordinary charge ($3.7 million after-tax or $.06 per common share) related to the early extinguishment of subordinated debt. 1993 results are also 10 12 before an after-tax charge of approximately $22 million ($.39 per common share) related to the disposition of a segment of the Company's business. Net income for 1993 before preferred dividends was $47.6 million or $.57 per common share. Income from continuing operations per common share in 1996 and 1993 is presented on a fully diluted basis. Primary earnings from continuing operations per common share were $.50 and $.97 in 1996 and 1993, respectively. For all other years presented, the assumed conversion of dilutive securities is anti-dilutive. Income (loss) from continuing operations before accounting change and extraordinary income (loss) attributable to common stock was $27.0 million, $46.2 million, $(247.4) million, $56.0 million and $29.7 million after preferred stock dividends in 1996, 1995, 1994, 1993 and 1992, respectively. 11 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. MASCOTECH Masco Corporation undertook a major corporate restructuring during 1984, transferring its Products for Industry businesses to the Company at their historical net book value. MascoTech became a separate public company in mid-1984, when Masco Corporation distributed common shares of MascoTech as a special dividend to its shareholders. At December 31, 1996, Masco Corporation owned approximately 21 percent of MascoTech common stock outstanding. In 1993, the Company changed its name to MascoTech, Inc. from Masco Industries, Inc. to reflect the significance of technology in the design, engineering and manufacturing of many of the Company's products and services. CORPORATE DEVELOPMENT Since mid-1984, the Company has invested more than $1.5 billion in capital expenditures and acquisitions combined to expand the Company's product and technological positions in its industrial markets. Since late 1988, the Company has divested several businesses as part of its long-term strategic plan to de-leverage its balance sheet and focus on its core operating capabilities. The Company's divestiture activity included several businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"), and in late 1993 the announcement of the Company's plan to dispose of its energy segment. In addition, in late 1994 the Company announced the planned disposition of a number of businesses including its architectural products, defense and certain transportation-related products and services businesses. Also, in separate transactions, the Company disposed of its remaining heavy-gauge stamping operations in 1996 and its Technical Services business in January, 1997. The Company has realized cash proceeds of approximately $870 million through January, 1997, from its divestiture activity, which have been applied to reduce the Company's indebtedness and to fund its core businesses' expanded capital investment programs. The Company's remaining core operations are comprised of metalworking and aftermarket businesses. In early 1993, the Company acquired from Masco Corporation 10 million shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of Emco Limited ("Emco") common stock and convertible debentures. In exchange, Masco Corporation received from the Company $87.5 million in cash, $100 million of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in 1993) and seven-year warrants to purchase 10 million shares of Company Common Stock at $13 per share. The Company's major shareholder, Masco Corporation, had a long-standing stated objective to simplify its corporate structure by reducing its affiliate investments. More recently, Masco Corporation had committed to its shareholders that Masco Corporation would reduce its investment in MascoTech to below 20 percent. Given the possible alternatives available to Masco Corporation to accomplish this objective and the related uncertainty as to what action Masco Corporation might take, together with the positive long-term outlook for MascoTech, the MascoTech Board of Directors decided to address this issue by proactively pursuing the purchase of Masco Corporation's holdings in MascoTech. The MascoTech Board of Directors believed that purchasing and retiring a substantial number of MascoTech shares (at a reasonable price) would help create long-term value for the Company's shareholders. As a result, in late 1996, the Company purchased from Masco Corporation 17 million shares of MascoTech common stock and warrants to acquire 10 million shares of MascoTech common stock, for approximately $266 million. As part of this transaction, and given his role as Chairman of both Masco Corporation and MascoTech, Richard Manoogian also agreed to sell to MascoTech one million shares of MascoTech common stock at the then current market price of $13 5/8. As a result, his seven percent ownership in MascoTech common stock remains approximately the same after the share purchases. Although these transactions result in the additional leverage of the Company's balance sheet in the near-term, the Company believes that the substantial reduction in MascoTech common shares outstanding should enhance the long-term financial returns for its shareholders. 12 14 DISPOSITION OF NON-CORE BUSINESSES In late 1994, the Company adopted a plan to dispose, by sale or liquidation, a number of businesses, including its architectural products, defense and certain of its transportation-related products and services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. The disposition of these businesses did not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses are included in continuing operations until disposition. Through dates of sale, such businesses held for disposition had sales of approximately $90 million, $468 million and $637 million in 1996, 1995 and 1994, respectively, and operating losses before gains (charge) on disposition of businesses, net of $14 million, $11 million and $7 million in 1996, 1995 and 1994, respectively. The Company's carrying value of a number of the businesses to be disposed exceeded the estimated proceeds expected from such dispositions. To reflect the estimated loss on the disposition of these businesses, the Company recorded a non-cash charge in 1994 aggregating $400 million pre-tax (approximately $315 million after-tax or $5.35 per common share) for those businesses for which a loss was anticipated. At December 31, 1996, the Company has substantially completed the disposition of such businesses for aggregate proceeds (including related tax benefits) of approximately $400 million. The cash portion of these proceeds has been applied to reduce the Company's indebtedness and for investment in its core businesses. In May, 1996, the Company sold MascoTech Stamping Technologies, Inc. (MSTI), a wholly owned subsidiary, to Tower Automotive, Inc. (Tower) resulting in an after-tax loss of approximately $26 million ($.47 per common share), including after-tax losses of approximately $1 million related to the closure of a MSTI manufacturing facility not included in the sale. The Company received initial consideration of approximately $80 million, consisting principally of $55 million in cash, 785,000 shares of Tower common stock and warrants to purchase additional Tower common stock. The Company applied the cash proceeds (including approximately $14 million received from the subsequent sale of 600,000 shares of Tower common stock) to reduce its indebtedness. The Company may receive additional consideration, contingent upon the future earnings of MSTI over the next three years, which, if entirely earned, would substantially offset the loss. In early 1997, the Company completed the sale of its Technical Services Group ("TSG," comprised of the Company's engineering and technical business services units) to MSX International, Inc. Also included in this transaction were the net assets of APX International ("APX") which were acquired by the Company in November, 1996. The sale resulted in total proceeds to the Company of approximately $145 million, subject to certain adjustments, consisting of cash, subordinated debentures, preferred stock and an approximate 45 percent common equity interest in MSX International, Inc. Net proceeds to the Company will approximate $90 million, after taking into account the purchase price for APX and taxes payable in connection with this transaction. The excess of the consideration received by the Company over the book value of the related net assets has been deferred and will be recognized when cash is received. Businesses held for sale or sold, including MSTI and TSG, had sales of approximately $412 million, $874 million and $964 million in 1996, 1995 and 1994, respectively, and operating income (losses) before gains (charge) on disposition of businesses, net of $(13) million, $5 million and $8 million in 1996, 1995 and 1994, respectively. PROFIT MARGINS Operating profit margins, excluding the charges in 1996 and 1994, and net gains in 1995, from the disposition of businesses, were eight percent in 1996, six percent in 1995 and seven percent in 1994. The increase in the operating profit margin in 1996 compared with the previous two years is attributable to the disposition of non-core businesses which had margins lower than the Company's core operations. In addition, operating margins for the Company's core businesses increased as a result of the reduction of launch and start-up related costs and expenses incurred in 1995 and 1994 for new products associated with the Company's capital expansion programs. 13 15 CASH FLOWS AND CAPITAL EXPENDITURES Net cash flows from operating activities decreased to $129 million in 1996 from $158 million in 1995. Net cash flows from operating activities in 1996 were reduced by the increase in the Company's marketable securities portfolio. In early 1997, the Company amended its revolving credit agreement; as a result, the amended $575 million revolving credit agreement is due 2002. Reflecting the favorable long-term prospects for MascoTech, the Company's Board of Directors authorized in 1994 the repurchase of 10 million shares of Company Common Stock and Convertible Preferred Stock. Pursuant to this authorization, the Company has repurchased and retired approximately six million shares of Company Common Stock since 1994 at a cost of approximately $75 million. In addition, in October, 1996, the Company purchased and retired 18 million shares of Company Common Stock and warrants to purchase 10 million shares of Company Common Stock for cash and notes approximating $280 million (see "Corporate Development" and "Shareholders' Equity" note to the Company's Consolidated Financial Statements included in Item 8 of this Report). The Company in 1996 increased the quarterly dividend on its common stock to $.05 per share from $.04. On March 15, 1995, the Company redeemed at maturity $233 million of its 10% Senior Subordinated Notes utilizing its bank revolving credit agreement. In January, 1994, the Company issued, in a public offering, approximately $345 million of 4 1/2% Convertible Subordinated Debentures due December 15, 2003. These debentures are convertible into Company Common Stock at $31 per share. The net proceeds of approximately $337 million were used to redeem $250 million of 10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce other indebtedness. Capital expenditures declined in 1996 to approximately $44 million from $110 million and $115 million in 1995 and 1994, respectively. During 1995 and 1994, the Company made significant expenditures in capital programs to support the Company's metalworking and aftermarket businesses. These expenditures for new advanced manufacturing technologies, product line extensions and capacity for new products were the result of the Company's belief in the favorable long-term outlook for these businesses and to meet increased demand for certain product programs. INVENTORIES The Company's investment in inventories for its core businesses approximated $70 million at December 31, 1996. The decline from 1995 levels is the result of the disposition of MSTI and the reclassification of the Company's Technical Services Group to net assets of businesses held for disposition. The Company's continued emphasis on inventory management, utilizing Just-In-Time (JIT) and other inventory management techniques, has contributed to higher inventory turnover rates in recent years. FINANCIAL POSITION AND LIQUIDITY Although the Company's total debt outstanding only increased by approximately $50 million during 1996, debt as a percent of debt plus equity increased to 82 percent at December 31, 1996 from 63 percent at December 31, 1995, primarily as a result of the common share and warrant purchase from Masco Corporation. The application of cash proceeds from the sale of the Technical Services Group and the potential transfer of the Company's Emco holdings to Masco Corporation would reduce the Company's indebtedness to approximately $600 million on a pro forma basis at December 31, 1996, of which approximately $310 million is 4 1/2% Convertible Subordinated Debentures due 2003. The Company's interest coverage ratio remains strong, and the Company expects that its ratio of debt to total debt plus equity will improve as a result of the transactions mentioned above, from the disposition of other financial assets and from the operating performance of its businesses. At December 31, 1996 current assets, which aggregated approximately $394 million, were in excess of two times current liabilities. In addition, the Company has significant financial assets, including ownership positions in the securities of three publicly traded companies with an aggregate carrying value of approxi- 14 16 mately $229 million. This compares with an aggregate quoted market value at December 31, 1996 (which may differ from the amounts that could have been realized upon disposition) of approximately $505 million. Additional borrowings available under the Company's amended revolving credit agreement and otherwise, and anticipated internal cash flows are expected to provide sufficient liquidity to fund the Company's foreseeable working capital, capital expansion programs and other investment needs. The Company's amended revolving credit agreement contains restrictions including maintenance of a specified level of tangible shareholders' equity, the ratio of senior debt to earnings and the ratio of debt to equity. Under the most restrictive of these provisions, approximately $70 million was available at December 31, 1996 for the payment of cash dividends and the acquisition of Company Common Stock. In addition, future cash dividends and any acquisition of Company Common Stock and Convertible Preferred Stock could be further accomplished with internal cash flows from operations. An equity affiliate of the Company has called for the redemption or conversion of a convertible debt instrument in the first quarter of 1997. The Company may recognize a gain from the change in the Company's common equity ownership interest in the affiliate. The gain, if any, is dependent upon the number of convertible debentures converted to common stock. GENERAL FINANCIAL ANALYSIS 1996 VERSUS 1995 Sales for 1996 declined to $1.3 billion from $1.7 billion in 1995, reflecting the previously announced disposition of certain businesses. Sales of the Company's metalworking and aftermarket businesses, however, increased eight percent from 1995 to approximately $.9 billion, while sales of the Company's businesses held for sale or sold decreased approximately 53 percent from the comparable period in 1995 as a result of the disposition of a number of such businesses. Income after preferred stock dividends in 1996 was $38.7 million or $.70 per common share. Results in 1996 include an after-tax loss of approximately $26 million ($.47 per common share) related to the sale of the Company's heavy-gauge stamping operations (MSTI) which more than offset after-tax income of approximately $11.7 million ($.21 per common share) related to the cumulative effect of an accounting change. Income after preferred stock dividends in 1995 was $46.2 million or $.81 per common share. Operating profit in 1996 for the metalworking and aftermarket businesses, before general corporate expense, increased to approximately $136 million from $116 million in 1995, resulting from increased volume and the reduction of launch and start-up costs and expenses related to the Company's capital expansion programs. Businesses held for sale or sold (including MSTI and TSG) had operating income (losses) before general corporate expense and gains (charge) on disposition of businesses, net of approximately $(13) million and $5 million for 1996 and 1995, respectively. In December, 1994, the Company announced the planned disposition of a number of businesses, including its architectural products, defense and certain of its transportation-related products and services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. During 1995 and 1996, the Company completed the disposition of such businesses for proceeds aggregating approximately $400 million. Net assets of businesses held for sale decreased by approximately $167 million during 1996 as a result of the disposition of such businesses and from the reduction of assets employed in these businesses through operating activity, asset sales and the redeployment of certain assets. Net assets of businesses held for sale at December 31, 1996 reflect the net assets of the Company's Technical Services Group and APX International which were sold January 3, 1997. In 1995, the Company sold businesses in transactions which resulted in net gains of approximately $25 million. These net gains were substantially offset by reductions in the estimated net proceeds that the Company expected to receive from certain businesses remaining to be sold, aggregating approximately $12 million, and by certain exit costs related to the businesses sold or held for sale incurred in 1995 aggregating approximately $8 million. 15 17 Other income (expense), net in 1996, was income of approximately $8 million as compared with expense of approximately $9 million in 1995. Results for 1996 benefitted from reduced interest expense as proceeds from the disposition of businesses were applied to reduce the Company's indebtedness as well as from increased earnings from equity affiliates. Results for 1995 were impacted by pre-tax income of approximately $5 million as a result of gains associated with the sale of common stock through a public offering by an equity affiliate. The Company's 1996 effective tax rate differs from the statutory rate principally because a significant portion of the loss on the sale of the heavy-gauge stamping operations does not result in a tax benefit. 1995 VERSUS 1994 Sales for 1995 were $1.7 billion which approximated 1994 sales. Sales of the Company's metalworking and aftermarket businesses, however, increased nine percent from 1994 to approximately $.8 billion, while sales of the Company's businesses held for sale or sold decreased approximately nine percent from the comparable period in 1994 as a result of the disposition of a number of such businesses. Income after preferred stock dividends in 1995 was $46.2 million or $.81 per common share, compared with a loss of $3.96 per common share in 1994 which reflects the non-cash charge of $400 million pre-tax ($315 million after-tax) for the anticipated loss on the disposition of non-core businesses. Operating profit from continuing operations (excluding the gains (charge) in 1995 and 1994, respectively, on disposition of businesses, net) in 1995 for the metalworking and aftermarket businesses, before general corporate expense, decreased by $11 million to approximately $116 million from $127 million in 1994. Although 1995 results benefitted from increased sales in our metalworking and aftermarket businesses, operating performance was negatively impacted by increased costs and expenses reflecting start-up costs associated with the Company's expanded capital investment programs and increased steel costs. Businesses held for sale or sold (including MSTI and TSG) had operating profit before general corporate expense and gains (charge) on disposition of businesses, net of approximately $5 million and $8 million for 1995 and 1994, respectively. In December, 1994, the Company announced the planned disposition of a number of businesses, including its architectural products, defense and certain of its transportation-related products and services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. At December 31, 1995, the Company has disposed of certain of such businesses for proceeds approximating $180 million. The Company expects that the divestiture of the remaining businesses held for sale will be completed by mid-1996 for additional proceeds (including related tax benefits) approximating $220 million, of which approximately $120 million was received in January, 1996. Net assets of businesses held for sale decreased by $212 million during 1995 as a result of the disposition of such businesses and from the reduction of assets employed in these businesses through operating activity, asset sales and the redeployment of certain assets. During 1995, the Company sold businesses in transactions which resulted in net gains of approximately $25 million. These net gains were substantially offset by reductions in the estimated net proceeds that the Company expected to receive from certain businesses remaining to be sold, aggregating approximately $12 million, and by certain exit costs related to the businesses sold or held for sale incurred in 1995 aggregating approximately $8 million. Other income (expense), net in 1995 was an expense of $9 million compared with income of $13 million in 1994. Results for 1995 were impacted by a gain of approximately $5 million pre-tax resulting from the issuance of common stock through a public offering by an equity affiliate and from lower investment income as compared with 1994. Other income, net in 1994 included gains of approximately $17.9 million pre-tax from sales of a portion of the Company's common stock holdings of an equity affiliate. Results for 1994 also benefitted from the partial reversal of the charge established in 1993 for discontinued operations of approximately $11.7 million after-tax and from an extraordinary gain of approximately $2.6 million after-tax related to the early extinguishment of debt. 16 18 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of MascoTech, Inc.: We have audited the accompanying consolidated balance sheet of MascoTech, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations and cash flows for each of the three years in the period ended December 31, 1996 and the financial statement schedule as listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepting auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of MascoTech, Inc. and subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. As discussed in the footnotes to the consolidated financial statements, effective January 1, 1996, the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be disposed of. COOPERS & LYBRAND L.L.P. Detroit, Michigan February 28, 1997 17 19 MASCOTECH, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996 AND 1995 ASSETS
1996 1995 -------------- -------------- Current assets: Cash and cash investments................................. $ 19,400,000 $ 16,380,000 Marketable securities..................................... 37,760,000 4,120,000 Receivables............................................... 127,530,000 216,490,000 Inventories............................................... 69,640,000 94,420,000 Deferred and refundable income taxes...................... 39,180,000 51,300,000 Prepaid expenses and other assets......................... 14,480,000 21,630,000 Net current assets of businesses held for disposition..... 85,980,000 62,410,000 -------------- -------------- Total current assets................................. 393,970,000 466,750,000 Equity and other investments in affiliates.................. 282,470,000 237,530,000 Property and equipment, net................................. 388,460,000 466,450,000 Excess of cost over net assets of acquired companies........ 69,140,000 115,750,000 Notes receivable and other assets........................... 72,090,000 47,780,000 Net non-current assets of businesses held for disposition... 22,850,000 104,510,000 -------------- -------------- Total assets......................................... $1,228,980,000 $1,438,770,000 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 58,170,000 $ 99,710,000 Accrued liabilities....................................... 96,910,000 82,400,000 Current portion of long-term debt......................... 3,370,000 5,150,000 -------------- -------------- Total current liabilities............................ 158,450,000 187,260,000 Long-term debt held by Masco Corporation.................... 151,380,000 -- Other long-term debt........................................ 601,020,000 701,910,000 Deferred income taxes and other long-term liabilities....... 153,170,000 134,420,000 -------------- -------------- Total liabilities.................................... 1,064,020,000 1,023,590,000 -------------- -------------- Shareholders' equity: Preferred stock, $1 par: Authorized: 25 million; Outstanding: 10.8 million (liquidation value -- $216 million)............................................... 10,800,000 10,800,000 Common stock, $1 par: Authorized: 250 million; Outstanding: 37.3 million and 55.5 million............. 37,250,000 55,520,000 Paid-in capital........................................... 41,080,000 307,910,000 Retained earnings......................................... 61,060,000 32,380,000 Other..................................................... 14,770,000 8,570,000 -------------- -------------- Total shareholders' equity........................... 164,960,000 415,180,000 -------------- -------------- Total liabilities and shareholders' equity........... $1,228,980,000 $1,438,770,000 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 18 20 MASCOTECH, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994 --------------- --------------- --------------- Net sales................................... $ 1,281,220,000 $ 1,678,210,000 $ 1,702,260,000 Cost of sales............................... (1,048,110,000) (1,397,880,000) (1,385,430,000) --------------- --------------- --------------- Gross profit........................... 233,110,000 280,330,000 316,830,000 Selling, general and administrative expenses.................................. (132,260,000) (176,810,000) (194,680,000) Gains (charge) on disposition of businesses, net....................................... (31,520,000) 5,290,000 (400,000,000) --------------- --------------- --------------- Operating profit (loss)................ 69,330,000 108,810,000 (277,850,000) --------------- --------------- --------------- Other income (expense), net: Interest expense.......................... (29,970,000) (49,900,000) (49,830,000) Equity and interest income from affiliates............................. 40,460,000 31,420,000 29,810,000 Gain from change in investment of an equity affiliate....................... -- 5,100,000 -- Other, net................................ (2,600,000) 4,850,000 33,380,000 --------------- --------------- --------------- 7,890,000 (8,530,000) 13,360,000 --------------- --------------- --------------- Income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net.......................... 77,220,000 100,280,000 (264,490,000) Income taxes (credit)....................... 37,300,000 41,090,000 (30,070,000) --------------- --------------- --------------- Income (loss) from continuing operations before extraordinary item and cumulative effect of accounting change, net.......................... 39,920,000 59,190,000 (234,420,000) Gain on disposition of discontinued energy operations (net of income taxes).......... -- -- 11,700,000 --------------- --------------- --------------- Income (loss) before extraordinary item and cumulative effect of accounting change, net.......................... 39,920,000 59,190,000 (222,720,000) Extraordinary income (net of income taxes).................................... -- -- 2,600,000 Cumulative effect of accounting change (net of income taxes).......................... 11,700,000 -- -- --------------- --------------- --------------- Net income (loss)...................... $ 51,620,000 $ 59,190,000 $ (220,120,000) =============== =============== =============== Preferred stock dividends................... $ 12,960,000 $ 12,960,000 $ 12,960,000 =============== =============== =============== Earnings (loss) attributable to common stock................................ $ 38,660,000 $ 46,230,000 $ (233,080,000) =============== =============== ===============
1996 ------------------ ASSUMING FULL 1995 1994 PRIMARY DILUTION PRIMARY PRIMARY ------- -------- ------- ------- Earnings (loss) per common and common equivalent share: Continuing operations........................... $.50 $.49 $.81 $(4.20) Gain on disposition of discontinued energy operations............................. -- -- -- .20 ------ ------ ------ ------- Income (loss) before extraordinary item and cumulative effect of accounting change, net........................ .50 .49 .81 (4.00) Extraordinary income............................ -- -- -- .04 Cumulative effect of accounting change, net................................... .22 .21 -- -- ------ ------ ------ ------- Earnings (loss) attributable to common stock.................................. $.72 $.70 $.81 $(3.96) ====== ====== ====== =======
The accompanying notes are an integral part of the consolidated financial statements. 19 21 MASCOTECH, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994 ------------- ------------- ------------- CASH FROM (USED FOR): OPERATING ACTIVITIES: Net income (loss)............................. $ 51,620,000 $ 59,190,000 $(220,120,000) Adjustments to reconcile net income (loss) to net cash provided by operating activities, excluding reclassification of businesses held for disposition: (Gains) charge on disposition of businesses, net.......................... 31,520,000 (5,290,000) 400,000,000 Gain from change in investment of an equity affiliate................................. -- (5,100,000) -- Gains from sales of TriMas common stock.... -- -- (17,900,000) Depreciation and amortization.............. 44,470,000 47,070,000 66,760,000 Equity earnings, net of dividends.......... (31,650,000) (23,360,000) (23,720,000) Deferred income taxes...................... 8,640,000 51,330,000 (67,760,000) (Increase) decrease in marketable securities, net.......................... (24,890,000) 57,990,000 (34,320,000) Decrease (increase) in receivables......... 10,200,000 (21,910,000) (37,940,000) Decrease (increase) in inventories......... 19,190,000 4,650,000 (23,390,000) Decrease (increase) in prepaid expenses and other current assets...................... 38,650,000 (1,900,000) (32,860,000) Increase (decrease) in accounts payable and accrued liabilities....................... 9,320,000 (9,070,000) 65,330,000 Other, net, including extraordinary item... (8,820,000) 2,390,000 (6,000,000) Net assets of businesses held for disposition, net, including cumulative effect of accounting change............... (19,240,000) 2,190,000 (30,410,000) ------------- ------------- ------------- Net cash from operating activities....... 129,010,000 158,180,000 37,670,000 ------------- ------------- ------------- FINANCING ACTIVITIES: Issuance of convertible debt.................. -- -- 337,240,000 Increase in other debt........................ 5,220,000 79,460,000 82,730,000 Payment or repurchase of other debt........... (114,900,000) (253,770,000) (349,230,000) Retirement of Company Common Stock............ (14,040,000) (13,130,000) (54,130,000) Repurchase of Company Common Stock and warrants from Masco Corporation for cash..... (116,000,000) -- -- Payment of dividends.......................... (22,940,000) (21,000,000) (18,980,000) Other, net.................................... (8,610,000) (2,250,000) (5,010,000) ------------- ------------- ------------- Net cash used for financing activities... (271,270,000) (210,690,000) (7,380,000) ------------- ------------- ------------- INVESTING ACTIVITIES: Cash received from sales of TriMas securities................................. -- -- 18,180,000 Cash received from sale of businesses......... 223,720,000 122,190,000 41,220,000 Acquisition of businesses..................... (47,200,000) (23,850,000) -- Capital expenditures.......................... (42,390,000) (95,800,000) (115,220,000) Receipt of cash from notes receivable......... 9,300,000 6,570,000 14,640,000 Other, net.................................... 1,850,000 (2,170,000) (10,360,000) ------------- ------------- ------------- Net cash from (used for) investing activities............................ 145,280,000 6,940,000 (51,540,000) ------------- ------------- ------------- CASH AND CASH INVESTMENTS: Increase (decrease) for the year.............. 3,020,000 (45,570,000) (21,250,000) At January 1.................................. 16,380,000 61,950,000 83,200,000 ------------- ------------- ------------- At December 31........................... $ 19,400,000 $ 16,380,000 $ 61,950,000 ============= ============= =============
The accompanying notes are an integral part of the consolidated financial statements. 20 22 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES: Principles of Consolidation. The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. Corporations that are 20 to 50 percent owned are accounted for by the equity method of accounting; ownership less than 20 percent is accounted for on the cost basis unless the Company exercises significant influence over the investee. Capital transactions by equity affiliates, which change the Company's ownership interest at amounts differing from the Company's carrying amount, are reflected in other income or expense and the investment in affiliates account. The consolidated balance sheet at December 31, 1996 reflects the segregation of net current and net non-current assets related to the disposition of the Company's Technical Services Group ("TSG") and, at December 31, 1995, reflects the segregation of assets related to the plan adopted in late 1994 to dispose of certain businesses. The Company has a corporate services agreement with Masco Corporation, which at December 31, 1996 owned approximately 21 percent of the Company's Common Stock. Under the terms of the agreement, the Company pays fees to Masco Corporation for various corporate staff support and administrative services, research and development and facilities. Such fees, which are determined principally as a percentage of net sales, aggregated approximately $7 million in 1996, $9 million in 1995, and $11 million in 1994. The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from such estimates and assumptions. Cash and Cash Investments. The Company considers all highly liquid debt instruments with an initial maturity of three months or less to be cash and cash investments. The carrying amount reported in the balance sheet for cash and cash investments approximates fair value. Marketable Securities. The Company's marketable equity securities holdings are categorized as either trading or available-for-sale securities, and, as a result, are stated at fair value. Changes in the fair value of trading securities are recognized in earnings and the changes in the fair value of available-for-sale securities are recorded in shareholders' equity, net of deferred taxes. Receivables. Receivables are presented net of allowances for doubtful accounts of approximately $2.0 million at both December 31, 1996 and 1995. Inventories. Inventories are stated at the lower of cost or net realizable value, with cost determined principally by use of the first-in, first-out method. Property and Equipment, Net. Property and equipment additions, including significant betterments, are recorded at cost. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. Repair and maintenance costs are charged to expense as incurred. Depreciation and Amortization. Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10 percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred financing costs are amortized over the lives of the related debt securities. The excess of cost over net assets of acquired companies is amortized using the straight-line method over the period estimated to be benefitted, not exceeding 40 years. At each balance sheet date, management assesses whether there has been a permanent impairment of the excess of cost over net assets of acquired companies by comparing anticipated undiscounted 21 23 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) future cash flows from operating activities with the carrying amount of the excess of cost over net assets of acquired companies. The factors considered by management in performing this assessment include current operating results, business prospects, market trends, potential product obsolescence, competitive activities and other economic factors. Based on this assessment, there was no permanent impairment related to the excess of cost over net assets of acquired companies at December 31, 1996. At December 31, 1996 and 1995, accumulated amortization of the excess of cost over net assets of acquired companies and patents was $29.4 million and $42.3 million, respectively. Amortization expense was $8.5 million, $13.7 million and $22.9 million in 1996, 1995 and 1994, respectively. Income Taxes. The Company records income taxes in accordance with Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes." SFAS No. 109 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, SFAS No. 109 generally allows consideration of all expected future events other than enactments of changes in the tax law or tax rates. A provision has not been made for U.S. or additional foreign withholding taxes on approximately $47 million of undistributed earnings of foreign subsidiaries as those earnings are intended to be permanently reinvested. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability on such undistributed earnings. Earnings (Loss) Per Common Share. Primary earnings per common share are based on the weighted average shares of common stock and common stock equivalents outstanding (including the dilutive effect of options and warrants, utilizing the treasury stock method) of 53.8 million and 57.1 million in 1996 and 1995, respectively. Primary loss per common share in 1994 is based on 58.9 million weighted average shares of common stock outstanding. The effect of options and warrants on earnings per common share in 1994 would be anti-dilutive. Primary earnings (loss) per common share are calculated on earnings (loss) after deducting preferred stock dividends of $13.0 million in each of 1996, 1995 and 1994. Fully diluted earnings per common share is presented only when the assumed conversion of convertible securities is dilutive. Convertible securities did not have a dilutive effect on earnings (loss) per common share in 1996, 1995 or 1994. Fully diluted earnings per common share is presented in 1996 due to the utilization of the treasury stock method. In late 1996, the Company purchased from Masco Corporation 17 million shares of MascoTech common stock and warrants to purchase 10 million shares of MascoTech common stock. These shares and warrants have been retired. If such retirement had taken place at the beginning of 1996, the pro forma primary and fully diluted earnings per common and common equivalent share amounts would have been $.78 and $.77, respectively, in 1996. Recently Issued Accounting Pronouncements. At January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which resulted in a pre-tax gain (because the fair value of the businesses being held for sale at January 1, 1996 exceeded the carrying value for such businesses) of $16.7 million ($11.7 million after-tax), recorded as the cumulative effect of an accounting change. The pro forma effect of the retroactive application of the change on the financial statements for the years prior to 1996 has not been presented because the new method did not have a material effect on the earnings reported for those years. The Company adopted the disclosure requirements of SFAS No. 123, "Accounting for Stock-Based Compensation," effective with the 1996 financial statements, and elected to continue to measure compensation cost using the intrinsic value method, in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, no compensation cost for stock options has been recognized. If compensation cost had been determined based on the estimated fair value of options granted in 1996 and 1995, consistent with the methodology in SFAS 22 24 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) No. 123, the pro forma effects on the Company's net income and income per common share would not have been material. SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," and the American Institute of Certified Public Accountants' Statement of Position No. 96-1, "Environmental Remediation Liabilities," become effective in 1997 and will not have a material impact on the Company's financial statements. The Company expects that SFAS No. 128, "Earnings Per Share," will not have a material impact on earnings per share when adopted in 1997. SUPPLEMENTARY CASH FLOWS INFORMATION: Significant transactions not affecting cash were: in 1996: in addition to cash received, approximately $25 million comprised of both common stock and warrants (with a portion of the common stock subsequently sold for approximately $14 million of cash), as consideration from the sale of MascoTech Stamping Technologies, Inc.; in addition to the cash payment by the Company of $121 million, notes approximating $159 million were issued for the purchase of 18 million shares of the Company's Common Stock and warrants to purchase 10 million shares of the Company's Common Stock (see "Shareholders' Equity" note); in 1995: in addition to cash received, approximately $34 million comprised of both notes receivable due from, and a 29 percent equity interest in, the acquiring company, as consideration for a non-core business unit. Income taxes paid (refunded) were $(12) million, $11 million and $28 million in 1996, 1995 and 1994, respectively. Interest paid was $30 million, $55 million and $61 million in 1996, 1995 and 1994, respectively. DISPOSITIONS OF OPERATIONS: In late 1994, the Company adopted a plan to dispose, by sale or liquidation, a number of businesses, including its architectural products, defense and certain of its transportation-related products and services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. Through dates of sale, the businesses held for disposition had sales of approximately $90 million, $468 million and $637 million in 1996, 1995 and 1994, respectively, and operating losses before gains (charge) on disposition of businesses, net of $14 million, $11 million and $7 million in 1996, 1995 and 1994, respectively. At December 31, 1996, the Company has substantially completed the disposition of such businesses, and the liability for accrued exit costs approximates $17 million, including approximately $11 million related to post-employment benefits. The Company's carrying value of a number of the businesses disposed of exceeded the estimated proceeds expected from such dispositions. To reflect the estimated loss on the disposition of these businesses, the Company in 1994 recorded a non-cash charge aggregating $400 million pre-tax (approximately $315 million after-tax or $5.35 per common share) for those businesses for which a loss was anticipated. During 1995, the Company divested a number of such businesses, in separate transactions, for aggregate proceeds of approximately $180 million, which resulted in net gains of approximately $25 million. These net gains were substantially offset by reductions in the estimated net proceeds the Company expected to receive from certain remaining businesses to be sold, aggregating approximately $12 million, and by certain exit costs incurred in 1995 aggregating approximately $8 million. In May, 1996, the Company sold MascoTech Stamping Technologies, Inc. (MSTI), a wholly owned subsidiary, to Tower Automotive, Inc. (Tower) resulting in an after-tax loss of approximately $26 million ($.47 per common share), including after-tax losses of approximately $1 million related to the closure of a MSTI manufacturing facility not included in the sale. The Company received initial consideration of approximately $80 million, consisting principally of $55 million in cash, 785,000 shares of Tower common stock and warrants to purchase additional Tower common stock. The Company applied the cash proceeds (including approximately $14 million received from the subsequent sale of 600,000 shares of Tower common stock) to reduce its indebtedness. The Company may receive additional consideration, contingent upon the future earnings of MSTI over the next three years, which, if entirely earned, would substantially offset the loss. 23 25 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On January 3, 1997, the Company completed the sale of its Technical Services Group (comprised of the Company's engineering and technical business services units) to MSX International, Inc. Also included in this transaction were the net assets of APX International which were acquired by the Company in November, 1996 for approximately $44 million. The sale will result in total proceeds to the Company of approximately $145 million, subject to certain adjustments, consisting of cash, subordinated debentures, preferred stock and an approximate 45 percent common equity interest in MSX International, Inc. Net proceeds to the Company will approximate $90 million, after taking into account the purchase price for APX International and taxes payable in connection with this transaction. The excess of the consideration received by the Company over the book value of the related net assets has been deferred and will be recognized when cash is received. The net assets of the Technical Services Group and APX International are reflected on the consolidated balance sheet as net assets of businesses held for disposition at December 31, 1996. The Company has not reflected any revenues or expenses in the consolidated statement of operations related to APX International from the date of acquisition through December 31, 1996 as control was deemed to be temporary. The disposition of businesses held for sale or sold, including MSTI and TSG, did not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses were included in continuing operations until disposition. Businesses held for sale or sold, including MSTI and TSG, had sales of approximately $412 million, $874 million and $964 million in 1996, 1995 and 1994, respectively, and operating income (losses) before gains (charge) on disposition of businesses, net of $(13) million, $5 million and $8 million in 1996, 1995 and 1994, respectively. In late 1993, the Company adopted a plan to divest the business units in its energy segment. Certain of the remaining business units were sold in 1994 at prices greater than those used in estimating the loss on disposition in 1993, resulting in a reversal in 1994 of approximately $18 million pre-tax ($11.7 million after-tax) of the charge established in 1993. Amounts included in the consolidated balance sheet for net assets of businesses held for disposition consist of the following at December 31, 1996 and 1995:
(IN THOUSANDS) 1996 1995 -------- -------- Receivables.............................................. $ 59,110 $ 49,510 Other current assets..................................... 46,050 88,000 Current liabilities...................................... (19,180) (75,100) -------- -------- Net current assets..................................... 85,980 62,410 -------- -------- Property and equipment, net.............................. 22,090 26,180 Other non-current assets and liabilities, net............ 760 78,330 -------- -------- Net non-current assets................................. 22,850 104,510 -------- -------- Net assets of businesses held for disposition............ $108,830 $166,920 ======== ========
INVENTORIES:
(IN THOUSANDS) AT DECEMBER 31 ------------------ 1996 1995 ------- ------- Finished goods............................................. $21,020 $21,120 Work in process............................................ 20,360 38,480 Raw material............................................... 28,260 34,820 ------- ------- $69,640 $94,420 ======= =======
24 26 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EQUITY AND OTHER INVESTMENTS IN AFFILIATES: Equity and other investments in affiliates consist primarily of the following common stock interests in publicly traded affiliates:
AT DECEMBER 31 -------------------- 1996 1995 1994 ---- ---- ---- TriMas Corporation.......................................... 41% 41% 41% Emco Limited................................................ 43% 43% 43% Titan Wheel International, Inc. ............................ 12% 15% 20%
TriMas Corporation ("TriMas") is a diversified manufacturer of commercial, industrial and consumer products. Emco Limited ("Emco") is a Canadian-based manufacturer and distributor of building and other industrial products. Titan Wheel International, Inc. ("Titan") is a manufacturer of wheels, tires and other products for agricultural, construction and off-highway equipment markets. At December 31, 1996, the investments in Titan common stock and in Emco convertible and other debt are classified for accounting purposes as available-for-sale securities. Accordingly, these investments have been recorded at fair value which was in excess of their carrying value resulting in unrealized gains of approximately $8 million pre-tax which have been reflected as an adjustment to shareholders' equity, net of deferred taxes of $3 million, at December 31, 1996. The carrying amount of investments in affiliates at December 31, 1996 and 1995 and quoted market values at December 31, 1996 for publicly traded affiliates (which may differ from the amounts that could have been realized upon disposition) are as follows:
(IN THOUSANDS) 1996 QUOTED 1996 1995 MARKET CARRYING CARRYING VALUE AMOUNT AMOUNT -------- -------- -------- Common stock: TriMas Corporation............................ $362,690 $101,880 $ 80,150 Emco Limited.................................. 65,130 49,400 43,720 Titan Wheel International, Inc................ 42,280 42,280 32,240 -------- -------- -------- Common stock holdings........................... 470,100 193,560 156,110 Convertible and other debt: Emco Limited.................................. 35,130 35,130 32,390 -------- -------- -------- Investments in publicly traded affiliates....... $505,230 228,690 188,500 ======== Other non-public affiliates..................... 53,780 49,030 -------- -------- Total........................................... $282,470 $237,530 ======== ========
During 1994, the Company sold a portion of its common stock holdings in TriMas, decreasing the Company's common equity ownership interest in TriMas to 41 percent, and resulting in a pre-tax gain of $17.9 million. In June, 1995, Titan sold newly issued common stock in a public offering and issued common stock as a result of the conversion of convertible securities. The Company recognized pre-tax income of approximately $5.1 million as a result of the change in the Company's common equity ownership interest in Titan. In December, 1996, Titan called for redemption its 4 3/4% Convertible Subordinated Notes which resulted in the issuance of approximately 4.5 million common shares, reducing the Company's common equity 25 27 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ownership interest in Titan to approximately 12 percent. As a result, the investment in Titan has been classified for accounting purposes as available-for-sale. In addition to its equity and other investments in publicly traded affiliates, the Company has equity and other investment interests in privately held manufacturers of automotive components, including the Company's common equity ownership interest in Delco Remy International, Inc., a manufacturer of automotive electric motors and other components (acquired in 1994), and Saturn Electronics & Engineering, Inc., a manufacturer of electromechanical and electronic automotive components (acquired in 1995). Equity in undistributed earnings of affiliates of $57 million at December 31, 1996, $38 million at December 31, 1995 and $24 million at December 31, 1994 are included in consolidated retained earnings. Approximate combined condensed financial data of the Company's equity affiliates accounted for under the equity method are as follows:
(IN THOUSANDS) AT DECEMBER 31 ---------------------- 1996 1995 --------- --------- Current assets......................................... $ 839,250 $ 985,310 Current liabilities.................................... (342,980) (413,290) --------- --------- Working capital...................................... 496,270 572,020 Property and equipment, net............................ 453,350 581,670 Excess of cost over net assets of acquired companies... 257,160 261,300 Other assets........................................... 78,990 90,180 Long-term debt......................................... (655,370) (745,480) Deferred income taxes and other long-term liabilities.......................................... (73,680) (60,240) --------- --------- Shareholders' equity................................. $ 556,720 $ 699,450 ========= =========
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31 -------------------------------------- 1996 1995 1994 ---------- ---------- ---------- Net sales.................................. $2,959,980 $2,729,260 $1,989,670 ========== ========== ========== Operating profit........................... $ 269,440 $ 235,510 $ 174,850 ========== ========== ========== Earnings attributable to common stock...... $ 128,820 $ 92,700 $ 74,870 ========== ========== ==========
Equity and interest income from affiliates consists of the following:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31 -------------------------------- 1996 1995 1994 -------- -------- -------- The Company's equity in affiliates' earnings available for common shareholders................ $35,190 $26,230 $25,970 Interest income.................................... 5,270 5,190 3,840 ------- ------- ------- Equity and interest income from affiliates......... $40,460 $31,420 $29,810 ======= ======= =======
26 28 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PROPERTY AND EQUIPMENT, NET:
(IN THOUSANDS) AT DECEMBER 31 ---------------------- 1996 1995 -------- -------- Cost: Land and land improvements............................ $ 17,530 $ 16,030 Buildings............................................. 109,730 121,470 Machinery and equipment............................... 513,010 609,730 -------- -------- 640,270 747,230 Less accumulated depreciation........................... 251,810 280,780 -------- -------- $388,460 $466,450 ======== ========
Depreciation expense totalled $37 million, $38 million and $44 million in 1996, 1995 and 1994, respectively. ACCRUED LIABILITIES:
(IN THOUSANDS) AT DECEMBER 31 -------------------- 1996 1995 ------- ------- Salaries, wages and commissions........................... $15,930 $19,690 Income taxes.............................................. 2,810 3,260 Interest.................................................. 4,050 3,940 Insurance................................................. 33,940 30,880 Property, payroll and other taxes......................... 5,500 6,830 Other..................................................... 34,680 17,800 ------- ------- $96,910 $82,400 ======= =======
LONG-TERM DEBT:
(IN THOUSANDS) AT DECEMBER 31 ---------------------- 1996 1995 -------- -------- Bank revolving credit agreement......................... $250,000 $350,000 4 1/2% Convertible Subordinated Debentures, due 2003.... 310,000 310,000 6 5/8% Note held by Masco Corporation................... 151,380 -- Other................................................... 44,390 47,060 -------- -------- 755,770 707,060 Less current portion of long-term debt.................. 3,370 5,150 -------- -------- Long-term debt.......................................... $752,400 $701,910 ======== ========
The interest rates applicable to the revolving credit agreement are principally at alternative floating rates provided for in the agreement (approximately six percent at December 31, 1996). In early 1997, the Company amended the revolving credit agreement; as a result, the new $575 million revolving credit agreement is due 2002. 27 29 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amended revolving credit agreement requires the maintenance of a specified level of tangible shareholders' equity as defined, with limitations on the ratios of senior debt to earnings and debt to equity (as defined). Under the most restrictive of these provisions, approximately $70 million was available at December 31, 1996 for the payment of cash dividends and the acquisition of Company Capital Stock. The note held by Masco Corporation was part of the consideration paid by the Company for the purchase of 17 million shares of MascoTech common stock and warrants to purchase 10 million shares of MascoTech common stock from Masco Corporation. Although the note payable to Masco Corporation is due September 30, 1997, it is classified as non-current at December 31, 1996 as the Company has the intent and the ability to refinance this borrowing on a long-term basis. On March 15, 1995, the Company redeemed at maturity $233 million of its 10% Senior Subordinated Notes utilizing its bank revolving credit agreement. During 1994, the Company recognized extraordinary income of $4.4 million pre-tax ($2.6 million after-tax) related to the early extinguishment of a portion of the 4 1/2% Convertible Subordinated Debentures. The maturities of debt during the next five years are as follows (taking into account the amended credit agreement and assuming the short-term debt referred to above is refinanced by the amended credit agreement) (in millions): 1997 - $3; 1998 - $3; 1999 - $3; 2000 - $3; and 2001 - $1. SHAREHOLDERS' EQUITY:
(IN THOUSANDS) RETAINED PREFERRED COMMON PAID-IN EARNINGS SHAREHOLDERS' STOCK STOCK CAPITAL (DEFICIT) OTHER EQUITY --------- -------- --------- --------- ------- ------------- Balance, January 1, 1994.............. $10,800 $ 60,510 $ 367,290 $ 232,120 $(3,090) $ 667,630 Net loss............................ -- -- -- (220,120) -- (220,120) Preferred stock dividends........... -- -- -- (12,960) -- (12,960) Common stock dividends.............. -- -- -- (6,630) -- (6,630) Retirement of common stock.......... -- (4,070) (50,060) -- -- (54,130) Translation adjustments, net........ -- -- -- -- 5,450 5,450 Exercise of stock options........... -- 170 1,730 -- -- 1,900 ------- -------- --------- --------- ------- --------- Balance, December 31, 1994............ 10,800 56,610 318,960 (7,590) 2,360 381,140 Net income.......................... -- -- -- 59,190 -- 59,190 Preferred stock dividends........... -- -- -- (12,960) -- (12,960) Common stock dividends.............. -- -- -- (6,260) -- (6,260) Retirement of common stock.......... -- (1,210) (11,920) -- -- (13,130) Translation adjustments, net........ -- -- -- -- 6,210 6,210 Exercise of stock options........... -- 120 870 -- -- 990 ------- -------- --------- --------- ------- --------- Balance, December 31, 1995............ 10,800 55,520 307,910 32,380 8,570 415,180 Net income.......................... -- -- -- 51,620 -- 51,620 Preferred stock dividends........... -- -- -- (12,960) -- (12,960) Common stock dividends.............. -- -- -- (9,980) -- (9,980) Retirement of common stock and warrants......................... -- (18,720) (270,320) -- -- (289,040) Translation adjustments and other... -- -- -- -- 6,200 6,200 Exercise of stock options........... -- 450 3,490 -- -- 3,940 ------- -------- --------- --------- ------- --------- Balance, December 31, 1996............ $10,800 $ 37,250 $ 41,080 $ 61,060 $14,770 $ 164,960 ======= ======== ========= ========= ======= =========
28 30 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In July, 1993, the Company issued 10.8 million shares of 6% Dividend Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at $20 per share ($216 million aggregate liquidation amount) in a public offering. On July 1, 1997, each of the then outstanding shares of the DECS will convert into one share of Company Common Stock, if not previously redeemed by the Company or converted at the option of the holder, in both cases for Company Common Stock. Each share of the DECS is convertible at the option of the holder anytime prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent to a conversion price of $24.81 per share of Company Common Stock. Dividends are cumulative and each share of the DECS has 4/5 of a vote, voting together as one class with holders of Company Common Stock. The Company, at its option, may redeem the DECS at a call price payable in shares of Company Common Stock principally determined by a formula based on the then current market price of Company Common Stock. Redemption by the Company, as a practical matter, will generally not result in a call price that exceeds one share of Company Common Stock or is less than .806 of a share of Company Common Stock (resulting from the holder's conversion option). On October 31, 1996, the Company purchased from Masco Corporation 17 million shares of MascoTech common stock and warrants to purchase 10 million shares of MascoTech common stock, for cash and notes approximating $266 million. Payment of the note, which approximates $151 million and bears interest at 6 5/8 percent, is due September 30, 1997 and is payable in cash or at the Company's option partially by the transfer of its holdings in its equity affiliate, Emco Limited. As part of this transaction, Richard A. Manoogian, Chairman of both Masco Corporation and MascoTech, also sold to MascoTech one million shares of MascoTech common stock (at the then current market price) for approximately $13.6 million, for cash and a $7.6 million note bearing interest at 6 5/8 percent, payable on September 30, 1997. In addition, as part of this transaction, Masco Corporation's agreement to purchase from the Company, at the Company's option, up to $200 million of subordinated debentures was extended through 2002, and the corporate services agreement with Masco Corporation was extended until September 30, 1998. Masco Corporation also agreed that MascoTech will have the right of first refusal to purchase the approximate 7.8 million shares of MascoTech common stock that Masco Corporation continues to hold, should Masco Corporation decide to dispose of such shares. In addition, during each of 1996 and 1995, the Company repurchased and retired approximately one million shares of its common stock in open-market purchases, pursuant to a Board of Directors' authorized repurchase program. At December 31, 1996, the Company may repurchase approximately four million additional shares of Company Common Stock and Convertible Preferred Stock pursuant to this repurchase authorization. Under a Stock Repurchase Agreement, Masco Corporation has the right to sell to the Company, at approximate fair market value, shares of Company Common Stock following the occurrence of certain events that would result in an increase in Masco Corporation's ownership percentage in excess of 49 percent of the then outstanding shares of Company Common Stock. Such events include repurchases of Company Common Stock initiated by MascoTech or any of its subsidiaries, and reacquisitions of Company Common Stock through forfeitures of shares previously awarded by the Company pursuant to its employee stock incentive plans. In each case, MascoTech has control over the amount of Company Common Stock it would ultimately acquire, including shares subject to repurchase under the Stock Repurchase Agreement. The aforementioned rights expire 30 days from the date notice is given by MascoTech. To the extent these rights have been exercised at any balance sheet date, the Company would reclassify from permanent capital an amount representative of the repurchase obligation. On the basis of amounts paid (declared), cash dividends per common share were $.18 ($.18) in 1996, $.14 ($.11) in 1995 and $.10 ($.11) in 1994. 29 31 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) STOCK OPTIONS AND AWARDS: The Company's Long-Term Stock Incentive Plan (the "Plan") provides for the issuance of stock-based incentives in various forms. At December 31, 1996, outstanding stock-based incentives are in the form of restricted long-term stock awards and stock options. Pursuant to the Plan, the Company granted long-term stock awards, net, for 480,000, 461,000 and 213,000 shares of Company Common Stock during 1996, 1995 and 1994, respectively, to key employees of the Company and affiliated companies. The weighted average grant date fair value per share of long-term stock awards granted during 1996 and 1995 was $14 and $12, respectively. Compensation expense for the vesting of long-term stock awards was approximately $2.3 million, $4.8 million and $3.3 million in 1996, 1995 and 1994, respectively. The unamortized costs of unvested stock awards, aggregating approximately $26 million at December 31, 1996, are being amortized over the ten-year vesting periods. Fixed stock options are granted to key employees of the Company and affiliated companies and have a maximum term of 10 years. The exercise price of each fixed option equals the market price of Company Common Stock on the date of grant. These options either vest no later than 10 years after grant or in installments beginning in the third year and extending through the eighth year after grant. A summary of the status of the Company's stock options granted under the Plan or prior plans for the three years ended December 31, 1996 is presented below.
(SHARES IN THOUSANDS) 1996 1995 1994 ------ ------ ------ Option shares outstanding, January 1........................ 3,440 3,620 3,810 Weighted average exercise price........................... $ 8 $ 7 $ 7 Option shares granted....................................... 1,370 -- 20 Weighted average exercise price........................... $15 -- $24 Option shares exercised..................................... (450) (120) (170) Weighted average exercise price........................... $ 7 $ 7 $ 6 Option shares canceled...................................... (70) (60) (40) Weighted average exercise price........................... $ 5 $ 5 $ 5 Option shares outstanding, December 31...................... 4,290 3,440 3,620 Weighted average exercise price........................... $10 $ 8 $ 7 Weighted average remaining option term (in years)......... 5.3 4.4 5.4 Option shares exercisable, December 31...................... 1,710 1,640 1,080 Weighted average exercise price........................... $ 9 $ 9 $ 9
At December 31, 1996, options have been granted and are outstanding with exercise prices ranging from $4 1/2 to $26 per share, the fair market value at the dates of grant. At December 31, 1996 and 1995, a combined total of 4,656,000 and 5,646,000 shares, respectively, of Company Common Stock were available for the granting of options and incentive awards under the above plans. The Company has elected to continue to apply the provisions of Accounting Principles Board Opinion No. 25 and, accordingly, no stock option compensation expense is included in the determination of net income in the statement of operations. The weighted average grant date fair value of options granted was $6.20 in 1996. Had stock option compensation expense been determined pursuant to the methodology of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," the pro forma effects on the Company's earnings and earnings per common share in 1996, 1995 and 1994 would not have been material. 30 32 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EMPLOYEE BENEFIT PLANS: Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit pension plans for most of its employees. In addition, substantially all salaried employees participate in noncontributory profit-sharing plans, to which payments are approved annually by the Directors. Aggregate charges to income under these plans were $11.0 million in 1996, $13.0 million in 1995 and $9.8 million in 1994. Net periodic pension cost for the Company's defined-benefit pension plans includes the following components for the three years ended December 31, 1996:
(IN THOUSANDS) 1996 1995 1994 ------- ------- ------- Service cost -- benefits earned during the year.... $ 5,230 $ 4,680 $ 4,800 Interest cost on projected benefit obligations..... 6,490 6,330 5,800 Actual (return) loss on assets..................... (3,970) (6,540) 1,850 Net amortization and deferral...................... (740) 1,600 (8,240) ------- ------- ------- Net periodic pension cost.......................... $ 7,010 $ 6,070 $ 4,210 ======= ======= =======
Major assumptions used in accounting for the Company's defined-benefit pension plans are as follows:
1996 1995 1994 ------ ------ ------ Discount rate for obligations....................... 7.50% 7.25% 8.50% Rate of increase in compensation levels............. 5.00% 5.00% 5.00% Expected long-term rate of return on plan assets.... 11.00% 11.00% 13.00%
The funded status of the Company's defined-benefit pension plans at December 31, 1996 and 1995 is as follows:
(IN THOUSANDS) 1996 1995 ----------- ----------- ACCUMULATED ACCUMULATED BENEFITS BENEFITS EXCEED EXCEED RECONCILIATION OF FUNDED STATUS ASSETS ASSETS - ------------------------------- ----------- ----------- Actuarial present value of benefit obligations: Vested benefit obligation............................ $ 72,450 $ 70,960 ======== ======== Accumulated benefit obligation....................... $ 77,380 $ 76,370 ======== ======== Projected benefit obligation......................... $ 89,620 $ 89,410 Assets at fair value................................... 59,710 54,480 -------- -------- Projected benefit obligation in excess of plan assets............................................ (29,910) (34,930) Reconciling items: Unrecognized net loss................................ 14,690 22,350 Unrecognized prior service cost...................... 8,050 7,540 Unrecognized net asset at transition................. (930) (1,060) Adjustment required to recognize minimum liability... (12,580) (15,810) -------- -------- Accrued pension cost................................... $(20,680) $(21,910) ======== ========
31 33 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Postretirement Benefits. The Company provides postretirement medical and life insurance benefits for certain of its active and retired employees. The Company records its postretirement benefit plans in accordance with Statement of Financial Accounting Standards No. 106 ("SFAS No. 106"), "Employers' Accounting for Postretirement Benefits Other Than Pensions." This statement requires the accrual method of accounting for postretirement health care and life insurance based on actuarially determined costs to be recognized over the period from the date of hire to the full eligibility date of employees who are expected to qualify for such benefits. In conjunction with SFAS No. 106, the Company recognizes the transition obligation on a prospective basis with the net transition obligation amortized over 20 years. Net periodic postretirement benefit cost includes the following components for the years ended December 31, 1996, 1995 and 1994:
(IN THOUSANDS) 1996 1995 1994 ------ ------ ------ Service cost................................................ $ 400 $ 300 $ 400 Interest cost............................................... 1,600 1,900 1,800 Net amortization............................................ 800 1,100 1,300 ------ ------ ------ Net periodic postretirement benefit cost.................... $2,800 $3,300 $3,500 ====== ====== ======
Postretirement benefit obligations, none of which are funded, are summarized as follows at December 31, 1996 and 1995:
(IN THOUSANDS) 1996 1995 -------- -------- Accumulated postretirement benefit obligations: Retirees.................................................. $13,900 $ 18,400 Fully eligible active plan participants................... 800 900 Other active participants................................. 5,300 5,600 -------- -------- Total accumulated postretirement benefit obligation......... 20,000 24,900 Unrecognized prior service cost........................... (300) -- Unrecognized net gain..................................... 700 400 Unamortized transition obligation......................... (11,000) (16,000) -------- -------- Accrued postretirement benefits............................. $ 9,400 $ 9,300 ======== ========
The discount rate used in determining the accumulated postretirement benefit obligation was 7.25 percent in both 1996 and 1995. The assumed health care cost trend rate in 1996 was 12 percent, decreasing to an ultimate rate in the year 2002 of seven percent. If the assumed medical cost trend rates were increased by one percent, the accumulated postretirement benefit obligation would increase by $1.6 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost would increase by $.2 million. Included in the Company's 1994 charge for the disposition of certain businesses are curtailment costs for postretirement benefit obligations relating to these businesses of approximately $3.7 million. 32 34 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEGMENT INFORMATION: The Company's business segments involve the sale of the following products and services: Transportation-Related Products and Services: Precision products, generally produced using advanced metalworking technologies with significant proprietary content, and aftermarket products for the transportation industry. Engineering and technical business services. Specialty Products: Other Industrial -- Principally doors, windows, security grilles and office panels and partitions for commercial and residential markets. The Company's export sales approximated $75 million, $85 million and $102 million in 1996, 1995 and 1994, respectively. Corporate assets consist primarily of cash and cash investments, marketable securities, equity and other investments in affiliates and notes receivable. 33 35 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS) NET SALES OPERATING PROFIT (LOSS)(B) ------------------------------------ ------------------------------- 1996 1995 1994 1996 1995 1994 ---------- ---------- ---------- -------- -------- --------- The Company's operations by industry segment are: Transportation-Related Products and Services (A)............. $1,151,000 $1,340,000 $1,332,000 $ 90,000 $144,000 $ (55,000) Specialty Products: Other Industrial............. 130,000 338,000 370,000 1,000 (3,000) (196,000) ---------- ---------- ---------- -------- -------- --------- Total.................... $1,281,000 $1,678,000 $1,702,000 91,000 141,000 (251,000) ========== ========== ========== Other income (expense), net.... 8,000 (9,000) 13,000 General corporate expense...... (22,000) (32,000) (26,000) -------- -------- --------- Income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net....... $ 77,000 $100,000 $(264,000) ======== ======== ========= Corporate assets............... Total assets............. Foreign Operations (F)......... $ 170,000 $ 166,000 $ 116,000 $ 17,000 $ 22,000 $ 16,000 ========== ========== ========== ======== ======== ========= (IN THOUSANDS) ASSETS EMPLOYED AT DECEMBER 31(C) ------------------------------------ 1996 1995 1994 ---------- ---------- ---------- The Company's operations by industry segment are: Transportation-Related Products and Services (A)............. $ 742,000 $ 870,000 $ 796,000 Specialty Products: Other Industrial............. 55,000 150,000 181,000 ---------- ---------- ---------- Total.................... 797,000 1,020,000 977,000 Other income (expense), net.... General corporate expense...... Income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net....... Corporate assets............... 432,000 419,000 554,000 ---------- ---------- ---------- Total assets............. $1,229,000 $1,439,000 $1,531,000 ========== ========== ========== Foreign Operations (F)......... $ 155,000 $ 140,000 $ 93,000 ========== ========== ==========
DEPRECIATION AND PROPERTY ADDITIONS(D) AMORTIZATION(E) ----------------------------- ------------------------------- 1996 1995 1994 1996 1995 1994 ------- -------- -------- ------- ------- ------- The Company's operations by industry segment are: Transportation-Related Products and Services................ $41,000 $ 96,000 $101,000 $44,000 $45,000 $48,000 Specialty Products: Other Industrial.......................................... 3,000 14,000 14,000 2,000 7,000 19,000 ------- -------- -------- ------- ------- ------- Total................................................. $44,000 $110,000 $115,000 $46,000 $52,000 $67,000 ======= ======== ======== ======= ======= =======
(A) Included within this segment are sales to one customer of $232 million, $397 million and $361 million in 1996, 1995 and 1994, respectively; sales to another customer of $146 million, $182 million and $225 million in 1996, 1995 and 1994, respectively; sales to a third customer of $122 million, $178 million and $212 million in 1996, 1995 and 1994, respectively; and sales to a fourth customer of $155 million, $136 million and $111 million in 1996, 1995 and 1994, respectively. (B) Operating profit in 1996 includes a $32 million pre-tax loss principally from the sale of MascoTech Stamping Technologies, Inc. This charge impacted the Company's Transportation-Related Products and Services industry segment. Operating profit in 1995 includes $25 million in net gains resulting from sales of non-core businesses in the third quarter. These net gains were substantially offset by reductions in the estimated proceeds the Company expected to receive from businesses to be sold, aggregating $12 million, and by certain exit costs incurred in 1995 aggregating approximately $8 million. The net gains (charge) impact the Company's industry segments as follows: Transportation-Related Products and Services -- $21 million and Specialty Products -- $(2) million. The remaining $(14) million of the net gains (charge) was allocated to General Corporate Expense. Operating loss in 1994 includes the impact of a pre-tax charge in the amount of $400 million for the disposition of businesses. The charge impacts the Company's industry segments as follows: Transportation-Related Products and Services -- $196 million and Specialty Products -- $191 million. The remaining $13 million of the charge was allocated to General Corporate Expense. (C) Assets employed at December 31, 1996, 1995 and 1994 include net assets related to the disposition of certain operations (see "Dispositions of Operations" note). (D) Property additions include approximately $2 million and $14 million in 1996 and 1995, respectively, of capital expenditures for those businesses held for disposition related to the plan adopted in late 1994. (E) Depreciation and amortization expense include approximately $5 million in 1995 of expense for those businesses held for disposition related to the plan adopted in late 1994. (F) The Company's foreign operations are located principally in Western Europe. 34 36 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER INCOME (EXPENSE), NET:
(IN THOUSANDS) 1996 1995 1994 ------- ------ ------- Other, net: Net realized and unrealized gains (losses) from marketable securities............................................. $ (160) $ 730 $ 4,360 Gains from sales of TriMas common stock................... -- -- 17,900 Interest income........................................... 1,160 2,390 5,490 Dividend income........................................... 420 950 2,880 Other, net................................................ (4,020) 780 2,750 ------- ------ ------- $(2,600) $4,850 $33,380 ======= ====== =======
Gains and losses realized from sales of marketable securities and gains from sales of common stock of equity affiliates are determined on a specific identification basis at the time of sale. INCOME TAXES:
(IN THOUSANDS) 1996 1995 1994 ------- -------- --------- Income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net: Domestic................................... $59,870 $ 78,870 $(280,900) Foreign.................................... 17,350 21,410 16,410 ------- -------- --------- $77,220 $100,280 $(264,490) ======= ======== ========= Provision for income taxes (credit): Federal, current.............................. $16,170 $(24,210) $ 36,660 State and local............................... 4,650 6,110 8,880 Foreign, current.............................. 7,840 7,860 (7,850) Deferred, principally federal................. 8,640 51,330 (67,760) ------- -------- --------- Income taxes (credit) on income (loss) from continuing operations before extraordinary item and cumulative effect of accounting change, net................ $37,300 $ 41,090 $ (30,070) ======= ======== =========
35 37 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The components of deferred taxes at December 31, 1996 and 1995 are as follows:
(IN THOUSANDS) 1996 1995 -------- -------- Deferred tax assets: Inventories............................................ $ 2,860 $ 3,550 Expected capital loss benefit related to net assets of businesses held for disposition..................... -- 15,600 Accrued liabilities and other, principally expected ordinary loss benefit related to net assets of businesses held for disposition..................... 35,170 37,250 Alternative minimum tax................................ 6,750 -- -------- -------- 44,780 56,400 -------- -------- Deferred tax liabilities: Property and equipment................................. 59,580 71,610 Other, principally equity investments in affiliates.... 57,370 45,280 -------- -------- 116,950 116,890 -------- -------- Net deferred tax liability............................... $ 72,170 $ 60,490 ======== ========
Net current and non-current assets of businesses held for disposition at December 31, 1995 include approximately $41 million of the foregoing deferred tax assets. The following is a reconciliation of tax computed at the U.S. federal statutory rate to the provision for income taxes (credit) allocated to income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net:
(IN THOUSANDS) 1996 1995 1994 ------- ------- -------- U.S. federal statutory rate....................... 35% 35% 35% ------- ------- -------- Tax (credit) at U.S. federal statutory rate....... $27,020 $35,100 $(92,570) State and local taxes, net of federal tax benefit......................................... 3,020 3,970 5,770 Higher effective foreign tax rate................. 2,100 2,710 3,380 Tax benefit on distributed foreign earnings, net............................................. -- -- (4,200) Non-deductible portion of charge for disposition of businesses................................... 5,780 -- 54,600 Amortization in excess of tax, net................ (140) 1,630 2,190 Other, net........................................ (480) (2,320) 760 ------- ------- -------- Income taxes (credit) from continuing operations before extraordinary item and cumulative effect of accounting change, net............. $37,300 $41,090 $(30,070) ======= ======= ========
36 38 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS: In accordance with Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," the following methods were used to estimate the fair value of each class of financial instruments: MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS Fair values of financial instruments included in marketable securities, notes receivable and other assets were estimated using various methods including quoted market prices and discounted future cash flows based on the incremental borrowing rates for similar types of investments. In addition, for variable-rate notes receivable that fluctuate with the prime rate, the carrying amounts approximate fair value. LONG-TERM DEBT The carrying amount of bank debt and certain other long-term debt instruments approximate fair value as the floating rates inherent in this debt reflect changes in overall market interest rates. The fair values of the Company's subordinated debt instruments are based on quoted market prices. The fair values of certain other debt instruments are estimated by discounting future cash flows based on the Company's incremental borrowing rate for similar types of debt instruments. The carrying amounts and fair values of the Company's financial instruments at December 31, 1996 and 1995 are as follows:
(IN THOUSANDS) 1996 1995 ------------------- ------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE -------- -------- -------- -------- Cash and cash investments........................... $ 19,400 $ 19,400 $ 16,380 $ 16,380 Marketable securities, notes receivable and other assets............................................ $124,270 $125,460 $ 38,710 $ 38,990 Long-term debt: Bank debt......................................... $265,000 $265,000 $375,000 $375,000 4 1/2% Convertible Subordinated Debentures........ $310,000 $252,650 $310,000 $244,900 6 5/8% Note due Masco Corporation................. $151,380 $151,380 -- -- Other long-term debt.............................. $ 26,020 $ 24,490 $ 16,910 $ 15,330
37 39 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) FOR THE QUARTERS ENDED ------------------------------------------------------------------------ DECEMBER SEPTEMBER JUNE MARCH 31ST 30TH 30TH 31ST -------- --------- -------- -------- 1996: - ----- Net sales................................... $271,450 $290,790 $345,060 $373,920 Gross profit................................ $ 58,160 $ 55,580 $ 57,930 $ 61,440 Income (loss) before accounting change item: Income (loss)............................. $ 16,450 $ 19,390 $ (6,660) $ 10,740 Per common and common equivalent share: Primary........................... $.29 $.28 $(.18) $.16 Assuming full dilution............ $.28 $.28 $(.18) $.17 Net income (loss): Income (loss)............................. $ 16,450 $ 19,390 $ (6,660) $ 22,440 Income (loss) attributable to common stock.................................. $ 13,210 $ 16,150 $ (9,900) $ 19,200 Per common and common equivalent share: Primary........................... $.29 $.28 $(.18) $.33 Assuming full dilution............ $.28 $.28 $(.18) $.32 Market price per common share: High...................................... $17 $15 1/2 $16 1/8 $13 5/8 Low....................................... $13 1/2 $13 $12 1/2 $10 3/8 1995: - ----- Net sales................................... $389,010 $404,900 $439,290 $445,010 Gross profit................................ $ 67,570 $ 67,050 $ 69,250 $ 76,460 Net income: Income.................................... $ 14,670 $ 15,960 $ 15,100 $ 13,460 Income attributable to common stock....... $ 11,430 $ 12,720 $ 11,860 $ 10,220 Per common share.......................... $.20 $.22 $.21 $.18 Market price per common share: High...................................... $12 1/2 $13 3/4 $12 7/8 $13 1/2 Low....................................... $10 $11 1/4 $10 1/2 $11 3/8
Since dilution occurs in the first quarter 1996, earnings per common share is presented on a fully diluted basis. However, earnings per common share on income before accounting change item is anti-dilutive. Results for the second quarter 1996 include an after-tax loss of approximately $26 million related to the sale of MascoTech Stamping Technologies, Inc. Net income for the first quarter of 1996 includes an after-tax gain of approximately $12 million as a result of the adoption of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996 which was recorded as a cumulative effect of an accounting change. The 1996 income (loss) per common share amounts for the quarters do not total to the full year amounts due to the purchase and retirement of shares throughout the year. 38 40 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) Results for the third quarter of 1995 include net gains aggregating approximately $25 million from the sale of certain businesses held for disposition. These net gains were offset by reductions in the estimated net proceeds the Company expected to receive from businesses to be sold, aggregating $12 million and by certain exit costs incurred in 1995 aggregating approximately $8 million. Results for the second quarter of 1995 include pre-tax income of approximately $5 million as a result of gains associated with the sale of common stock through a public offering by an equity affiliate. The following supplemental unaudited financial data combine the Company with TriMas and have been presented for analytical purposes. The Company had a common equity ownership interest in TriMas of approximately 41 percent at December 31, 1996 and December 31, 1995. The interests of the other common shareholders are reflected below as "Equity of other shareholders of TriMas." All significant intercompany transactions have been eliminated.
(IN THOUSANDS) AT DECEMBER 31 --------------------- 1996 1995 --------- --------- Current assets......................................... $ 676,590 $ 718,340 Current liabilities.................................... (241,690) (241,390) --------- --------- Working capital................................... 434,900 476,950 Property and equipment, net............................ 583,000 640,150 Excess of cost over net assets of acquired companies... 183,690 200,210 Other assets........................................... 320,330 355,880 Bank and other debt.................................... (935,460) (889,110) Deferred income taxes and other long-term liabilities.......................................... (193,090) (170,780) Equity of other shareholders of TriMas................. (228,410) (198,120) --------- --------- Equity of shareholders of MascoTech............... $ 164,960 $ 415,180 ========= =========
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31 ------------------------------------ 1996 1995 1994 ---------- ---------- ---------- Net sales.................................. $1,877,080 $2,227,850 $2,232,430 ========== ========== ========== Operating profit (loss).................... $ 173,620 $ 207,490 $ (186,450) ========== ========== ========== Income (loss) from continuing operations before extraordinary item and cumulative effect of accounting change, net......... $ 39,920 $ 59,190 $ (234,420) ========== ========== ==========
39 41 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information regarding executive officers required by this Item is set forth as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3 to Item 401(b) of Regulation S-K). Other information required by this Item will be contained in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be filed on or before April 30, 1997 and such information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be filed on or before April 30, 1997, and such information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be filed on or before April 30, 1997, and such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be filed on or before April 30, 1997, and such information is incorporated herein by reference. 40 42 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (A) LISTING OF DOCUMENTS. (1) Financial Statements. The Company's Consolidated Financial Statements included in Item 8 hereof, as required at December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, consist of the following: Consolidated Balance Sheet Consolidated Statement of Operations Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements (2) Financial Statement Schedules. (i) Financial Statement Schedule of the Company appended hereto, as required for the years ended December 31, 1996, 1995 and 1994, consists of the following: II. Valuation and Qualifying Accounts (ii) (A) TriMas Corporation and Subsidiaries Consolidated Financial Statements appended hereto, as required at December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, consist of the following: Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (B) TriMas Corporation and Subsidiaries Financial Statement Schedule appended hereto, as required for the years ended December 31, 1996, 1995 and 1994, consists of the following: II. Valuation and Qualifying Accounts (3) Exhibits. 3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments thereto.(2) 3.ii Bylaws of MascoTech, Inc., as amended.(6) 4.a.i Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and Directors' resolutions establishing the Company's 4 1/2% Convertible Subordinated Debentures Due 2003.(4) 4.a.ii Agreement of Appointment and Acceptance of Successor Trustee dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First National Bank of Chicago.(3) 4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc. and The First National Bank of Chicago, as trustee.(3) 4.b Credit Agreement dated as of February 28, 1997, by and among MascoTech, Inc., the banks party thereto, NBD Bank, as agent for the banks, and Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America Illinois, as co-agents.
41 43 4.c Credit Agreement dated February 1, 1993 among TriMas Corporation, certain banks party thereto and NationsBank of North Carolina, N.A. (now known as NationsBank, N.A. (Carolinas)), as Agent(7), and First Amendment dated as of June 30, 1995.(1) NOTE: Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of MascoTech, Inc. or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10% of MascoTech, Inc.'s consolidated assets, and (ii) such instruments, notes and extracts will be furnished by MascoTech, Inc. to the Securities and Exchange Commission upon request. 10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(1) 10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation(7) and Amendment No. 1 dated as of October 31, 1996.(8) 10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation(1) and Amendment No. 1 dated as of October 31, 1996.(8) 10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation and related letter dated September 20, 1985, Amendment to Stock Repurchase Agreement dated as of December 20, 1990 and Agreement dated as of November 23, 1993 including an amendment to Stock Repurchase Agreement.(4) 10.e Amended and Restated Securities Purchase Agreement dated as of November 23, 1993 ("Securities Purchase Agreement") between MascoTech, Inc. and Masco Corporation, including form of Note(5), Agreement dated as of November 23, 1993 relating thereto(4), and Amendment No. 1 to the Securities Purchase Agreement dated as of October 31, 1996.(8) 10.f Registration Agreement dated as of March 31, 1993 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(2) 10.g Stock Purchase Agreement dated as of October 15, 1996 between Masco Corporation and MascoTech. Inc.(8) and related promissory note. 10.h Stock Purchase Agreement dated as of October 15, 1996 between Richard A. Manoogian and MascoTech, Inc.(8) and related promissory note. NOTE: Exhibits 10.i through 10.r constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate. 10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan (Restated December 6, 1995).(1) 10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995).(1) 10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).(1) 10.l Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December 6, 1995).(1) 10.m Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995).(1) 10.n Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).(1) 10.o Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).(1) 10.p MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(2) 10.q MascoTech, Inc. Benefits Restoration Plan.(2) 10.r Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as MascoTech, Inc.) and certain of its officers(2), and acknowledgement of amendment thereto by Richard A. Manoogian (filed as part of Exhibit 10.v).
42 44 10.s Assumption and Indemnification Agreement dated as of December 27, 1988 between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(7) 10.t Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.u Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.v Registration Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation(6), Amendment dated as of April 21, 1992 (filed herewith), Amendment to Registration Agreement dated as of January 5, 1993(6), Amendment to Registration Agreement dated as of May 26, 1994(2), and Amendment to Registration Agreement dated as of May 15, 1996 (filed herewith). 10.w Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital Corporation). 10.x Bridge Credit Agreement dated as of January 3, 1997 among MSX International, Inc., Citicorp Venture Capital, Ltd. and MascoTech, Inc. 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 21 List of Subsidiaries. 23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and Financial Statement Schedule. 23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial Statements and Financial Statement Schedule. 27 Financial Data Schedule.
- --------------- (1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report of Form 10-K for the year ended December 31, 1995. (2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. (3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. (4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993. (5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 22, 1993. (6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated June 22, 1993. (7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992. (8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 13, 1996. THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN FURNISHING SUCH COPY OR COPIES. 43 45 (B) REPORTS ON FORM 8-K. (1) A Current Report on Form 8-K dated November 13, 1996 was filed by MascoTech, Inc. during the quarter ended December 31, 1996 reporting under Item 2. "Acquisition or Disposition of Assets," the Company's purchase from Masco Corporation of shares of the Company's common stock and warrants to purchase common stock. Included under Item 7 of such report was the following pro forma financial information: (i) MascoTech, Inc. Pro Forma Consolidated Condensed Income Statement for year ended December 31, 1995 (Unaudited) (ii) MascoTech, Inc. Pro Forma Consolidated Condensed Income Statement for the six months ended June 30, 1996 (Unaudited) (iii) MascoTech, Inc. Pro Forma Consolidated Condensed Balance Sheet as of June 30, 1996 (Unaudited) (2) A Current Report on Form 8-K dated January 20, 1997 was filed by MascoTech, Inc. during the quarter ended March 31, 1997 reporting under Item 2. "Acquisition or Disposition of Assets," the Company's sale of its Technical Services Group to MSX International, Inc. Included under Item 7 of such report was the following pro forma financial information: (i) MascoTech, Inc. Pro Forma Condensed Consolidated Statement of Income for year ended December 31, 1995 (Unaudited) (ii) MascoTech, Inc. Pro Forma Condensed Consolidated Statement of Income for the nine months ended September 30, 1996 (Unaudited) (iii) MascoTech, Inc. Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996 (Unaudited) 44 46 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. MASCOTECH, INC. By: /s/ TIMOTHY WADHAMS ------------------------------------ TIMOTHY WADHAMS Vice President -- Controller and Treasurer March 26, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. PRINCIPAL EXECUTIVE OFFICER: /s/ RICHARD A. MANOOGIAN Chairman of the Board - --------------------------------------------- and Chief Executive Officer RICHARD A. MANOOGIAN PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: /s/ TIMOTHY WADHAMS Vice President -- Controller - --------------------------------------------- and Treasurer TIMOTHY WADHAMS /s/ ERWIN H. BILLIG Director March 26, 1997 - --------------------------------------------- ERWIN H. BILLIG /s/ PETER A. DOW Director - --------------------------------------------- PETER A. DOW /s/ EUGENE A. GARGARO, JR. Director - --------------------------------------------- EUGENE A. GARGARO, JR. /s/ JOHN A. MORGAN Director - --------------------------------------------- JOHN A. MORGAN /s/ ROGER T. FRIDHOLM Director - --------------------------------------------- ROGER T. FRIDHOLM
45 47 MASCOTECH, INC. FINANCIAL STATEMENT SCHEDULES PURSUANT TO ITEM 14(A)(2) OF FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1996 Schedules, as required for the years ended December 31, 1996, 1995 and 1994:
PAGE ---- II. Valuation and Qualifying Accounts....................... F-2 TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial Statement Schedule............... F-3
F-1 48 MASCOTECH, INC. SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - --------------------------------- ---------- --------------------------- ---------- ------------- ADDITIONS --------------------------- CHARGED BALANCE AT CHARGED (CREDITED) BEGINNING TO COSTS TO OTHER BALANCE AT DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD - --------------------------------- ---------- ------------ ----------- ---------- ------------- (A) (B) Allowance for doubtful accounts, deducted from accounts receivable in the balance sheet: 1996........................... $1,880,000 $ 890,000 $ 20,000 $ 790,000 $2,000,000 ========== ========== =========== ========== ========== 1995........................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $1,880,000 ========== ========== =========== ========== ========== 1994........................... $5,130,000 $3,480,000 $(4,310,000) $2,710,000 $1,590,000 ========== ========== =========== ========== ==========
NOTES: (A) Allowance of companies reclassified for businesses held for disposition, and other adjustments, net in 1996, 1995 and 1994. Allowance of companies acquired, and other adjustments, net in 1995. (B) Deductions, representing uncollectible accounts written off, less recoveries of accounts written off in prior years. F-2 49 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of TriMas Corporation: We have audited the consolidated financial statements and the financial statement schedule of TriMas Corporation and subsidiaries listed in Item 14(a)(2)(ii)(A) and (B) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TriMas Corporation and subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Detroit, Michigan February 11, 1997 F-3 50 TRIMAS CORPORATION CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- Net sales....................................... $ 600,230,000 $ 553,490,000 $ 535,480,000 Cost of sales................................... (403,380,000) (371,470,000) (361,520,000) Selling, general and administrative expenses.... (92,560,000) (83,340,000) (82,560,000) ------------- ------------- ------------- Operating profit.............................. 104,290,000 98,680,000 91,400,000 Interest expense................................ (10,810,000) (13,530,000) (12,930,000) Other, net (principally interest income)........ 7,110,000 6,690,000 5,030,000 ------------- ------------- ------------- Income before income taxes.................... 100,590,000 91,840,000 83,500,000 Income taxes.................................... 39,230,000 35,820,000 33,400,000 ------------- ------------- ------------- Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000 ============= ============= ============= Earnings per common share: Primary....................................... $1.66 $1.51 $1.35 ============= ============= ============= Fully diluted................................. $1.55 $1.42 $1.28 ============= ============= =============
The accompanying notes are an integral part of the consolidated financial statements. F-4 51 TRIMAS CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ---------------------------- 1996 1995 ------------ ------------ ASSETS Current assets: Cash and cash equivalents................................. $105,890,000 $ 92,390,000 Receivables............................................... 80,390,000 71,200,000 Inventories............................................... 92,210,000 85,490,000 Other current assets...................................... 4,130,000 2,510,000 ------------ ------------ Total current assets.............................. 282,620,000 251,590,000 Property and equipment...................................... 194,540,000 173,700,000 Excess of cost over net assets of acquired companies........ 174,710,000 144,860,000 Other assets................................................ 44,800,000 46,210,000 ------------ ------------ Total assets.................................... $696,670,000 $616,360,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 33,750,000 $ 24,390,000 Other current liabilities................................. 45,430,000 29,740,000 ------------ ------------ Total current liabilities......................... 79,180,000 54,130,000 Deferred income taxes and other............................. 39,920,000 36,360,000 Long-term debt.............................................. 187,120,000 187,200,000 ------------ ------------ Total liabilities................................. 306,220,000 277,690,000 ------------ ------------ Shareholders' equity: Common stock, $.01 par value, authorized 100 million shares, outstanding 36.6 million shares................ 370,000 370,000 Paid-in capital........................................... 155,690,000 155,430,000 Retained earnings......................................... 238,290,000 185,370,000 Cumulative translation adjustments........................ (3,900,000) (2,500,000) ------------ ------------ Total shareholders' equity........................ 390,450,000 338,670,000 ------------ ------------ Total liabilities and shareholders' equity...... $696,670,000 $616,360,000 ============ ============
The accompanying notes are an integral part of the consolidated financial statements. F-5 52 TRIMAS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, -------------------------------------------- 1996 1995 1994 ------------ ------------ ------------ CASH FROM (USED FOR): OPERATIONS: Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000 Adjustments to reconcile net income to net cash from operations: Depreciation and amortization............ 22,930,000 21,480,000 20,580,000 Deferred income taxes.................... 2,100,000 5,560,000 3,210,000 (Increase) decrease in receivables....... (1,460,000) (4,670,000) (7,280,000) (Increase) decrease in inventories....... (2,430,000) (5,930,000) (2,860,000) Increase (decrease) in accounts payable and accrued liabilities................ 7,320,000 (2,500,000) 5,110,000 Other, net............................... 1,260,000 (3,710,000) (1,190,000) ------------ ------------ ------------ Net cash from operations............... 91,080,000 66,250,000 67,670,000 ------------ ------------ ------------ INVESTMENTS: Capital expenditures.......................... (26,670,000) (23,470,000) (24,310,000) Acquisitions, net of cash acquired............ (27,490,000) ------------ ------------ ------------ Net cash from (used for) investments... (54,160,000) (23,470,000) (24,310,000) ------------ ------------ ------------ FINANCING: Long-term debt: Issuance................................. 27,920,000 Retirement............................... (43,280,000) (51,470,000) (330,000) Common stock dividends paid................... (8,060,000) (6,590,000) (5,130,000) ------------ ------------ ------------ Net cash from (used for) financing..... (23,420,000) (58,060,000) (5,460,000) ------------ ------------ ------------ CASH AND CASH EQUIVALENTS: Increase (decrease) for the year.............. 13,500,000 (15,280,000) 37,900,000 At beginning of the year...................... 92,390,000 107,670,000 69,770,000 ------------ ------------ ------------ At end of the year.......................... $105,890,000 $ 92,390,000 $107,670,000 ============ ============ ============
The accompanying notes are an integral part of the consolidated financial statements. F-6 53 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of TriMas Corporation and its wholly owned subsidiaries (the "Company"). All significant intercompany transactions have been eliminated. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. AFFILIATES As of December 31, 1996 MascoTech, Inc.'s common stock ownership in the Company approximated 41.5 percent, and Masco Corporation's common stock ownership approximated 4.3 percent. The Company has a corporate services agreement with Masco Corporation. Under the terms of the agreement, the Company pays a fee to Masco Corporation for various corporate support staff, administrative services, and research and development services. Such fee equals .8 percent of the Company's net sales, subject to certain adjustments, and totaled $3.3 million, $3.1 million and $3.0 million in 1996, 1995 and 1994. CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1996 the Company had $84.8 million invested in prime commercial paper of several United States issuers having the highest rating given by one of the two principal rating agencies. RECEIVABLES Receivables are presented net of an allowance for doubtful accounts of $1.9 million and $1.5 million at December 31, 1996 and 1995. INVENTORIES Inventories are stated at the lower of cost or net realizable value, with cost determined principally by use of the first-in, first-out method. PROPERTY AND EQUIPMENT Property and equipment additions, including significant betterments, are recorded at cost. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Maintenance and repair costs are charged to expense as incurred. DEPRECIATION AND AMORTIZATION Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of acquired companies is being amortized using the straight-line method over the periods estimated to be benefited, not exceeding F-7 54 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1. ACCOUNTING POLICIES (CONTINUED) 40 years. At December 31, 1996 and 1995, accumulated amortization of the excess of cost over net assets of acquired companies and other intangible assets was $36.6 million and $31.3 million. Amortization expense was $5.3 million, $5.0 million and $5.3 million in 1996, 1995 and 1994. As of each balance sheet date management assesses whether there has been an impairment in the value of excess of cost over net assets of acquired companies by comparing anticipated undiscounted future cash flows from the related operating activities with the carrying value. The factors considered by management in performing this assessment include current operating results, trends and prospects, as well as the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment at December 31, 1996. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying values of financial instruments classified in the balance sheet as current assets and current liabilities approximate fair values. The fair value of notes receivable, a portion of which is included in both receivables and other assets, based on discounted cash flows using current interest rates, approximates the carrying value of $9.6 million at December 31, 1996. The carrying amount of borrowings from banks approximates fair value as the floating rates applicable to this debt generally reflect changes in overall market interest rates. The fair value of the Company's Convertible Subordinated Debentures, based on quoted market prices, was $124.8 million at December 31, 1996 and $112.7 million at December 31, 1995, as compared to the carrying value on such dates of $115.0 million. FOREIGN CURRENCY TRANSLATION Net assets of the Company's operations outside of the United States are translated into U.S. dollars using current exchange rates with the effects of translation adjustments deferred and included as a separate component of shareholders' equity. Revenues and expenses are translated at the average rates of exchange during the period. EARNINGS PER COMMON SHARE Primary earnings per common share in 1996, 1995 and 1994 were calculated on the basis of 37.0 million weighted average common and common equivalent shares outstanding. Fully diluted earnings per common share in 1996, 1995 and 1994 were calculated on the basis of 42.1 million weighted average common and common equivalent shares outstanding. F-8 55 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2. ACQUISITIONS In June 1996 the Company acquired Queensland Towbars Pty. Ltd. ("Queensland"), in July it acquired The Englass Group Limited ("Englass"), and in the fourth quarter it acquired Heinrich Stolz GmbH ("Stolz") and Beaumont Bolt & Gasket Co. ("Beaumont"), all for an aggregate $54.2 million of cash and assumed liabilities. The acquisitions were accounted for as purchases. The aggregate excess of cost over net assets acquired of $28.8 million is being amortized on a straight-line basis over 40 years. The results of operations of the acquired businesses have been included in the consolidated financial statements from the respective acquisition dates. Additional purchase price amounts, contingent upon the achievement of specified levels of future profitability by certain of the businesses, may be payable in 1997. These payments, if required, will be recorded as additional excess of cost over net assets of acquired companies. Englass is a United Kingdom-based supplier of specialty dispensing and packaging products with applications in toiletry, pharmaceutical, veterinary, food and consumer household markets. Stolz, based in Neunkirchen, Germany, manufactures a wide variety of closures for industrial packaging markets. Queensland is Australia's second largest manufacturer of vehicle hitches and towing products. Beaumont, based in Texas, manufactures and distributes specialty metallic and nonmetallic gaskets, and complementary bolts and fasteners used in the refinery, chemical and petrochemical industries. On a pro forma, unaudited basis, as if the 1996 acquisitions had all occurred as of January 1, 1995, net sales, net income, primary earnings per common share and fully diluted earnings per common share for 1996 would have been $631.5 million, $63.1 million, $1.71 and $1.59, and net sales, net income, primary earnings per common share and fully diluted earnings per common share for 1995 would have been $592.6 million, $57.6 million, $1.56 and $1.46. NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 -------- -------- -------- Interest paid............................................... $10,610 $13,560 $12,110 ======= ======= ======= Income taxes paid........................................... $33,180 $30,690 $30,440 ======= ======= ======= Significant noncash transactions: Common stock dividends declared, payable in subsequent year................................................... $ 2,200 $ 1,830 $ 1,460 ======= ======= ======= Assumption of liabilities as partial consideration for the assets of companies acquired........................... $26,720 ======= Increase in obligation, including accrued interest, to former owner, MascoTech, Inc., of business acquired, recorded as additional excess of cost over net assets of acquired companies.................................. $ 5,850 =======
F-9 56 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4. INVENTORIES
(IN THOUSANDS) AT DECEMBER 31, ------------------ 1996 1995 ------- ------- Finished goods.............................................. $53,380 $47,490 Work in process............................................. 14,340 14,200 Raw material................................................ 24,490 23,800 ------- ------- $92,210 $85,490 ======= =======
NOTE 5. PROPERTY AND EQUIPMENT
(IN THOUSANDS) AT DECEMBER 31, -------------------- 1996 1995 -------- -------- Cost: Land and land improvements................................ $ 14,010 $ 13,380 Buildings................................................. 71,260 65,560 Machinery and equipment................................... 240,960 211,540 -------- -------- 326,230 290,480 Less accumulated depreciation............................... 131,690 116,780 -------- -------- $194,540 $173,700 ======== ========
Depreciation expense was $17.7 million, $16.4 million and $15.2 million in 1996, 1995 and 1994. NOTE 6. OTHER CURRENT LIABILITIES
(IN THOUSANDS) AT DECEMBER 31, --------------------- 1996 1995 ------- ------- Employee wages and benefits................................. $18,570 $16,010 Amount due former owner, MascoTech, Inc., of business acquired.................................................. 5,850 Current income taxes........................................ 3,810 1,080 Interest.................................................... 2,710 2,820 Dividends................................................... 2,200 1,830 Property taxes.............................................. 1,930 1,890 Other....................................................... 10,360 6,110 ------- ------- $45,430 $29,740 ======= =======
F-10 57 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7. LONG-TERM DEBT
(IN THOUSANDS) AT DECEMBER 31, ----------------------- 1996 1995 -------- -------- Borrowings from banks....................................... $ 68,030 $ 72,000 5% Convertible Subordinated Debentures Due 2003............. 115,000 115,000 Other....................................................... 4,260 410 -------- -------- 187,290 187,410 Less current maturities..................................... 170 210 -------- -------- $187,120 $187,200 ======== ========
At December 31, 1996 borrowings from banks are owing under the Company's domestic $350.0 million revolving credit facility ($33.0 million), its L20.0 million revolving credit facility in England ($19.3 million), its DM 30.0 million revolving credit facility in Germany ($9.0 million) and other borrowing arrangements in Germany ($6.7 million). At December 31, 1995 borrowings from banks were owing under the domestic facility. The domestic facility permits the Company to borrow under several different interest rate options, while the foreign facilities base interest rates on the London Interbank Offered Rate (LIBOR). At December 31, 1996 the blended interest rate on bank borrowings equaled 5.9 percent. The facilities contain certain restrictive covenants, the most restrictive of which, at December 31, 1996, required $270.1 million of shareholders' equity. The Company had available credit of $341.8 million under its revolving credit facilities at December 31, 1996. During February 1997 TriMas called for redemption, on March 21, 1997, its outstanding issue of $115.0 million of 5% Convertible Subordinated Debentures Due 2003. The Debentures are convertible at the option of the holders through March 20, 1997 into shares of Company common stock at a conversion price of $22 5/8 per share. The Company currently plans to use long-term borrowings under its domestic revolving credit facility to redeem the Debentures. The redemption price for the Debentures will be 103.33 percent of the principal amount. Any premium and unamortized debt issuance costs associated with the Debentures redeemed will be recorded as an extraordinary charge, on an after tax basis, in the first quarter of 1997. F-11 58 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 8. SHAREHOLDERS' EQUITY
(IN THOUSANDS) CUMULATIVE COMMON PAID-IN RETAINED TRANSLATION STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL ------ -------- -------- ----------- -------- Balance, January 1, 1994................... $370 $154,190 $ 91,700 $(1,410) $244,850 Net income............................... 50,100 50,100 Common stock dividends................... (5,490) (5,490) Other.................................... 1,020 120 1,140 ---- -------- -------- ------- -------- Balance, December 31, 1994................. 370 155,210 136,310 (1,290) 290,600 Net income............................... 56,020 56,020 Common stock dividends................... (6,960) (6,960) Other.................................... 220 (1,210) (990) ---- -------- -------- ------- -------- Balance, December 31, 1995................. 370 155,430 185,370 (2,500) 338,670 Net income............................... 61,360 61,360 Common stock dividends................... (8,440) (8,440) Other.................................... 260 (1,400) (1,140) ---- -------- -------- ------- -------- Balance, December 31, 1996................. $370 $155,690 $238,290 $(3,900) $390,450 ==== ======== ======== ======= ========
On the basis of amounts paid (declared), cash dividends per common share were $.22 ($.23) in 1996, $.18 ($.19) in 1995 and $.14 ($.15) in 1994. Under a Stock Repurchase Agreement which expires in December 1998, Masco Corporation and MascoTech, Inc. have the right to sell to the Company, at approximate fair market value, shares of Company common stock following the occurrence of certain events that would result in an increase in their respective ownership percentage of the then outstanding shares of Company common stock. Such events include repurchases of Company common stock initiated by TriMas or any of its subsidiaries, and reacquisitions of Company common stock through forfeitures of shares previously awarded by the Company pursuant to its employee stock incentive plans. In each case, TriMas has control over the amount of Company common stock it would ultimately acquire, including shares subject to repurchase under the Stock Repurchase Agreement. The aforementioned rights expire 30 days from the date notice of an event is given by TriMas and neither Masco Corporation nor MascoTech, Inc. have ever exercised their right to sell Company common stock to the Company. To the extent these rights have been exercised at any balance sheet date, the Company would reclassify from permanent capital an amount representative of the repurchase obligation. F-12 59 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9. STOCK OPTIONS AND AWARDS The Company's stock incentive plans include the TriMas Corporation 1995 Long Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the 1988 Stock Option Plan. Company common stock available for grant under these plans includes the 2,000,000 shares initially established under the 1995 plan, plus additional shares resulting from certain reacquisitions of shares by the Company. The Company granted long-term incentive awards of Company common stock, net, for 159,071 shares in 1996, 290,588 shares in 1995 and 88,118 shares in 1994, to key employees of the Company. The weighted average fair value per share, on date of grant, of long-term incentive awards granted in 1996 and 1995 was $19.66 and $23.21. Compensation expense recorded in 1996, 1995 and 1994 related to long-term incentive awards was $2.2 million, $1.6 million and $1.2 million. The unamortized costs of incentive awards, aggregating $14.0 million at December 31, 1996, are being amortized over the ten year vesting periods. Fixed stock options are granted to key employees of the Company and have a maximum term of ten years. The exercise price of each fixed option equals the market price of the Company's common stock on the date of grant. The options generally vest in installments beginning in the second year and extending through the eighth year after grant. For the three years ended December 31, 1996 stock option information is as follows:
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------- 1996 1995 1994 --------- --------- --------- Options outstanding, January 1.............................. 576,064 594,200 604,000 Options granted: At option prices per share of $18.38-$25.50............... 16,154 4,864 Weighted average option price per share................... $22.12 $23.35 Options exercised: At option price per share of $8.88........................ 53,661 23,000 9,800 Options outstanding, December 31: At option prices per share of $7.50-$8.88................. 517,539 571,200 594,200 Weighted average option price per share................ $8.45 $8.49 $8.50 Weighted average remaining term........................ 3.5 years 4.6 years 5.6 years At option prices per share of $18.38-$25.50............... 21,018 4,864 Weighted average option price per share................ $22.40 $23.35 Weighted average remaining term........................ 4.3 years 5.3 years Exercisable, December 31.................................... 312,552 260,464 218,000 Weighted average option price per share................... $8.94
The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock based compensation. Accordingly, no compensation expense has been charged against income for fixed stock option grants. Had compensation expense been determined based on the fair value at the 1996 and 1995 grant dates, consistent with the methodology of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the pro forma effects on the Company's net income and earnings per share would not have been material. At December 31, 1996 and 1995, a combined total of 2,011,642 and 2,055,803 shares of Company common stock were available for the granting of options and incentive awards under the aforementioned plans. F-13 60 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10. RETIREMENT PLANS The Company has noncontributory retirement benefit plans, both defined benefit plans and profit-sharing and other defined contribution plans, for most of its employees. The annual expense for all plans was:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 ------ ------ ------ Defined contribution plans.................................. $2,480 $3,470 $3,320 Defined benefit plans....................................... 2,660 1,690 890 ------ ------ ------ $5,140 $5,160 $4,210 ====== ====== ======
Contributions to profit-sharing and other defined contribution plans are generally determined as a percentage of the covered employee's annual salary. Defined benefit plans provide retirement benefits for salaried employees based primarily on years of service and average earnings for the five highest consecutive years of compensation. Defined benefit plans covering hourly employees generally provide benefits of stated amounts for each year of service. These plans are funded based on an actuarial evaluation and review of the assets, liabilities and requirements of each plan. Plan assets are held by a trustee and invested principally in cash equivalents and marketable equity and fixed income instruments. Net periodic pension cost of defined benefit plans includes the following components:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, ----------------------------------- 1996 1995 1994 ------- ------- ------- Service cost................................................ $ 2,670 $ 2,000 $ 2,490 Interest cost............................................... 3,980 3,570 3,310 Actual (return)/loss on assets.............................. (4,010) (5,360) 1,820 Net amortization and deferral............................... 20 1,480 (6,730) ------- ------- ------- $ 2,660 $ 1,690 $ 890 ======= ======= =======
Weighted average rate assumptions used were as follows:
1996 1995 1994 ----- ----- ----- Discount rate............................................... 7.5% 7.3% 8.5% Rate of increase in compensation levels..................... 5.1% 5.1% 5.1% Expected long-term rate of return on plan assets............ 10.6% 10.7% 12.5%
F-14 61 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10. RETIREMENT PLANS (CONTINUED) The following table sets forth the funded status of the defined benefit plans:
(IN THOUSANDS) AT DECEMBER 31, -------------------------------------------------------- 1996 1995 -------------------------- -------------------------- PLANS PLANS PLANS PLANS WHERE WHERE WHERE WHERE ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of: Vested benefit obligation.................... $30,850 $12,060 $30,680 $11,530 ======= ======= ======= ======= Accumulated benefit obligation............... $31,220 $14,190 $31,000 $12,960 ======= ======= ======= ======= Projected benefit obligation................. $41,030 $15,270 $39,900 $13,980 Plan assets at fair value...................... 35,660 9,200 33,640 7,790 ------- ------- ------- ------- Projected benefit obligation (in excess of) or less than plan assets........................ (5,370) (6,070) (6,260) (6,190) Unrecognized net (asset) or obligation......... (980) 390 (1,160) 420 Unrecognized prior service cost................ 400 1,680 440 1,670 Unrecognized net (gain) or loss................ 5,630 3,240 7,910 3,230 Requirement to recognize minimum liability..... (4,220) (4,300) ------- ------- ------- ------- Prepaid pension cost or (pension liability).............................. $ (320) $(4,980) $ 930 $(5,170) ======= ======= ======= =======
The Company provides postretirement health care and life insurance benefits for certain eligible retired employees under unfunded plans. Some of the plans have cost-sharing provisions. Net periodic postretirement benefit costs during 1996, 1995 and 1994 were $1.0 million, $.8 million and $.8 million. The aggregate accumulated postretirement benefit obligation of these unfunded plans was $7.1 million at both December 31, 1996 and 1995. The discount rates used in determining the accumulated postretirement benefit obligations and the net periodic postretirement benefit costs were 7.5 percent, 7.3 percent and 8.5 percent in 1996, 1995 and 1994. The assumed health care cost trend rate in 1996 was 12.0 percent, decreasing to an ultimate rate in the years subsequent to 2001 of seven percent. A one percent increase in the assumed health care cost trend rates would have increased the net periodic postretirement benefit cost by $.1 million during 1996 and would have increased the accumulated postretirement benefit obligation at December 31, 1996 by $.9 million. The Company is amortizing the unrecognized transition accumulated postretirement benefit obligation and subsequent plan net gains and losses in accordance with Statement of Financial Accounting Standards No. 106. The accrued postretirement benefit obligation was $3.5 million and $3.1 million at December 31, 1996 and 1995. F-15 62 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION The Company's operations in its business segments consist principally of the manufacture and sale of the following: Specialty Fasteners: Cold formed fasteners and related metallurgical processing. Towing Systems: Vehicle hitches, jacks, winches, couplers and related towing accessories. Specialty Container Products: Industrial container closures, pressurized gas cylinders and metallic and nonmetallic gaskets. Corporate Companies: Specialty drills, cutters and specialized metal finishing services, and flame-retardant facings and jacketings and pressure-sensitive tapes. F-16 63 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION (CONTINUED)
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, -------------------------------------- 1996 1995 1994 -------- -------- -------- NET SALES Specialty Fasteners.................................. $141,510 $141,050 $138,720 Towing Systems....................................... 189,540 175,000 163,130 Specialty Container Products......................... 189,320 165,670 163,880 Corporate Companies.................................. 79,860 71,770 69,750 -------- -------- -------- Total net sales................................... $600,230 $553,490 $535,480 ======== ======== ======== OPERATING PROFIT Specialty Fasteners.................................. $ 25,740 $ 27,290 $ 24,280 Towing Systems....................................... 31,480 31,080 25,660 Specialty Container Products......................... 42,890 39,040 39,060 Corporate Companies.................................. 11,980 8,420 9,850 -------- -------- -------- Total operating profit............................ 112,090 105,830 98,850 Other income (expense), net............................ (3,700) (6,840) (7,900) General corporate expense.............................. (7,800) (7,150) (7,450) -------- -------- -------- Income before income taxes........................ $100,590 $ 91,840 $ 83,500 ======== ======== ======== IDENTIFIABLE ASSETS AT DECEMBER 31 Specialty Fasteners.................................. $143,060 $146,200 $137,190 Towing Systems....................................... 158,840 151,160 148,890 Specialty Container Products......................... 231,610 149,790 150,360 Corporate Companies.................................. 57,220 56,230 55,210 Corporate (A)........................................ 105,940 112,980 123,490 -------- -------- -------- Total assets...................................... $696,670 $616,360 $615,140 ======== ======== ======== CAPITAL EXPENDITURES Specialty Fasteners.................................. $ 4,500 $ 10,840 $ 9,140 Towing Systems....................................... 9,160 4,790 6,720 Specialty Container Products......................... 23,170 5,780 5,420 Corporate Companies.................................. 2,690 2,030 3,000 Corporate............................................ 10 30 30 -------- -------- -------- Total capital expenditures........................ $ 39,530(B) $ 23,470 $ 24,310 ======== ======== ======== DEPRECIATION AND AMORTIZATION Specialty Fasteners.................................. $ 7,510 $ 7,230 $ 6,970 Towing Systems....................................... 6,070 5,610 5,390 Specialty Container Products......................... 6,690 6,140 5,790 Corporate Companies.................................. 2,590 2,430 2,360 Corporate............................................ 70 70 70 -------- -------- -------- Total depreciation and amortization............... $ 22,930 $ 21,480 $ 20,580 ======== ======== ========
- ------------------------- (A) Corporate assets consist primarily of cash and cash equivalents. (B) Including $12.9 million from businesses acquired. Sales of the Company's foreign operations equaled $46.0 million, $33.7 million and $35.2 million in 1996, 1995 and 1994. Identifiable assets of foreign operations totaled $82.9 million, $32.4 million and $26.5 million at December 31, 1996, 1995 and 1994. Export sales equaled less than ten percent of total sales for each of the three years presented. F-17 64 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12. INCOME TAXES
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, ------------------------------------ 1996 1995 1994 -------- ------- ------- Income before income taxes: Domestic................................................. $ 92,990 $86,900 $79,040 Foreign.................................................. 7,600 4,940 4,460 -------- ------- ------- $100,590 $91,840 $83,500 ======== ======= ======= Provision for income taxes: Federal.................................................. $ 29,700 $23,810 $24,240 State and local.......................................... 4,690 4,460 4,100 Foreign.................................................. 2,740 1,990 1,850 Deferred, principally federal............................ 2,100 5,560 3,210 -------- ------- ------- $ 39,230 $35,820 $33,400 ======== ======= =======
The following is a reconciliation of the U.S. federal statutory tax rate to the effective tax rate:
FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 1996 1995 1994 ----- ----- ----- U.S. federal statutory tax rate............................. 35.0% 35.0% 35.0% State and local taxes, net of federal tax benefit........... 3.0 3.1 3.2 Foreign taxes in excess of U.S. federal tax rate............ .1 .3 .3 Nondeductible amortization of excess of cost over net assets of acquired companies..................................... .6 .7 .8 Other, net.................................................. .3 (.1) .7 ----- ----- ----- Effective tax rate..................................... 39.0% 39.0% 40.0% ===== ===== =====
Items that gave rise to deferred taxes:
(IN THOUSANDS) AT DECEMBER 31, ------------------------------------------------------------------ 1996 1995 ------------------------------ ------------------------------ DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX ASSETS LIABILITIES ASSETS LIABILITIES ------------ ------------ ------------ ------------ Property and equipment...................... $23,940 $22,240 Intangible assets........................... 4,960 3,840 Accrued employee benefits................... $2,950 $1,200 Inventory................................... 620 1,080 Other....................................... 1,420 4,480 910 3,400 ------ ------- ------ ------- $4,990 $33,380 $3,190 $29,480 ====== ======= ====== =======
F-18 65 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) NOTE 13. INTERIM FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) FIRST QUARTER SECOND QUARTER -------------------- -------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Net sales........................................... $147,700 $147,600 $160,200 $151,920 Gross profit........................................ $ 47,460 $ 47,600 $ 53,460 $ 50,530 Net income.......................................... $ 14,130 $ 13,440 $ 17,820 $ 16,560 Primary earnings per common share................... $.38 $.36 $.48 $.45 Fully diluted earnings per common share............. $.36 $.34 $.45 $.42 Weighted average common and common equivalent shares outstanding: Primary........................................ 36,966 36,996 36,983 37,001 Fully diluted.................................. 42,067 42,090 42,065 42,088
THIRD QUARTER FOURTH QUARTER -------------------- -------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Net sales........................................... $149,620 $131,880 $142,710 $122,090 Gross profit........................................ $ 47,790 $ 42,520 $ 48,140 $ 41,370 Net income.......................................... $ 14,440 $ 13,220 $ 14,970 $ 12,800 Primary earnings per common share................... $.39 $.36 $.40 $.35 Fully diluted earnings per common share............. $.37 $.34 $.38 $.33 Weighted average common and common equivalent shares outstanding: Primary........................................ 36,977 36,998 36,978 36,978 Fully diluted.................................. 42,072 42,080 42,063 42,061
Earnings per common share in the fourth quarter of 1996 and 1995 were improved by $.06 and $.07, net, resulting from year end adjustments to estimates recorded earlier in each year. Amounts adjusted include rebates from raw material suppliers, required year end insurance reserves and incentive compensation accruals whose final determinations require actual results for the year. Quarterly earnings per common share amounts for both 1996 and 1995 do not total to the full year amounts due to rounding. QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
MARKET PRICE ------------- DIVIDENDS HIGH LOW DECLARED ----- ----- --------- 1996 - ----- 4th Quarter.................................... $25 1/2 $22 3/8 $.06 3rd Quarter.................................... 24 1/4 19 7/8 .06 2nd Quarter.................................... 25 1/2 20 7/8 .06 1st Quarter.................................... 24 3/8 16 7/8 .05 1995 - ----- 4th Quarter.................................... $22 1/4 $18 3/8 $.05 3rd Quarter.................................... 25 1/2 20 .05 2nd Quarter.................................... 24 1/4 20 1/4 .05 1st Quarter.................................... 22 3/4 19 5/8 .04
F-19 66 TRIMAS CORPORATION FINANCIAL STATEMENT SCHEDULE PURSUANT TO ITEM 14(A)(2) OF FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION Schedule, as required, for the years ended December 31, 1996, 1995 and 1994:
PAGES ----- II. Valuation and Qualifying Accounts........................... F-21
F-20 67 TRIMAS CORPORATION SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- -------- -------------------------- -------- -------- ADDITIONS -------------------------- CHARGED CHARGED BALANCE AT (CREDITED) (CREDITED) BALANCE BEGINNING TO COST TO OTHER AT END DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD ----------- ---------- ------------ ---------- ---------- --------- (A) (B) Allowance for doubtful accounts, deducted from accounts receivable in the balance sheet: 1996............................... $1,530,000 $360,000 $600,000 $640,000 $1,850,000 ========== ======== ======== ======== ========== 1995............................... $2,040,000 $270,000 $ -- $780,000 $1,530,000 ========== ======== ======== ======== ========== 1994............................... $1,800,000 $620,000 $ -- $380,000 $2,040,000 ========== ======== ======== ======== ==========
Notes: (A) Allowance of companies acquired, and other adjustments, net. (B) Doubtful accounts charged off, less recoveries. F-21 68 EXHIBIT INDEX
EXHIBIT PAGE NUMBER DESCRIPTION NO. - ------- ----------- ---- 3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments thereto.(2) 3.ii Bylaws of MascoTech, Inc., as amended.(6) 4.a.i Indenture dated as of November 1, 1986 between Masco Industries Inc. (now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and Directors' resolutions establishing the Company's 4 1/2% Convertible Subordinated Debentures Due 2003.(4) 4.a.ii Agreement of Appointment and Acceptance of Successor Trustee date as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First National Bank of Chicago.(3) 4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc. and The First National Bank of Chicago, as trustee.(3) 4.b Credit Agreement dated as of February 28, 1997, by and among MascoTech, Inc., the banks party thereto, NBD Bank, as agent for the banks, and Comerica Bank, The Bank of New York, Nationsbank, N.A. and Bank of America Illinois, as co-agents. 4.c Credit Agreement dated February 1, 1993 among TriMas Corporation, certain banks party thereto and NationsBank of North Carolina, N.A. (now known as NationsBank, N.A. (Carolinas)), as Agent(7), and First Amendment dated as of June 30, 1995.(1) NOTE: Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of MascoTech, Inc. or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10% of MascoTech, Inc.'s consolidated assets, and (ii) such instruments, notes and extracts will be furnished by MascoTech, Inc. to the Securities and Exchange Commission upon request. 10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(1) 10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation(7) and Amendment No. 1 dated as of October 31, 1996.(8) 10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation(1) and Amendment No. 1 dated as of October 31, 1996.(8) 10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation and related letter dated September 20, 1985, Amendment to Stock Repurchase Agreement dated as of December 20, 1990 and Agreement dated as of November 23, 1993 including an amendment to Stock Repurchase Agreement.(4) 10.e Amended and Restated Securities Purchase Agreement dated as of November 23, 1993 ("Securities Purchase Agreement") between MascoTech, Inc. and Masco Corporation, including form of Note(5), Agreement dated as of November 23, 1993 relating thereto(4), and Amendment No. 1 to the Securities Purchase Agreement dated as of October 31, 1996.(8) 10.f Registration Agreement dated as of March 31, 1993 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(2) 10.g Stock Purchase Agreement dated as of October 15, 1996 between Masco Corporation and MascoTech, Inc.(8) and related promissory note. 10.h Stock Purchase Agreement dated as of October 15, 1996 between Richard A. Manoogian and MascoTech, Inc.(8) and related promissory note. NOTE: Exhibits 10.i through 10.r constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate.
69 10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan (Restated December 6, 1995).(1) 10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995).(1) 10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).(1) 10.1 Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December 6, 1995).(1) 10.m Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995).(1) 10.n Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).(1) 10.o Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).(1) 10.p MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(2) 10.q MascoTech, Inc. Benefits Restoration Plan.(2) 10.r Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as MascoTech, Inc.) and certain of its officers(2), and acknowledgment of amendment thereto by Richard A. Manoogian (filed as part of Exhibit 10.v). 10.s Assumption and Indemnification Agreement dated as of December 27, 1988 between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(7) 10.t Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.u Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.v Registration Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation(6), Amendment dated as of April 21, 1992 (filed herewith), Amendment to Registration Agreement dated as of January 5, 1993(6), Amendment to Registration Agreement dated as of May 26, 1994(2), and Amendment to Registration Agreement dated as of May 15, 1996 (filed herewith). 10.w Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital Corporation). 10.x Bridge Credit Agreement dated as of January 3, 1997 among MSX International, Inc., Citicorp Venture Capital, Ltd. and MascoTech, Inc. 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 21 List of Subsidiaries. 23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and Financial Statement Schedule. 23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial Statements and Financial Statement Schedule. 27 Financial Data Schedule.
- --------------- (1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995. (2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. (3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. (4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993. 70 (5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 22, 1993. (6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated June 22, 1993. (7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992. (8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 13, 1996. EX-4.B 2 EXHIBIT 4B 1 EXHIBIT 4.b Execution Copy MASCOTECH, INC. ________________________________________________ $575,000,000 CREDIT AGREEMENT DATED AS OF FEBRUARY 28, 1997 ______________________________________________ NBD BANK, AS AGENT AND COMERICA BANK, THE BANK OF NEW YORK, NATIONSBANK, N.A., AND BANK OF AMERICA ILLINOIS, AS CO-AGENTS 2 TABLE OF CONTENTS ARTICLE I. ............................................................ 1 DEFINITIONS ........................................................... 1 1.1 CERTAIN DEFINITIONS ....................................... 1 1.2 ACCOUNTING TERMS .......................................... 17 1.3 OTHER DEFINITIONS; RULES OF CONSTRUCTION .................. 17 ARTICLE II ........................................................... 18 TERMINATION OF EXISTING CREDIT AGREEMENT .............................. 18 2.1 TERMINATION ............................................... 18 ARTICLE III. .......................................................... 18 THE LOANS AND LETTER OF CREDIT ISSUANCES .............................. 18 3.1 SYNDICATED BORROWINGS...................................... 18 3.2 NOTICE OF SYNDICATED BORROWINGS............................ 18 3.3 LETTERS OF CREDIT.......................................... 19 3.4 BID-OPTION BORROWINGS ..................................... 22 3.5 NOTICE TO BANKS; FUNDING OF LOANS. ........................ 25 3.6 THE NOTES ................................................. 27 3.7 CERTAIN FEES .............................................. 27 3.8 TERMINATION OR REDUCTION OF COMMITMENTS.................... 28 3.9 MANDATORY TERMINATION OF COMMITMENTS....................... 28 3.10 EXTENSION OF SCHEDULED EXPIRATION DATE.................... 28 ARTICLE IV ............................................................ 29 PRINCIPAL PAYMENTS; INTEREST; ETC ..................................... 29 4.1 SCHEDULED PRINCIPAL PAYMENTS .............................. 29 4.2 PREPAYMENTS OF PRINCIPAL .................................. 29 4.3 INTEREST PAYMENTS ......................................... 30 4.4 PAYMENT PROCEDURES ........................................ 31 4.5 COMPUTATION OF INTEREST AND FEES .......................... 32 3 4.6 NO SETOFF OR DEDUCTION .................................... 32 4.7 OTHER PROVISIONS APPLICABLE TO FOREIGN CURRENCY BID-OPTION LOANS .......................................... 32 ARTICLE V.............................................................. 33 CHANGE IN CIRCUMSTANCES ............................................... 33 5.1 IMPOSSIBILITY; INTEREST RATE INADEQUATE OR UNFAIR ......... 33 5.2 ILLEGALITY................................................. 33 5.3 INCREASED COST; YIELD PROTECTION........................... 34 5.4 SUBSTITUTE LOANS........................................... 36 5.5 FUNDING LOSSES............................................. 36 ARTICLE VI............................................................. 37 REPRESENTATIONS AND WARRANTIES......................................... 37 6.1 CORPORATE EXISTENCE AND POWER.............................. 37 6.2 CORPORATE AUTHORITY; NO VIOLATIONS; GOVERNMENTAL FILINGS; ETC ................................. 37 6.3 BINDING EFFECT ............................................ 37 6.4 LITIGATION ................................................ 37 6.5 TAXES...................................................... 38 6.6 FINANCIAL CONDITION........................................ 38 6.7 COMPLIANCE WITH ERISA ..................................... 38 6.8 ENVIRONMENTAL MATTERS ..................................... 38 6.9 COMPLIANCE WITH LAWS ...................................... 39 ARTICLE VII............................................................ 39 COVENANTS ............................................................. 39 7.1 FINANCIAL STATEMENTS ...................................... 39 7.2 CERTIFICATES OF NO DEFAULT AND COMPLIANCE ................. 40 7.3 PRESERVATION OF CORPORATE EXISTENCE, ETC. ................ 41 7.4 [INTENTIONALLY OMITTED] ................................... 41 7.5 TOTAL LEVERAGE RATIO ...................................... 41 7.6 [INTENTIONALLY OMITTED] ................................... 41 7.7 TANGIBLE CAPITAL FUNDS..................................... 41 7.8 SENIOR DEBT COVERAGE ...................................... 46 4 7.9 SUBSIDIARY INDEBTEDNESS.................................... 41 7.10 NEGATIVE PLEDGE .......................................... 42 7.11 DISPOSITIONS OF ASSETS; MERGERS AND CONSOLIDATIONS; RESTRICTED TRANSFERS...................................... 43 7.12 CHANGES IN SUBORDINATED DEBT ............................. 43 7.13 USE OF PROCEEDS........................................... 43 7.14 FISCAL YEAR............................................... 44 7.15 COMPLIANCE WITH LAWS...................................... 44 ARTICLE VIII........................................................... 44 CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES ............... 44 8.1 EACH BORROWING AND LETTER OF CREDIT ISSUANCE............... 44 8.2 INITIAL BORROWING OR LETTER OF CREDIT ISSUANCE............. 45 8.3 CLOSING ................................................... 45 ARTICLE IX............................................................. 46 EVENTS OF DEFAULT AND REMEDIES ........................................ 46 9.1 EVENTS OF DEFAULT.......................................... 46 9.2 REMEDIES................................................... 48 9.3 SET OFF ................................................... 48 ARTICLE X.............................................................. 49 THE AGENTS AND THE BANKS .............................................. 49 10.1 APPOINTMENT AND AUTHORIZATION............................. 49 10.2 AGENT AND AFFILIATES ..................................... 49 10.3 SCOPE OF AGENT'S DUTIES .................................. 49 10.4 RELIANCE BY AGENT ........................................ 49 10.5 DEFAULT .................................................. 49 10.6 LIABILITY OF AGENT........................................ 50 10.7 NONRELIANCE ON AGENT AND OTHER BANKS...................... 50 10.8 INDEMNIFICATION........................................... 50 10.9 RESIGNATION OF AGENT...................................... 51 10.10 SHARING OF PAYMENTS...................................... 51 10.11 WITHHOLDING TAX EXEMPTION ............................... 51 5 10.12 THE CO-AGENTS ........................................... 52 ARTICLE XI............................................................. 52 MISCELLANEOUS ......................................................... 52 11.1 AMENDMENTS, ETC........................................... 52 11.2 NOTICES................................................... 53 11.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE................. 53 11.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS............ 53 11.5 EXPENSES AND INDEMNIFICATION.............................. 54 11.6 SUCCESSORS AND ASSIGNS.................................... 55 11.7 CONFIDENTIALITY.......................................... 57 11.8 COUNTERPARTS; EFFECTIVENESS OF TELECOPIED SIGNATURES...... 58 11.9 TABLE OF CONTENTS AND HEADINGS............................ 58 11.10 CONSTRUCTION OF CERTAIN PROVISIONS....................... 58 11.11 INDEPENDENCE OF COVENANTS................................ 58 11.12 INTEREST RATE LIMITATION................................. 58 11.13 SUBSTITUTION OF BANKS.................................... 59 11.14 COLLATERAL............................................... 59 11.15 GOVERNING LAW............................................ 59 11.16 INTEGRATION AND SEVERABILITY............................. 59 11.17 WAIVER OF JURY TRIAL..................................... 59 6 SCHEDULES AND EXHIBITS SCHEDULES Schedule 1 - Applicable Margin Chart SCHEDULE 2 - Certain Industrial Revenue Bonds (See Section 9.1(e) of the Credit Agreement) EXHIBITS Exhibit A - Syndicated Note Exhibit B - Bid-Option Note Exhibit C - Notice of Syndicated Borrowing Exhibit D - Request for Letter of Credit Issuance Exhibit E - Bid-Option Quote Request Exhibit F - Invitation for Bid-Option Quotes Exhibit G - Bid-Option Quote Exhibit H - Notice of Disbursement of Foreign Currency Bid-Option Loan Exhibit I - Notice of Receipt of Foreign Currency Bid-Option Loan Payment Exhibit J - Securities Purchase Agreement Exhibit K - Assignment and Acceptance Exhibit L - Notice of Substitution of Bank(s) Exhibit M - Opinion of Counsel for the Company Exhibit N - Opinion of Counsel for the Agent Exhibit O - Terms of Subordination 7 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of February 28, 1997 (as amended, supplemented or otherwise modified from time to time, this "Agreement"), is by and among MASCOTECH, INC., a Delaware corporation formerly named Masco Industries, Inc. (the "Company"), the lenders party hereto from time to time (collectively, the "Banks" and individually, a "Bank"), NBD BANK, a Michigan banking corporation formerly named NBD Bank, N.A., as agent (in such capacity, the "Agent") for the Banks, and COMERICA BANK, a Michigan banking corporation, THE BANK OF NEW YORK, a New York banking corporation, NATIONSBANK, N.A., a national banking association, and BANK OF AMERICA ILLINOIS, an Illinois banking corporation, as co-agents (in such capacity, the "Co-Agents"). RECITALS: A. The Company, the Existing Banks (as hereinafter defined) and the Existing Agent (as hereinafter defined) have entered into the Existing Credit Agreement (as hereinafter defined), pursuant to which the Existing Banks provided to the Company a revolving credit facility in the maximum aggregate principal amount of $675,000,000. B. The Company now desires to replace the existing revolving credit facility under the Existing Credit Agreement with a new revolving credit facility in an aggregate principal amount the Dollar Equivalent (as hereinafter defined) of which does not exceed $575,000,000, including standby letters of credit in an aggregate amount not exceeding $20,000,000, in order to provide funds for its general corporate purposes. C. The Banks are willing to provide such a replacement revolving credit facility on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual promises contained herein, the parties hereto agree as follows: ARTICLE I. DEFINITIONS 1.1 Certain Definitions. As used in this Agreement, and in any certificate, report, other agreement or other document made or delivered pursuant to this Agreement, the following terms shall have the following respective meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined unless the context otherwise requires): "Absolute Rate Dollar Bid-Option Loan" means a Loan which pursuant to the applicable Notice of Borrowing is made at the Bid-Option Absolute Rate. "Acquired Debt" means, with respect to any Person who becomes a Subsidiary after the Closing Date, Debt of such Person which was outstanding before such Person became a Subsidiary and which was not created in contemplation of such Person becoming a Subsidiary. "Additional Bank" shall have the meaning ascribed thereto in Section 11.13(b). MASCOTECH, INC. CREDIT AGREEMENT -1- 8 "Adjusted Net Worth" means, as of any date, the sum of (a) Net Worth, plus (b) the Deferred Trimas Gain, plus (or, if the amount determined pursuant to the following clause (c) is negative, minus the absolute amount thereof, provided that such amount, if subtracted, shall not exceed the amount determined pursuant to clause (b) of this definition) (c) the amount equal to 33-1/3% of the difference of (i) the aggregate Market Value of all shares of common stock of Trimas owned by the Company on such date, minus (ii) the aggregate value at which such common stock is carried on the Company's books on such date, plus (d) an amount equal to the lesser of (i) the Deferred MSX Gain or (ii) $35,000,000. "Affiliate", when used with respect to any Person, means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person. For purposes of this definition, "control" (including the correlative meanings of the terms "controlled by" and "under common control with"), with respect to any Person, shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Applicable Lending Office" means, as to any Bank, its Domestic Lending Office, Eurodollar Lending Office or any other office of such Bank or of any Affiliate of such Bank selected and notified to the Company and the Agent as the applicable lending office for a particular Loan or type of Loan by such Bank; provided that the Company shall not be responsible for the increase, if any, in costs hereunder that (a) are due to any Bank changing its Applicable Lending Office with respect to a particular Loan or type of Loan and (b) arise because of circumstances existing at the time of such change. "Applicable Margin" means, with respect to any Application Period for Eurodollar Rate Syndicated Loans, CD Rate Loans, Facility Fees and Letters of Credit, the percentage found in the applicable chart set forth on Schedule 1 attached hereto by reading down the column of Senior Leverage Ratio ranges to the row for the range into which the Senior Leverage Ratio as of the relevant Determination Date falls, and then reading across that row to the Interest Coverage Ratio column for the range into which the Interest Coverage Ratio for the relevant Determination Period falls. By way of example, if the Senior Leverage Ratio as of the relevant Determination Date is 0.53:1.00 and the Interest Coverage Ratio for the relevant Determination Period is 2.75:1.00, the Applicable Margin for Eurodollar Rate Syndicated Loans during the Application Period shall be 0.40%. For purposes of this definition of the term "Applicable Margin", (a) the term "Application Period" means a period commencing with and including the 60th day after the end of the most recently completed fiscal quarter of the Company to and including the 59th day after the end of the next following fiscal quarter of the Company, (b) the term "Determination Date" means, with respect to any Application Period, the last day of the Determination Period for such Application Period, (c) the term "Determination Period" means, with respect to any Application Period, the period of four consecutive fiscal quarters of the Company ending with the fiscal quarter ending immediately preceding such Application Period, and (d) any change in the Applicable Margin during any Interest Period for any Syndicated Loan shall be effective as to such Syndicated Loan upon such change in the Applicable Margin taking effect pursuant to this definition, but any change in the Applicable Margin while any Letter of Credit is outstanding shall not be effective with respect to such Letter of Credit for any quarterly period for which the fee for such Letter of Credit has already been paid under Section 3.3(c). For purposes of determining the Applicable Margin, (i) if the proceeds resulting from all Stock Issuances, net of the cost of all Stock Redemptions (other than any issuance or redemption, purchase, retirement or other acquisition in connection with the Company's employee stock award programs), or if the payments resulting from all Stock Redemptions, net of the proceeds resulting from all Stock Issuances, within 45 days after a Determination Date, exceed $10,000,000, the Senior Leverage Ratio shall be calculated on a pro forma basis to reflect the effect of all Stock Issuances and Stock Redemptions (other than any issuance or redemption, purchase retirement or other acquisition in MASCOTECH, INC. CREDIT AGREEMENT -2- 9 connection with the Company's employee stock award programs) and the related application of proceeds or funding or payment thereof within such 45-day period; and (ii) if the proceeds resulting from all Stock Issuances, net of the cost of Stock Redemptions (other than any issuance or redemption, purchase, retirement or other acquisition in connection with the Company's employee stock awards programs), or if the payments resulting from all Stock Redemptions, net of the proceeds resulting from all Stock Issuances, from the beginning of a Determination Period through and including the 45th day after the end of such Determination Period exceeds $10,000,000, the Interest Coverage Ratio for such Determination Period shall be calculated on a pro forma basis as if each such Stock Issuance and each such Stock Redemption (other than any issuance or redemption, purchase, retirement or other acquisition in connection with the Company's employee stock award programs) and the related application of proceeds or funding or payment thereof had occurred on the first day of such Determination Period. Notwithstanding anything in this definition of "Applicable Margin" to the contrary, if the Company has a Senior Debt Rating at any time, including at any time prior to the end of an Application Period, the Applicable Margin shall change on the date such Senior Debt Rating is effective such that the Applicable Margin is (x) 0.25% for Eurodollar Rate Syndicated Loans and, subject to clause (d) above, Letters of Credit, (y) 0.375% for CD Rate Loans and (z) 0.10% for Facility Fees. "Application Period" shall have the meaning ascribed thereto in the definition of the term "Applicable Margin". "Assignment and Acceptance" is defined in Section 11.6(d). "Available Masco Corporation Funding Commitment" means, as of any date, any unused and available amount of the "Commitment" of Masco Corporation under, and as defined in, the Securities Purchase Agreement, provided that such amount for purposes of this definition shall not exceed $100,000,000, provided that such "Commitment" relates only to the purchase by Masco Corporation of equity securities of the Company or of Subordinated Debt of the Company. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA that is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by the Company or any ERISA Affiliate of the Company. "Bid-Option Absolute Rate" means, with respect to any Absolute Rate Dollar Bid-Option Loan or Foreign Currency Bid-Option Loan, the Bid-Option Absolute Rate, as defined in Section 3.4(d)(ii)(D), that is offered for such Loan. "Bid-Option Auction" means a solicitation of Bid-Option Quotes setting forth Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the case may be, pursuant to Section 3.4(b). "Bid-Option Eurodollar Rate" means the sum of (a) the Bid-Option Eurodollar Rate Margin plus (b) the Eurodollar Base Rate. "Bid-Option Eurodollar Rate Margin" means, with respect to any Eurodollar Rate Bid-Option Loan, the Bid-Option Eurodollar Rate Margin, as defined in Section 3.4(d)(ii)(E), that is offered for such Loan. "Bid-Option Interest Period" means (a) with respect to each Eurodollar Rate Dollar Bid-Option Borrowing, the Eurodollar Rate Interest Period applicable thereto, and (b) with respect to each Absolute Rate Dollar Bid-Option Borrowing and Foreign Currency Bid-Option Borrowing, the period commencing on the MASCOTECH, INC. CREDIT AGREEMENT -3- 10 date of such Borrowing and ending on the date elected by the Company in the applicable Notice of Borrowing, which date shall be not less than 15 and not more than 360 days after the date of such Borrowing; provided that: (i) any such Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day; and (ii) no such Interest Period that would end after the Scheduled Expiration Date shall be permitted. "Bid-Option Loan" means a Loan which is made by a Bank pursuant to a Bid-Option Auction. "Bid-Option Note" means a promissory note of the Company in substantially the form of Exhibit B hereto evidencing the obligation of the Company to repay Bid-Option Loans, as amended or modified from time to time and together with any promissory note or notes issued in exchange or replacement therefor. "Bid-Option Percentage" means, with respect to any Bank, the percentage of the Dollar Equivalent of the aggregate outstanding principal amount of the Bid-Option Loans of all the Banks represented by the Dollar Equivalent of the outstanding principal amount of the Bid-Option Loans of such Bank. "Bid-Option Quote" means an offer by a Bank to make a Bid-Option Loan in accordance with Section 3.4(d). "Bid-Option Quote Request" shall have the meaning ascribed thereto in Section 3.4(b). "Borrowing" means a borrowing hereunder consisting of Loans made to the Company on a single date, at a single rate and for a single Interest Period. A Borrowing may be referred to as a "Floating Rate Borrowing" if such Loans are Floating Rate Loans, a "CD Rate Borrowing" if such Loans are CD Rate Loans, a "Eurodollar Rate Syndicated Borrowing" if such Loans are Eurodollar Rate Syndicated Loans, a "Dollar Bid-Option Borrowing" if such Loans are Dollar Bid-Option Loans, a "Foreign Currency Bid-Option Borrowing" if such Loans are Foreign Currency Bid-Option Loans, an "Absolute Rate Dollar Bid-Option Borrowing" if such Loans are Absolute Rate Dollar Bid-Option Loans, a "Eurodollar Rate Dollar Bid-Option Borrowing" if such Loans are Eurodollar Rate Dollar Bid-Option Loans, or a "Eurodollar Rate Borrowing" if such Loans are Eurodollar Rate Loans. CD Rate Borrowings and Eurodollar Rate Syndicated Borrowings are sometimes collectively referred to as "Fixed Base Rate Syndicated Borrowings"; Floating Rate Borrowings and Fixed Base Rate Syndicated Borrowings are sometimes collectively referred to as "Syndicated Borrowings"; Absolute Rate Dollar Bid-Option Borrowings and Eurodollar Rate Dollar Bid-Option Borrowings are sometimes collectively referred to as "Dollar Bid-Option Borrowings"; Dollar Bid-Option Borrowings and Foreign Currency Bid-Option Borrowings are sometimes collectively referred to herein as "Bid-Option Borrowings"; and Fixed Base Rate Syndicated Borrowings and Bid-Option Borrowings are sometimes collectively referred to as "Fixed Rate Borrowings". "Business Day" means any day on which commercial banks are open for domestic and international business (including dealings in Dollar deposits) in New York City and Detroit and, with respect to Eurodollar Rate Loans and the related Interest Periods, in London, and with respect only to Foreign Currency Bid-Option Loans and the related Interest Periods, on which dealings in deposits in the relevant Foreign Currency are carried out in the relevant interbank market and in the principal financial center of the country issuing the relevant Foreign Currency. MASCOTECH, INC. CREDIT AGREEMENT -4- 11 "Capital Expenditures" means, for any period, the aggregate amount of capital expenditures of the Company and its Consolidated Subsidiaries during such period, determined on a consolidated basis in accordance with generally accepted accounting principles. "Capital Lease" of any Person means any lease which, in accordance with generally accepted accounting principles, is required to be capitalized on the books of such Person. "Cash and Cash Equivalents" means (a) all cash of the Company and its Consolidated Subsidiaries on hand or on deposit, plus (b) cash equivalents as determined in accordance with generally accepted accounting principles, plus (c) all investments of the Company and its Consolidated Subsidiaries of the following types, whether or not such investments are cash equivalents in accordance with generally accepted accounting principles: (i) commercial paper of any United States issuer having the highest rating then given by Moody's Investors Service, Inc. or Standard & Poor's Corporation, (ii) direct obligations of, and obligations fully guaranteed by, the United States of America, and (iii) certificates of deposit of (A) any commercial bank which is a member of the Federal Reserve System and which has capital, surplus and undivided profits (as shown on its most recently published statement of condition) aggregating not less than $100,000,000 or (B) any Bank, provided that each of the foregoing investments has a maturity date not later than 180 days after the date of acquisition thereof by the Company or any of its Consolidated Subsidiaries. "CD Base Rate" applicable to any CD Rate Interest Period means the per annum rate that is equal to the sum of: (a) the rate per annum obtained by dividing (i) the arithmetic mean of secondary market bid rates per annum (expressed as a percentage) quoted at approximately 10:00 a.m. New York time (or as soon thereafter as practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing selected by the Agent for the purchase from the CD Reference Banks at face value of negotiable certificates of deposit of the CD Reference Banks with a term comparable to such Interest Period in an aggregate amount comparable to the related CD Rate Loans to be made by such CD Reference Banks in their capacity as Banks hereunder, by (ii) an amount equal to one minus the stated maximum rate (expressed as a decimal) of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) under any regulations of the Board of Governors of the Federal Reserve System (or any successor agency thereto), applicable on the first day of the related Interest Period to a negotiable certificate of deposit of the bank that is the Agent with a term comparable to such Interest Period in an aggregate amount comparable to the related CD Rate Loan to be made by such bank in its capacity as a Bank hereunder, plus (b) the annual assessment rate (expressed as a percentage) estimated by the Agent on the first day of the related Interest Period to be payable by the bank that is the Agent to the Federal Deposit Insurance Corporation (or any successor agency thereto) for such Corporation's (or such successor's) insuring Dollar deposits of such bank in the United States during the related Interest Period; all as conclusively determined, absent manifest error, by the Agent, such sum to be rounded up, if necessary, to the nearest whole multiple of one one-hundredth of one percent (1/100 of 1%). "CD Rate" means, with respect to any CD Rate Loan for any CD Rate Interest Period or portion thereof, the per annum rate that is equal to the sum of (a) the Applicable Margin, plus (b) the CD Base Rate; which CD Rate shall change simultaneously with any change in such Applicable Margin. "CD Rate Interest Period" means, with respect to each CD Rate Borrowing, the period commencing on the date of such CD Rate Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Company may elect in the applicable Notice of Borrowing, provided that: MASCOTECH, INC. CREDIT AGREEMENT -5- 12 (a) any such Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day; and (b) no such Interest Period that would end after the Scheduled Expiration Date shall be permitted. "CD Rate Loan" means a Loan which pursuant to the applicable Notice of Borrowing is made at the CD Rate. "CD Reference Bank" means each of The First National Bank of Chicago and Morgan Guaranty Trust Company of New York, or such other CD Reference Banks as may be appointed pursuant to Section 11.6. "Closing Date" means the first day on which all the following shall have occurred: (a) the Company has executed this Agreement and furnished all documents required under Section 8.3, and all matters required under such Section have been completed, (b) the Agent has received telexes or telecopies affirming execution of this Agreement in counterparts by all the Banks, and (c) the Agent has executed this Agreement. Subject to the second sentence of Section 10.6, the Agent shall notify each party hereto of the occurrence of the Closing Date on the date thereof. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder. "Commitment" means, with respect to each Bank whose commitment has not been terminated pursuant to Section 11.13, the commitment of such Bank to make Syndicated Loans pursuant to Section 3.1 and to participate in the risk of Letters of Credit pursuant to Section 3.3, in an aggregate principal amount the Dollar Equivalent of which does not exceed (a) in the case of each Bank originally a party hereto, the amount set forth opposite the name of such Bank on the signature pages hereof, and (b) in the case of each Bank becoming a party hereto in accordance with Section 11.6(d) or 11.13, the aggregate amount assigned to it, in each case (i) less the aggregate amount, if any, subsequently assigned by it in accordance with Section 11.6(d), (ii) plus the aggregate amount, if any, subsequently assigned to it under Section 11.6(d) or 11.13 and (iii) subject to activation pursuant to SectionE3.1, and as such amount may be reduced from time to time pursuant to Section 3.8. "Commitment Percentage" means, with respect to any Bank, the percent of the aggregate amount of all the Commitments represented by the amount of such Bank's Commitment. "Consolidated" or "consolidated" refers to the consolidation of the accounts of a Person and its Subsidiaries in accordance with generally accepted accounting principles. "Consolidated Subsidiary" of any corporation means any Subsidiary which would be consolidated on the consolidated balance sheet of such corporation in accordance with generally accepted accounting principles. "Current Assets" means, at any time, the current assets of the Company and its Consolidated Subsidiaries, determined as to amount and classification on a consolidated basis in accordance with generally accepted accounting principles. "Current Market Price" with respect to any shares of stock, means, as of any day, the last reported sales price or, in the event that no sale takes place on such day, the average of the reported closing bid and MASCOTECH, INC. CREDIT AGREEMENT -6- 13 asked prices, in either case as reported on the New York Stock Exchange, on the principal national securities exchange on which such stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, by NASDAQ National Market System or, if such stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such stock on such day shall not have been reported through NASDAQ, the average of the closing bid and asked prices on such day as furnished by any New York Stock Exchange member firm regularly making a market in such security selected by the Agent. "Debt" means: (a) indebtedness for money borrowed; (b) the capitalized portion of lease rentals under Capital Leases; (c) other indebtedness incurred in connection with the acquisition of any real or personal property, stock, debt or other assets (to the extent that any of the foregoing acquisition indebtedness is represented by any notes, bonds, debentures or similar evidences of indebtedness); and (d) obligations in respect of obligations or indebtedness of others of the types referred to in each of the foregoing clauses (a)-(c), for the payment of which the Company or any Consolidated Subsidiary is directly or contingently liable, or which is secured by any property of the Company or any Consolidated Subsidiary (whether or not the Company or such Consolidated Subsidiary is liable therefor). "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Deferred MSX Gain" means, as of any date, the remaining amount of the liability or contra asset of the Company booked in connection with the transfer of assets by the Company to MSX International on January 3, 1997, which amount was approximately $40,000,000 as of January 3, 1997 and has not been recognized as income to the Company. "Deferred Trimas Gain" means, as of any date, the remaining amount of the liability or contra asset of the Company booked in connection with the transfer of assets by the Company to Trimas prior to the Closing Date, which amount was approximately $63,520,000 as of December 31, 1996 and has not been recognized as income to the Company. "Determination Date" shall have the meaning ascribed thereto in the definition of the term "Applicable Margin". "Determination Period" shall have the meaning ascribed thereto in the definition of the term "Applicable Margin". "Dollar Bid-Option Loan" means a Bid-Option Loan made in Dollars. "Dollar Bid-Option Percentage" means, with respect to any Bank and any Dollar Bid-Option Borrowing, the percentage of the aggregate outstanding principal amount of all the Dollar Bid-Option Loans comprising such Borrowing represented by the outstanding principal amount of the Dollar Bid-Option Loan made by such Bank as part of such Borrowing. "Dollar Equivalent" means, as of any date, (a) with respect to any amount of Dollars, the amount thereof, and (b) with respect to any amount of any Foreign Currency, the amount of Dollars that could be purchased with such amount of such Foreign Currency at the spot rate of exchange (except as provided in Section 3.7(a)) quoted by the Agent at approximately 10:00 a.m. (Detroit time) on such date or such number of Business Days before such date as may reasonably be deemed necessary by the Agent for purposes of this Agreement. "Dollars" and "$" shall mean the lawful money of the United States. MASCOTECH, INC. CREDIT AGREEMENT -7- 14 "Domestic Lending Office" means, as to any Bank, its office identified on the signature pages hereof as its Domestic Lending Office or such other office as such Bank may hereafter designate as its Domestic Lending Office. "Domestic Subsidiary" means a Subsidiary that is incorporated under the laws of the United States of America or any State thereof. "EBIT" means, for any period, Net Income, exclusive of any Non-Cash Special Items, for such period plus, to the extent deducted in determining such Net Income: (a) Interest Charges for such period, and (b) income and other taxes. "EBITDA Minus Capital Expenditures" means, as of the end of any fiscal quarter, the amount determined by subtracting (a) Capital Expenditures calculated as follows: (i) for the fiscal quarter ended December 31, 1996, Capital Expenditures for such fiscal quarter then ending and the three immediately preceding fiscal quarters, (ii) for the fiscal quarter ending March 31, 1997, Capital Expenditures for such fiscal quarter then ending and the four immediately preceding fiscal quarters times four-fifths, (iii) for the fiscal quarter ending June 30, 1997, Capital Expenditures for such fiscal quarter then ending and the five immediately preceding fiscal quarters times two-thirds, (iv) for the fiscal quarter ending September 30, 1997, Capital Expenditures for such fiscal quarter then ending and the six immediately preceding fiscal quarters times four-sevenths and (v) for the fiscal quarter ending December 31, 1997 and any fiscal quarter thereafter, Capital Expenditures for such fiscal quarter then ending and the seven immediately preceding fiscal quarters times one-half, from (b) the sum of EBIT for such fiscal quarter plus the three immediately preceding fiscal quarters plus, to the extent deducted in determining such EBIT, depreciation and amortization expense of the Company and its Consolidated Subsidiaries; provided that when determining the Senior Debt Coverage Ratio for purposes of Section 7.8, in the event the Company or any of its Consolidated Subsidiaries acquires any corporation or business, EBITDA Minus Capital Expenditures shall be calculated on a pro forma basis (which, to the extent deemed reasonable to the Agent, may include as pro forma adjustments reasonable eliminations of excess compensation (including salaries) and other adjustments that are attributable to the change in ownership or management of the corporation or business) as if the Company or such Consolidated Subsidiary had owned the acquired corporation or business for the eight fiscal quarters preceding its acquisition. "Environmental Laws" means any and all applicable United States federal, state and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations thereunder. "ERISA Affiliate" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414(b), (c) or (m), or the regulations prescribed under Section 414(o), of the Code. MASCOTECH, INC. CREDIT AGREEMENT -8- 15 "Eurodollar Base Rate" applicable to any Eurodollar Rate Interest Period means the per annum rate obtained by dividing (a) the per annum rate of interest at which deposits in Dollars for such Interest Period and in an aggregate amount comparable to (i) in the case of Eurodollar Rate Syndicated Loans, the amount of the related Eurodollar Rate Syndicated Loans to be made by the Eurodollar Reference Banks in their capacity as Banks hereunder, and (ii) in the case of Eurodollar Rate Dollar Bid-Option Loans, the aggregate amount of the Eurodollar Rate Dollar Bid-Option Borrowing set forth in the related Bid-Option Quote Request, are offered to the Eurodollar Reference Banks by other prime banks in the London or Nassau interbank market, selected in the Eurodollar Reference Banks' discretion, at approximately 11:00 a.m. London or Nassau time, as the case may be, on the second Business Day prior to the first day of such Eurodollar Rate Interest Period, by (b) an amount equal to one minus the stated maximum rate (expressed as a decimal) of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) that is specified on the first day of such Eurodollar Rate Interest Period by the Board of Governors of the Federal Reserve System (or any successor agency thereto) for determining the maximum reserve requirement with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a member bank of such System; all as conclusively determined, absent manifest error, by the Agent, such sum to be rounded up, if necessary, to the nearest whole multiple of one-hundredth of one percent (1/100 of 1%). "Eurodollar Lending Office" means, as to any Bank, its office identified on the signature pages hereof as its Eurodollar Lending Office or such other branch (or Affiliate) of such Bank as such Bank may hereafter designate as its Eurodollar Lending Office. "Eurodollar Rate Dollar Bid-Option Loan" means a Loan which pursuant to the applicable Notice of Borrowing is made at the Bid-Option Eurodollar Rate. "Eurodollar Rate Interest Period" means, with respect to each Eurodollar Rate Syndicated Loan, the period commencing on the date of such Eurodollar Rate Syndicated Loan and ending one month, two months, three months, four months, five months or six months thereafter, or twelve months if such proposed twelve-month Eurodollar Rate Interest Period is specifically agreed to by all Banks, and with respect to each Eurodollar Rate Dollar Bid-Option Loan, the period commencing on the date of such Eurodollar Rate Dollar Bid-Option Loan and ending on a date between fifteen days and twelve months thereafter, as the Company may request in the applicable Notice of Borrowing; provided that: (a) any such Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month in which case such Interest Period shall end on the next preceding Business Day; (b) any such Interest Period that begins on the last Business Day of a calendar month or on a day for which there is no numerically corresponding day in the calendar month during which such Eurodollar Interest Period is to end shall end on the last Business Day of such calendar month; and (c) no such Interest Period that would end after the Scheduled Expiration Date shall be permitted. "Eurodollar Rate Loan" means any Eurodollar Rate Dollar Bid-Option Loan or Eurodollar Rate Syndicated Loan. "Eurodollar Rate Syndicated Loan" means a Loan which pursuant to the applicable Notice of Borrowing is made at the Syndicated Eurodollar Rate. MASCOTECH, INC. CREDIT AGREEMENT -9- 16 "Eurodollar Reference Bank" means the principal London office of each of The First National Bank of Chicago and Morgan Guaranty Trust Company of New York, or such other Eurodollar Reference Banks as may be appointed pursuant to Section 11.6. "Events of Default" has the meaning ascribed thereto in Section 9.1. "Existing Agent" means NBD Bank, a Michigan banking corporation, formerly known as NBD Bank, N.A., in its capacity as agent for the Existing Banks. "Existing Banks" means the banks that are parties to the Existing Credit Agreement. "Existing Bid-Option Loans" means the "Bid-Option Loans" (as defined in the Existing Credit Agreement) outstanding on the Closing Date. "Existing Commitment" means, with respect to each Bank, the amount, if any, of such Bank's "Commitment" (as defined in the Existing Credit Agreement) immediately prior to the Closing Date. "Existing Credit Agreement" means the Credit Agreement dated as of September 2, 1993, among the Company, the Existing Banks and the Existing Agent, as amended, supplemented or otherwise modified, and as in force immediately prior to the Closing Date. "Existing Debt" shall have the meaning ascribed thereto in the definition of the term "Senior Debt". "Existing Loans" means the "Loans" (as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement on the Closing Date. "Facility Fees" means the facility fees payable pursuant to Section 3.7(b). "Federal Funds Rate" means, as of any day, the per annum rate that is equal to the average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published by the Federal Reserve Bank of New York for such day (or, in the case of any day on which the federal funds market is not open, for the immediately preceding day on which it was open), or, if such rate is not so published for any day (or, in the case of any day on which the federal funds market is not open, for the immediately preceding day on which it was open), the average of the quotations for such rates received by the Agent from three federal funds brokers of recognized standing selected by the Agent in its discretion; all as conclusively determined, absent manifest error, by the Agent, such average to be rounded up, if necessary, to the nearest whole multiple of one-hundredth of one percent (1/100 of 1%); which Federal Funds Rate shall change simultaneously with any change in such published or quoted rates. "Fixed Base Rate Syndicated Loan" means any CD Rate Loan or Eurodollar Rate Syndicated Loan. "Fixed Rate Loan" means any Fixed Base Rate Syndicated Loan or Bid-Option Loan. "Floating Rate" means, with respect to any Floating Rate Loan, the greater of (a) the Prime Rate and (b) the per annum rate equal to the sum of (i) one-half percent (1/2%) plus (ii) the Federal Funds Rate; which Floating Rate shall change simultaneously with any change in such Prime Rate or Federal Funds Rate, as the case may be. "Floating Rate Interest Period" means, with respect to each Floating Rate Borrowing, the period commencing on the date of such Floating Rate Borrowing and ending 30 days thereafter; provided that: MASCOTECH, INC. CREDIT AGREEMENT -10- 17 (a) any such Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day; and (b) no Interest Period that would end after the Scheduled Expiration Date shall be permitted. "Floating Rate Loan" means a Loan which pursuant to the applicable Notice of Borrowing is made at the Floating Rate. "Foreign Currency" means any currency (other than Dollars) freely convertible into Dollars and freely transferable, which the Company designates in any Bid-Option Quote Request with respect to any Foreign Currency Bid-Option Borrowing as the currency in which the related Loans are to be made. "Foreign Currency Bid-Option Loan" means a Bid-Option Loan made in a Foreign Currency. "Foreign Currency Bid-Option Percentage" means, with respect to any Bank and any Foreign Currency Bid-Option Borrowing, the percentage of the aggregate outstanding principal amount of all the Foreign Currency Bid-Option Loans comprising such Borrowing represented by the outstanding principal amount of the Foreign Currency Bid-Option Loan made by such Bank as part of such Borrowing. "Funded Debt" means all Debt of the Company and its Consolidated Subsidiaries which by its terms matures more than twelve months from the date such Debt was incurred or assumed by the Company or any such Consolidated Subsidiary, as the case may be, or which by its terms matures less than twelve months from such date but by its terms is renewable or extendable at the option of the Company or any such Consolidated Subsidiary beyond twelve months from such date, including, without limitation, all Loans under this Agreement (including those made within twelve months of the Scheduled Expiration Date). "Interest Charges" means, for any period, the sum of interest that is expensed (or, under generally accepted accounting principles, would be expensed) during such period by the Company and its Consolidated Subsidiaries on Debt of the Company and its Consolidated Subsidiaries. "Interest Coverage Ratio" means, for any Determination Period, the ratio of (a) EBIT to (b) Interest Charges. "Interest Payment Date" means, with respect to each Loan, the last day of each Interest Period with respect to such Loan and, in the case of any Interest Period exceeding (a) with respect to Eurodollar Rate Loans, three months or (b) with respect to CD Rate Loans and Absolute Rate Dollar Bid-Option Loans, ninety days, those days that occur during such Interest Period at intervals of three months and ninety days, respectively, after the first day of such Interest Period. "Interest Period" means any Floating Rate Interest Period, CD Rate Interest Period, Eurodollar Rate Interest Period or Bid-Option Interest Period. "Investment" by any Person means the purchase or other acquisition of any capital stock of or other ownership interest in, or debt securities of or other evidences of indebtedness of, any other Person, or the making of a loan or advancing of any funds or property or making of any other extension of credit to, or the making of any investment or acquiring any interest whatsoever in, any other Person, or the satisfaction of any contingent liability, as obligor, guarantor, surety or in any other capacity, for obligations of any other Person; provided, however, that the term Investment shall not include any evidence of indebtedness, any account MASCOTECH, INC. CREDIT AGREEMENT -11- 18 receivable or any obligation or indebtedness on open account which, in all of the foregoing cases, arises directly from the sale of goods or merchandise or services for fair value in the ordinary course of business. "Invitation for Bid-Option Quotes" means an Invitation for Bid-Option Quotes in the form referred to in Section 3.4(c). "Letter of Credit" shall mean a standby letter of credit issued for the account of the Company or any of its Consolidated Subsidiaries pursuant to this Agreement. "Letter of Credit Documents" shall have the meaning ascribed thereto in Section 3.3(f). "Letter of Credit Issuance" shall mean any issuance by the Agent of a Letter of Credit pursuant to Section 3.3. "Letter of Credit Obligations Amount" means, as of any date, the amount equal to the sum of (a) the maximum aggregate amount available to be drawn under all outstanding Letters of Credit at any time on or before the stated expiry date thereof, plus (b) the amount of any draws under all Letters of Credit that have not been reimbursed as provided in Section 3.3(e). "Lien" means, with respect to any asset, any mortgage, lien, pledge, security interest or similar encumbrance in respect of such asset; provided that a subordination agreement shall not be deemed to create a Lien. For the purposes of this Agreement, the Company or any Consolidated Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other similar title retention agreement relating to such asset. "Loan" means any Syndicated Loan or Bid-Option Loan. "Market Value" with respect to any shares of stock, means, as of any date, the average of the Current Market Prices of such shares for the thirty consecutive trading days ending with such date. "Masco Corporation" means Masco Corporation, a Delaware corporation. "Masco Group" means Masco Corporation or any Person who, on the date hereof, is an Affiliate of Masco Corporation or who hereafter becomes an Affiliate controlled by Masco Corporation. "Maximum Allowed Senior Debt Coverage Ratio" has the meaning ascribed thereto in Section 7.8. "Minority Interest Cash Investments" means, as of any date, the greater of (a) $0 or (b) the Dollar Equivalent (such Dollar Equivalent to be determined with respect to any Investment as of the time such Investment is made) of the aggregate amount of Cash and Cash Equivalents used by the Company after January 1, 1997 for Investments (other than the Investment in MSX International on January 3, 1997 (in the approximate amount of $70,000,000)) with respect to Persons in which the Company owns less than 50% of the capital stock or other ownership interests of such Persons, provided that such capital stock or other ownership interests are accounted for by the Company on the equity method as of such date, and provided, further, that such aggregate amount shall be adjusted as follows: (i) the Dollar Equivalent of Cash and Cash Equivalents received by the Company from the disposition of any such Investments (whether or not accounted for on the equity method at the time of disposition) made since January 1, 1997 shall be subtracted from such aggregate amount, and (ii) the Dollar Equivalent of the aggregate amount of Cash and Cash Equivalents received by the Company from the disposition of any such Investments (whether or not accounted for on the equity method at the time of disposition) made on or prior to January 1, 1997 (other than MASCOTECH, INC. CREDIT AGREEMENT -12- 19 any Investments in or relating to Trimas) in excess of the book value of such Investments shall be subtracted from such aggregate amount. For purposes of clauses (i) and (ii) above, the Dollar Equivalent of any Cash and Cash Equivalent shall be determined as of the time such Cash and Cash Equivalent is received by the Company. Notwithstanding anything herein to the contrary, the Company may exclude any Investment which would otherwise be included in this definition of Minority Interest Cash Investments provided that the difference of the Dollar Equivalent of the Cash and Cash Equivalents of all such excluded Investments minus the Dollar Equivalent of the Cash and Cash Equivalents received by the Company from the disposition of all such excluded Investments in the aggregate is less than $5,000,000. "Moody's" means Moody's Investors Service, Inc. or any successor thereto. Any rating or change in rating given by Moody's shall be deemed effective, and in effect, when publicly announced by Moody's. "MSX International" shall mean MSX International, Inc., a Delaware corporation. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is then making, or, pursuant to an applicable collective bargaining agreement, accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be an ERISA Affiliate during such five-year period. "Net Income" means, for any period, the greater of (a) $0, and (b) the consolidated net income of the Company and its Consolidated Subsidiaries (after deduction for income and other taxes of the Company and its Consolidated Subsidiaries determined by reference to income or profits of the Company and its Consolidated Subsidiaries) for such period, all as determined in accordance with generally accepted accounting principles. "Net Income Minus Preferred Dividends" means, for any period, the greater of (a) $0, and (b) the excess of (i) Net Income for such period over (ii) the aggregate amount of all dividends in respect of any preferred stock of the Company accrued by the Company during such period. "Net Worth" means, as of any date, (a) the amount of total shareholders' equity of the Company and its Consolidated Subsidiaries on such date, determined on a consolidated basis in accordance with generally accepted accounting principles, minus (or, if the amount determined pursuant to the following clause (b) is negative, plus the absolute amount thereof) (b) to the extent included in total shareholders' equity the amount of the foreign currency translation adjustment account, plus (c) the amount of the foreign currency translation adjustment account shown on the consolidated balance sheet of the Company and its Consolidated Subsidiaries dated December 31, 1992, which amount is $6,050,000. "New Debt" shall have the meaning ascribed thereto in the definition of the term "Senior Debt". "Non-Cash Special Items" means non-recurring or extraordinary, non-cash gains or losses or other items affecting income, including, but without limitation, the cumulative effect of any accounting changes. "Note" means any Syndicated Note or Bid-Option Note. "Notice of Bid-Option Borrowing" shall have the meaning ascribed thereto in Section 3.4(f). "Notice of Borrowing" means any Notice of Syndicated Borrowing or Notice of Bid-Option Borrowing. "Notice of Syndicated Borrowing" shall have the meaning ascribed thereto in Section 3.2. MASCOTECH, INC. CREDIT AGREEMENT -13- 20 "Overdue Rate" means (a) in respect of the principal of any Loan, the rate per annum that is equal to the sum of one percent (1%) per annum plus the per annum rate otherwise applicable to such Loan until the end of the then current Interest Period for such Loan and, thereafter, a rate per annum that is equal to the sum of one percent (1%) per annum plus the Floating Rate; and (b) in respect of other amounts payable by the Company hereunder (other than interest), a per annum rate that is equal to the sum of one percent (1%) per annum plus the Floating Rate. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, corporation, partnership, joint venture, trust, association, limited liability company or unincorporated organization, or a government or any agency or political subdivision thereof. "Plan" means at any time any employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (a) is maintained, or contributed to, by the Company or any ERISA Affiliate for employees of the Company or any ERISA Affiliate, or (b) has at any time within the preceding five years been maintained, or contributed to, by the Company or any Person which was at such time an ERISA Affiliate for employees of the Company or any Person which was at such time an ERISA Affiliate. "Prime Rate" means the per annum rate of interest publicly announced by NBD Bank at its main office in Detroit from time to time as its "prime rate", it being understood that such announced rate may not be the lowest rate of interest charged by NBD Bank to any of its customers; which Prime Rate shall change simultaneously with any change in such announced rate. "Reference Bank" means any CD Reference Bank or Eurodollar Reference Bank. "Refunded" shall have the meaning ascribed thereto in the definition of the term "Senior Debt". "Refunding Borrowing" means a Borrowing which, after application of the proceeds of such Borrowing, results in no net increase in the Dollar Equivalent of the aggregate outstanding principal amount of the Loans made by any Bank. "Reimbursement Amount" shall have the meaning ascribed thereto in Section 3.3(e). "Relevant Day" shall have the meaning ascribed thereto in the definition of the term "Senior Debt Coverage Ratio". "Request for Letter of Credit Issuance" shall have the meaning ascribed thereto in Section 3.3(b). "Required Banks" means Banks having not less than 51% of the aggregate amount of the Commitments or, if the Commitments have terminated, Banks holding Notes evidencing not less than 51% of the aggregate unpaid principal amount of the Loans. "Restricted Transfer" has the meaning ascribed thereto in Section 7.11(b). "S&P" means Standard & Poor's Ratings Group or any successor thereto. Any rating or change in rating given by S&P shall be deemed effective, and in effect, when publicly announced by S&P. MASCOTECH, INC. CREDIT AGREEMENT -14- 21 "Scheduled Expiration Date" means February 28, 2002; provided that, if and only if the requirements of Section 3.10 are satisfied, the "Scheduled Expiration Date" shall be extended to February 28, 2003. "Securities Purchase Agreement" means the Amended and Restated Securities Purchase Agreement dated as of November 23, 1993, as amended by that certain Amendment No. 1 to Amended and Restated Securities Purchase Agreement made as of October 31, 1996, between the Company and Masco Corporation, as in effect on the Closing Date in the form attached hereto as Exhibit J, and as heretofore or hereafter amended, supplemented or otherwise modified from time to time. Nothing in this Agreement shall prohibit the Company and Masco Corporation from amending or terminating such Securities Purchase Agreement, provided that at the time of such amendment or termination, and immediately after giving effect thereto, no Default exists or would exist. "Senior Debt" means all Debt of the Company and its Consolidated Subsidiaries, determined on a consolidated basis, except Subordinated Debt, provided that, for purposes of this definition, if any Debt ("Existing Debt") is to be Refunded (as hereinafter defined) with the proceeds of other money borrowed ("New Debt"), the Existing Debt to be so Refunded shall be excluded from Senior Debt when the New Debt is incurred. For purposes of this definition, Existing Debt is to be "Refunded" by New Debt if, and to the extent that, (i) no later than five (5) Business Days after the New Debt is incurred, the Company delivers to the Agent written notice stating that the purpose of such New Debt is to refund Existing Debt and specifying the Existing Debt to be refunded, (ii) the proceeds of such New Debt are held in the form of Cash and Cash Equivalents (free of any Lien except a Lien securing the specified Existing Debt to be refunded and no other indebtedness or obligations) until such specified Existing Debt is repaid and (iii) such specified Existing Debt is repaid within 45 (forty-five) days after the New Debt is incurred. "Senior Debt Coverage Ratio" means, at any time from and including the 31st day (the "Relevant Day") after the last day of any fiscal quarter of the Company to but excluding the 31st day of the following fiscal quarter of the Company, the ratio of (a) Senior Debt as of the end of such fiscal quarter to (b) EBITDA Minus Capital Expenditures as of the end of such fiscal quarter. "Senior Debt Rating" means, at any date, that the senior unsecured unenhanced long term debt of the Company is rated BBB or better by S&P or Baa2 or better by Moody's, regardless of whether the Company has any such debt outstanding. "Senior Leverage Ratio" means, as of any Determination Date, the ratio of (a) the difference of (i) Senior Debt minus (ii) Cash and Cash Equivalents in excess of $50,000,000 (exclusive of any Cash and Cash Equivalents constituting or acquired with the proceeds of New Debt to the extent the specified Existing Debt to be Refunded with such New Debt remains outstanding), to (b) Tangible Capital Funds. "Significant Subsidiary" means any Subsidiary which is a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934. "Stock Issuance" means any issuance by the Company of, or any conversion of Subordinated Debt or any other Debt or liability of the Company or any of its Consolidated Subsidiaries to, common or other capital stock or other equity securities of the Company. "Stock Redemptions" means any redemption, purchase, retirement or other acquisition by the Company of any common or other capital stock or other equity securities of the Company. "Subordinated Debt" means, without duplication, (a) all Debt now outstanding or hereafter created, issued, guaranteed, incurred or assumed by the Company which is subordinated to payment of principal, premium, if any, and interest on the Notes by provisions not less favorable in any material respect to the MASCOTECH, INC. CREDIT AGREEMENT -15- 22 holders of the Notes than the provisions set forth on Exhibit O; (b) Debt evidenced by the Company's 4-1/2% Convertible Subordinated Debentures due 2003, in the original principal amount of $345,000,000 and (c) Debt hereafter issued pursuant to the Securities Purchase Agreement; provided, however, that any of such Debt shall cease to be "Subordinated Debt" upon and to the extent of the Company's repurchase or redemption of such Debt as permitted hereunder or the Company's transfer, conveyance, assignment or delivery to any trustee, paying agent or other fiduciary for the benefit of the holder(s) of such Debt of any cash, securities or other assets of the Company in payment or on account of, or as provision for, the principal of such Debt; provided further, however, that any of such Debt referred to in clauses (b) and (c) of this definition shall cease to be "Subordinated Debt" upon any amendment or other modification to the Debentures referred to in such clause (b) evidencing such Debt, relating to the subordination thereof, unless, in any such case, the provisions of such Debentures after giving effect to such amendment or modification are not less favorable in any material respect to the holders of the Notes than the provisions set forth on Exhibit O. "Subsidiary" of any Person means (a) any limited partnership (whether now existing or hereafter organized) of which such Person or another Subsidiary of such Person is the general partner, (b) any general partnership or limited liability company (whether now existing or hereafter organized) of which such Person or one or more of the other Subsidiaries of such Person own at least a majority of the ownership or membership interests and (c) any corporation (whether now existing or hereafter organized or acquired) in which (other than directors' qualifying shares required by law) at least a majority of the securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency), at the time as of which any determination is being made, is owned, beneficially and of record, by such Person or by one or more of the other Subsidiaries of such Person or by any combination thereof. Unless the context otherwise requires, references to "Subsidiary" or "Subsidiaries" herein refer to the Company's Subsidiaries. "Substantially-Owned Consolidated Subsidiary" of any corporation means any Consolidated Subsidiary of such corporation 90% or more of the shares of capital stock (or other ownership interests) of which having ordinary power to vote in elections for the board of directors (or other persons performing similar functions at the time) are directly or indirectly owned by such corporation. "Substitute Loan" means any Loan made by a Bank pursuant to Section 5.4. "Syndicated Eurodollar Rate" means, with respect to any Eurodollar Rate Syndicated Loan for any Eurodollar Rate Interest Period or portion thereof, the per annum rate that is equal to the sum of (a) the Applicable Margin, plus (b) the Eurodollar Base Rate; which Syndicated Eurodollar Rate shall change simultaneously with any change in such Applicable Margin. "Syndicated Loan" means any Floating Rate Loan or Fixed Base Rate Syndicated Loan. "Syndicated Note" means a promissory note of the Company substantially in the form of Exhibit A hereto evidencing the obligation of the Company to repay Syndicated Loans, as amended or modified from time to time and together with any promissory note or notes issued in exchange or replacement therefor. "Tangible Capital Funds" means, as of any date, the sum of (a) Adjusted Net Worth, minus (b) the net book value of goodwill (the excess of cost over net assets of acquired companies) included in the assets of the Company and its Consolidated Subsidiaries on a consolidated basis, plus (c) the amount of all Subordinated Debt which by its terms matures at least thirty days after the then existing Scheduled Expiration Date, plus (d) the Available Masco Corporation Funding Commitment minus (e) Minority Interest Cash Investments; provided, however, that for purposes of this definition, no Debt of the type described in clause (d) of the definition of the term "Debt" shall be included in Subordinated Debt. MASCOTECH, INC. CREDIT AGREEMENT -16- 23 "Termination Date" means the earlier to occur of (a) the Scheduled Expiration Date and (b) the date on which the Commitments shall be terminated pursuant to Section 3.8 or 9.1. "Total Borrowed Funds" means, as of any date, all indebtedness of the Company and its Consolidated Subsidiaries for money borrowed, determined on a consolidated basis in accordance with generally accepted accounting principles, provided that, for purposes of this definition, if any money borrowed ("Existing Borrowed Funds") is to be Refunded (as hereinafter defined) with the proceeds of other money borrowed ("New Borrowed Funds"), the Existing Borrowed Funds to be so Refunded shall be excluded from Total Borrowed Funds when the New Borrowed Funds are incurred. For purposes of this definition, Existing Borrowed Funds are to be "Refunded" by New Borrowed Funds if, and to the extent that, (i) no later than 5 Business Days after the New Borrowed Funds are incurred, the Company delivers to the Agent written notice stating that the purpose of such New Borrowed Funds is to refund Existing Borrowed Funds and specifying the Existing Borrowed Funds to be refunded, (ii) the proceeds of such New Borrowed Funds are held in the form of Cash and Cash Equivalents (free of any Lien except a Lien securing the specified Existing Borrowed Funds to be refunded and no other indebtedness or obligations) until such specified Existing Borrowed Funds are repaid and (iii) such specified Existing Borrowed Funds are repaid within 45 days after the New Borrowed Funds are incurred. "Total Leverage Ratio" means the ratio of (a) Total Borrowed Funds to (b) Adjusted Net Worth. "Trimas" means TriMas Corporation, a Delaware corporation. "Unfunded Benefit Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (a) the present value of all vested nonforfeitable benefits under such Plan exceeds (b) the fair market value of all Plan assets allocable to such benefits (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Company or any ERISA Affiliate to the PBGC or any other Person under Title IV of ERISA. 1.2 Accounting Terms. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, on a basis consistent, to the extent required by such principles, with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries filed with the Securities and Exchange Commission on Form 10-K and delivered to the Banks prior to the Closing Date; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article VII to eliminate the effect of any change in generally accepted accounting principles in the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article VII for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. Without limiting the foregoing, all transfers of receivables shall be recognized as sales, and not as Debts or Liens, if they would be recognized as sales in accordance with generally accepted accounting principles, provided that all probable adjustments in connection with the recourse provisions are accrued, all as more specifically described in Statement of Financial Accounting Standards No. 125. 1.3 Other Definitions; Rules of Construction. As used herein, the terms "Agent", "Bank", "Banks", "Co-Agent", "Company" and "this Agreement" shall have the respective meanings ascribed thereto in the introductory paragraph of this Agreement. Use of the terms "herein", "hereof" and "hereunder" shall be MASCOTECH, INC. CREDIT AGREEMENT -17- 24 deemed references to this Agreement in its entirety and not solely to the Section or clause in which such term appears. Unless otherwise specified herein, references to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement. Except as provided in the definition of Eurodollar Rate Interest Period, if any payment, report, financial statement, notice or other obligation is due hereunder on a day which is not a Business Day, then the due date thereof shall be extended to the next Business Day. ARTICLE II. TERMINATION OF EXISTING CREDIT AGREEMENT 2.1 Termination. The Company and the Banks acknowledge and agree that the Existing Commitment of each Existing Bank is hereby terminated. Each Existing Bank that is a party hereto shall cancel all Existing Notes held by it and return them to the Company promptly after all amounts payable thereunder have been paid in full. Notwithstanding the foregoing, the Company and each of the Banks acknowledge and agree that each Existing Bid-Option Loan shall continue with its existing principal amount, interest rate and Interest Period, except that each Existing Bid-Option Loan shall be deemed a Bid-Option Loan under this Agreement and shall be governed by the provisions of this Agreement. ARTICLE III. THE LOANS AND LETTER OF CREDIT ISSUANCES 3.1 Syndicated Borrowings. Each Bank agrees, for itself only, subject to the terms and conditions set forth in this Agreement, to make Syndicated Loans to the Company from time to time from the Closing Date to but excluding the Termination Date; provided that the aggregate outstanding principal amount of such Bank's Syndicated Loans shall not at any time exceed the excess of (a) the amount of its Commitment, over (b) the sum of (i) its Commitment Percentage of the Letter of Credit Obligations Amount plus (ii) its Commitment Percentage of the Dollar Equivalent of the aggregate outstanding principal amount of all Bid-Option Loans made by the Banks. Each Fixed Base Rate Syndicated Borrowing shall be in an aggregate principal amount of $10,000,000 or any larger multiple of $5,000,000 and each Floating Rate Borrowing shall be in an aggregate principal amount of $5,000,000 or any larger multiple of $5,000,000; provided that any such Borrowing may be in the aggregate amount of the unused Commitments. Each Syndicated Borrowing shall be made by the several Banks ratably in accordance with their respective Commitment Percentages. Within the foregoing limits, the Company may borrow Loans from each Bank under this Section 3.1, repay such Loans, prepay such Loans to the extent permitted or required by this Agreement and reborrow under this Section 3.1. Default by any Bank with respect to its obligations hereunder shall not excuse any non-performance by any other Bank, provided that no Bank shall be liable for the non-performance by any other Bank of its obligations hereunder. 3.2 Notice of Syndicated Borrowings. The Company shall give the Agent written notice in substantially the form attached hereto as Exhibit C (a "Notice of Syndicated Borrowing") (a) not later than 12:00 p.m. (Detroit time) on the Business Day of each Floating Rate Borrowing, and (b) not later than 11:00 a.m. (Detroit time) on (i) the second Business Day before each CD Rate Borrowing, and (ii) the third Business Day before each Eurodollar Rate Syndicated Borrowing, specifying: MASCOTECH, INC. CREDIT AGREEMENT -18- 25 (A) the date of such Borrowing, which shall be a Business Day, (B) the aggregate amount of such Borrowing, (C) whether the Loans comprising such Borrowing are to be Floating Rate Loans, CD Rate Loans or Eurodollar Rate Syndicated Loans, and (D) in the case of each Fixed Base Rate Syndicated Borrowing, the duration of the Interest Period applicable thereto, which shall comply with the provisions of the definition of the applicable Interest Period. 3.3 Letters of Credit. (a) Subject to the terms and conditions set forth in this Agreement, the Agent agrees to issue, and each Bank further agrees for itself only to participate in the risk of, Letters of Credit from time to time from the Closing Date to but excluding the Termination Date; provided that the Letter of Credit Obligations Amount shall not at any time exceed the lesser of (i) $20,000,000 and (ii) the excess of (A) the aggregate amount of the Commitments over (B) the aggregate outstanding principal amount of all Loans. No Letter of Credit shall have a stated expiry date earlier than 30 days after the date of its issuance, and no Letter of Credit shall have a stated expiry date or, if by its terms it is periodically renewable, be subject to being terminated by the Agent (unless renewal is permitted by the Agent in its sole discretion, in which case the Agent will not permit renewal to a date beyond that determined in accordance with the following portion of this sentence), later than the earlier of (i) the one year anniversary of its issuance (or, if renewable and renewal has been permitted, the one year anniversary of its last renewal) and (ii) the fifth Business Day before the Scheduled Expiration Date. Each Letter of Credit shall be in a minimum amount of $1,000,000. Subject to the terms and conditions set forth in this Agreement, the Agent shall, on the date any Letter of Credit is requested to be issued, issue the related Letter of Credit for the pro rata risk of the Banks. Notwithstanding anything herein to the contrary, the Agent may decline to issue any Letter of Credit if the beneficiary or the conditions of drawing are reasonably unacceptable to the Agent, or if the purpose of issuance is illegal or is in contravention of any law, rule, regulation or public policy or any judgment, decree, writ, injunction, order or award of any arbitrator, court or governmental authority. (b) The Company shall give the Agent written notice in substantially the form attached hereto as Exhibit D (a "Request for Letter of Credit Issuance") not later than 10:00 a.m. (Detroit time) on the fifth Business Day before each requested Letter of Credit Issuance or such later time as is acceptable to the Agent. (c) The Company agrees (i) to pay to the Agent for the account of the Banks a fee computed at the per annum rate equal to the Applicable Margin of the maximum amount available to be drawn from time to time under the related Letter of Credit for the period from and including the date of such Letter of Credit Issuance to but excluding the stated expiry date of such Letter of Credit, and (ii) to pay an additional fee to the Agent for its own account computed at the rate of one-eighth of one percent (1/8 of 1%) per annum of such maximum amount for such period, such fees with respect to any Letter of Credit to be paid quarterly in advance commencing with the date of its issuance, based upon the Applicable Margin in effect at the beginning of each such quarter. Such fees are nonrefundable and the Company shall not be entitled to any rebate of any portion thereof if such Letter of Credit does not remain outstanding through such quarter or for any other reason. The Company further agrees to pay to the Agent, on demand, such other customary administrative fees, charges and expenses of the Agent in respect of the issuance, negotiation, MASCOTECH, INC. CREDIT AGREEMENT -19- 26 acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued. (d) Nothing in this Agreement shall be construed to require or authorize any Bank to issue any Letter of Credit, it being recognized that the Agent has the sole obligation under this Agreement to issue Letters of Credit for the risk of the Banks. Upon each Letter of Credit Issuance, each Bank shall automatically acquire a pro rata risk participation interest in the related Letter of Credit based on its respective Commitment Percentage. If the Agent shall honor a draft or other demand for payment presented or made under any Letter of Credit, the Agent shall provide notice thereof to each Bank on the date such draft or demand is honored unless the Company shall have satisfied its reimbursement obligation under subsection (e) of this Section 3.3 by payment to the Agent on such date. Each Bank, on such date, shall make an amount equal to its Commitment Percentage of the amount paid by the Agent available in immediately available funds at the principal office of the Agent for the account of the Agent. If and to the extent such Bank shall not have made such amount available to the Agent, such Bank and the Company severally agree to pay to the Agent forthwith on demand such amount, together with interest thereon for each day from the date such amount was paid by the Agent until such amount is so made available to the Agent at (i) in the case of such Bank, the Federal Funds Rate and (ii) in the case of the Company, the per annum rate equal to the interest rate applicable during such period to the related Borrowing deemed (or that could have been deemed) disbursed under subsection (e) of this Section 3.3 in respect of the reimbursement obligation of the Company. If such Bank shall pay such amount to the Agent together with such interest, if any, accrued, such amount so paid shall constitute a Syndicated Loan by such Bank as part of the Borrowing disbursed in respect of the reimbursement obligation of the Company under subsection (e) of this Section 3.3 for purposes of this Agreement. The failure of any Bank to make an amount equal to its Commitment Percentage of any such amount paid by the Agent available to the Agent shall not relieve any other Bank of its obligation to make available an amount equal to such other Bank's Commitment Percentage of such amount, but no Bank shall be responsible for failure of any other Bank to make its share available to the Agent. (e)(i) Whether a Letter of Credit was issued for the account of the Company or any Consolidated Subsidiary of the Company, and without limiting the reimbursement obligation of such Consolidated Subsidiary, the Company agrees to pay to the Agent, not later than 3:00 p.m. (Detroit time) on the date on which the Agent shall honor a draft or other demand for payment presented or made under such Letter of Credit, an amount equal to the amount paid by the Agent in respect of such draft or other demand under such Letter of Credit and all expenses paid or incurred by the Agent relative thereto (the "Reimbursement Amount"). The Agent shall, on the date of each demand for payment under any Letter of Credit, give the Company notice thereof and of the amount of the Company's reimbursement obligation and liability for expenses relative thereto; provided that the failure of the Agent to give such notice shall not affect the reimbursement and other obligations of the Company under this Section 3.3. Unless the Company shall have made such payment to the Agent on such day, upon each such payment by the Agent, the Company shall be deemed to have elected to satisfy its reimbursement obligation by a Floating Rate Borrowing in an amount equal to the amount so paid by the Agent in respect of such draft or other demand under such Letter of Credit, and the Agent shall be deemed to have disbursed to the Company, for the account of the Banks, the Floating Rate Loans comprising such Floating Rate Borrowing, and each Bank shall make its share of each such Floating Rate Borrowing available to the Agent in accordance with Section 3.5(b). Such Floating Rate Loans shall be deemed disbursed notwithstanding any failure to satisfy any conditions for disbursement of any Loan set forth in Article VIII and, to the extent of the Floating Rate Loans so disbursed, the reimbursement obligation of the Company under this subsection (e)(i) shall be deemed satisfied. (ii) If, for any reason (including without limitation as a result of the occurrence of an Event of Default with respect to the Company pursuant to Section 9.1(f) or (g)), Floating Rate Loans may not be made by the Banks as described in Section 3.3(e)(i), then (A) the Company agrees that each MASCOTECH, INC. CREDIT AGREEMENT -20- 27 Reimbursement Amount not paid pursuant to the first sentence of Section 3.3(e)(i) shall bear interest, payable on demand by the Agent, at the interest rate then applicable to Floating Rate Loans, and (B) effective on the date each such Floating Rate Loan would otherwise have been made, each Bank severally agrees that it shall unconditionally and irrevocably, without regard to the occurrence of any Default, to the extent of such Bank's Commitment Percentage, purchase a participating interest in each Reimbursement Amount. Each Bank will immediately transfer to the Agent, in same day funds, the amount of its participation. Each Bank shall share on a pro rata basis (calculated by reference to its Commitment Percentage) in any interest which accrues thereon and in all repayments thereof. If and to the extent that any Bank shall not have so made the amount of such participating interest available to the Agent, such Bank agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Agent until the date such amount is paid to the Agent, at the Federal Funds Rate. (f) The reimbursement obligation of the Company under this Section 3.3 with respect to each Letter of Credit shall be absolute, unconditional and irrevocable and shall remain in full force and effect until all such obligations of the Company to the Banks and the Agent with respect to such Letter of Credit shall have been satisfied, and such obligations of the Company shall not be affected, modified or impaired upon the happening of any event, including without limitation, any of the following, whether or not with notice to, or the consent of, the Company: (i) Any lack of validity or enforceability of any Letter of Credit or any documentation relating to any Letter of Credit or to any transaction related in any way to such Letter of Credit (the "Letter of Credit Documents"); (ii) Any amendment, modification, waiver, consent, or any substitution, exchange or release of or failure to perfect any interest in collateral or security, with respect to any of the Letter of Credit Documents; (iii) The existence of any claim, setoff, defense or other right which the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), the Agent or any Bank or any other Person, whether in connection with any of the Letter of Credit Documents, the transactions contemplated herein or therein or any unrelated transactions; (iv) Any draft or other statement or document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) Payment by the Agent to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (vi) Any failure, omission, delay or lack on the part of the Agent or any Bank or any party to any of the Letter of Credit Documents to enforce, assert or exercise any right, power or remedy conferred upon the Agent, any Bank or any such party; or (vii) Any other event or circumstance that would, in the absence of this clause, result in the release or discharge by operation of law or otherwise of the Company from the performance or observance of any obligation, covenant or agreement contained in this Section 3.3. No setoff, counterclaim, reduction or diminution of any obligation or any defense of any kind or nature which the Company has or may have against the beneficiary of any Letter of Credit shall be available hereunder to MASCOTECH, INC. CREDIT AGREEMENT -21- 28 the Company against the Agent or any Bank. Nothing in this Section 3.3 shall limit the liability, if any, of the Agent to the Company pursuant to Section 11.5(c). 3.4 Bid-Option Borrowings. (a) The Bid-Option. In addition to Syndicated Borrowings that are made pursuant to Section 3.1, the Company may, as set forth in this Section, from time to time after the Closing Date to but excluding the Termination Date request the Banks to offer to make Bid-Option Loans to the Company. Each Bank may, but shall have no obligation to, make such offers; furthermore, each Bank may limit the aggregate amount of Bid-Option Loans when quoting rates for more than one Bid-Option Interest Period in any Bid-Option Quote, provided that such limitation shall not be less than the minimum amounts required hereunder for Bid-Option Loans and the Company may choose among the Bid-Option Loans if such limitation is imposed. The Company may, but shall have no obligation to, accept any such offers, in the manner set forth in this Section; provided that the Dollar Equivalent of the aggregate outstanding principal amount of Bid-Option Loans shall not at any time exceed the lesser of (i) the excess of (A) the aggregate amount of the Commitments over (B) the sum of (x) the aggregate outstanding principal amount of Syndicated Loans plus (y) the Letter of Credit Obligations Amount, or (ii) fifty percent (50%) of the aggregate amount of the Commitments (as the same may be reduced in accordance with the terms of this Agreement during any applicable Bid-Option Interest Period); and provided, further, that the Dollar Equivalent of the aggregate outstanding principal amount of Foreign Currency Bid-Option Loans shall not exceed $50,000,000. (b) Bid-Option Quote Requests. When the Company wishes to request offers to make Bid-Option Loans under this Section, it shall transmit to the Agent by telex or telecopy a request substantially in the form attached hereto as Exhibit E (a "Bid-Option Quote Request") so as to be received no later than 10:00 a.m. (Detroit time) on (i) the Business Day next preceding the date of the Borrowing proposed therein, in the case of a Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans, (ii) the fifth Business Day next preceding the date of the Borrowing in the case of a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (iii) the fourth Business Day prior to the date of Borrowing proposed therein, in the case of a Bid-Option Auction for Foreign Currency Bid-Option Loans, specifying: (A) the proposed date of the Borrowing, which shall be a Business Day; (B) whether the Borrowing is to be an Absolute Rate Dollar Bid-Option Borrowing, a Eurodollar Rate Dollar Bid-Option Borrowing or a Foreign Currency Bid-Option Borrowing and, if a Foreign Currency Bid-Option, the desired Foreign Currency; (C) the aggregate amount of such Borrowing, which shall be (A) $25,000,000 or a larger multiple of $5,000,000, in the case of a Dollar Bid-Option Borrowing, or (B) not less than the Dollar Equivalent of $5,000,000, in the case of a Foreign Currency Bid-Option Borrowing; and (D) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of the applicable Interest Period. The Company may request offers to make Bid-Option Loans for more than one Interest Period in a single Bid-Option Quote Request. The Company may not request offers to make Bid-Option Loans in more than MASCOTECH, INC. CREDIT AGREEMENT -22- 29 one currency in any Bid-Option Quote Request and may not make more than five Bid-Option Borrowings during any month. (c) Invitation for Bid-Option Quotes. Promptly upon receipt of a Bid-Option Quote Request, the Agent shall send to the Banks by telex or telecopy (or telephone promptly confirmed by telex or telecopy) an Invitation for Bid-Option Quotes substantially in the form attached hereto as Exhibit F, which shall constitute an invitation by the Company to each Bank to submit Bid-Option Quotes offering to make the Bid-Option Loans to which such Bid-Option Quote Request relates in accordance with this Section. (d) Submission and Contents of Bid-Option Quotes. (i) Each Bank may submit a Bid-Option Quote containing an offer or offers to make Bid-Option Loans in response to any Invitation for Bid-Option Quotes. Each Bid-Option Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or telecopy (or by telephone promptly confirmed by telex or telecopy) not later than (A) 9:00 a.m. (Detroit time) on the proposed date of the Borrowing, in the case of a Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans, (B) 10:00 a.m. (Detroit time) on the fourth Business Day prior to the proposed date of the Borrowing, in the case of a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 2:00 p.m. (Detroit time) on the third Business Day prior to the proposed date of the Borrowing, in the case of a Bid-Option Auction for Foreign Currency Bid-Option Loans; provided that Bid-Option Quotes submitted by the Agent (or any Affiliate of the Agent) in its capacity as a Bank may be submitted, and may only be submitted, if the Agent or such Affiliate notifies the Company of the terms of the offer or offers contained therein not later than (A) 8:45 a.m. (Detroit time) on the proposed date of the Borrowing, in the case of a Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans, (B) 9:45 a.m. (Detroit time) on the fourth Business Day prior to the proposed date of the Borrowing, in the case of a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 1:00 p.m. (Detroit time) on the third Business Day prior to the proposed date of the Borrowing in the case of a Bid-Option Auction for Foreign Currency Bid-Option Loans. Subject to Section 3.4(e), Article VIII and Article IX, any Bid-Option Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Company. (ii) Each Bid-Option Quote shall be in substantially the form attached hereto as Exhibit G and shall in any case specify: (A) the proposed date of the Borrowing; (B) whether the Bid-Option Loans for which the offers are made are Absolute Rate Dollar Bid-Option Loans, Eurodollar Rate Dollar Bid-Option Loans or Foreign Currency Bid-Option Loans, which must match the type of Borrowing stated in the related Invitation for Bid-Option Quotes; (C) the principal amount of the Bid-Option Loan for which each such offer is being made, the Dollar Equivalent of which (1) may, together with the Dollar Equivalent of the aggregate outstanding principal amount of all other Loans made by the quoting Bank, exceed the amount of the Commitment of the quoting Bank, (2) must be (y) in the case of any Dollar Bid-Option Loan, $5,000,000 or a larger multiple thereof, or (z) in the case of any Foreign Currency Bid-Option Loan, not less than $1,000,000, and (3) may not exceed the Dollar Equivalent of the aggregate principal MASCOTECH, INC. CREDIT AGREEMENT -23- 30 amount of the Bid-Option Borrowing specified in the related Invitation for Bid-Option Quotes; (D) in the case of a Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans or Foreign Currency Bid-Option Loans, the rate of interest per annum (rounded up to the nearest 1/10,000th of 1%) (the "Bid-Option Absolute Rate") offered for each such Bid-Option Loan; (E) in the case of a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, the applicable margin, which may be positive or negative (the "Bid-Option Eurodollar Rate Margin"), expressed as a percentage (rounded to the nearest 1/10,000th of 1%), offered for each such Bid-Option Loan; (F) the Interest Period(s) for which each such Bid-Option Absolute Rate or Bid-Option Eurodollar Rate Margin, as the case may be, is offered; and (G) the identity of the quoting Bank. (iii) Any Bid-Option Quote shall be disregarded if it: (A) is not substantially in the form of Exhibit G hereto or does not specify all of the information required by subsection (d)(ii) above; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Bid-Option Quotes; or (D) arrives after the time set forth in subsection (d)(i); provided that a Bid-Option Quote shall not be disregarded pursuant to clause (B) or (C) above solely because it indicates that an allocation that might otherwise be made to it pursuant to Section 3.4(g) would be unacceptable. (e) Notice to Company. The Agent shall promptly notify the Company of the terms (i) of any Bid-Option Quote submitted by a Bank that is in accordance with subsection (d) of this Section and (ii) of any Bid-Option Quote that amends, modifies or is otherwise inconsistent with a previous Bid-Option Quote submitted by such Bank with respect to the same Bid-Option Quote Request. Any such subsequent Bid-Option Quote shall be disregarded by the Agent unless such subsequent Bid-Option Quote is submitted solely to correct a manifest error in such former Bid-Option Quote. The Agent'sEnotice to the Company shall specify (i) the Dollar Equivalent of the aggregate principal amount of Bid-Option Loans for which offers have been received for each Interest Period specified in the related Bid-Option Quote Request and (ii) the respective Dollar Equivalent of the principal amounts and respective Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the case may be, so offered. MASCOTECH, INC. CREDIT AGREEMENT -24- 31 (f) Acceptance and Notice by Company. Not later than 10:00 a.m. (Detroit time) on (i) the proposed date of the Borrowing, in the case of a Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans, (ii) the third Business Day prior to the proposed date of the Borrowing, in the case of a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (iii) the second Business Day prior to the proposed date of the Borrowing, in the case of a Bid-Option Auction for Foreign Currency Bid-Option Loans, the Company shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e) of this Section 3.3. In the case of acceptance, such notice (a "Notice of Bid-Option Borrowing") shall specify the aggregate principal amount of accepted offers for the applicable Interest Period(s). The Company may accept any Bid-Option Quote in whole or in part; provided that: (A) the Dollar Equivalent of the aggregate principal amount of each Bid-Option Borrowing may not exceed the applicable amount set forth in the related Bid-Option Quote Request; (B) the Dollar Equivalent of the aggregate principal amount of each Bid-Option Borrowing must be (1) in the case of Dollar Bid-Option Borrowings, $25,000,000 or a larger multiple of $5,000,000, unless the aggregate amount of the related Bid-Option Loans for which Bid-Option Quotes were received is less than $25,000,000, in which case the aggregate principal amount of the Dollar Bid-Option Borrowing may be any amount less than $25,000,000, and (2) in the case of Foreign Currency Bid-Option Loans, not less than $5,000,000 (or, if less, the aggregate amount of the related Bid-Option Loans for which Bid-Option Quotes were received); (C) acceptance of offers may only be made on the basis of ascending Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the case may be; and (D) the Company may not accept any offer that is described in clause (iii) of subsection (d) of this Section or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Agent. If offers are made by two or more Banks with the same Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the case may be, for a greater aggregate principal amount than the amount in respect of which offers are accepted for the related Interest Period, the principal amount of Bid-Option Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in such multiples, not greater than the Dollar Equivalent of $500,000, as the Agent may deem appropriate) in proportion to the aggregate principal amount of such offers (excluding any Bank that has indicated in its offer that an allocation which otherwise would be made to it is unacceptable). Determinations by the Agent of the amounts of Bid-Option Loans shall be conclusive in the absence of manifest error. 3.5 Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing or Request for Letter of Credit Issuance, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share, if any, of such Borrowing or the related Letter of Credit risk, as the case may be. A Notice of Borrowing or Request for Letter of Credit Issuance shall be irrevocable by the Company once the Agent begins notifying any Bank of the contents thereof. MASCOTECH, INC. CREDIT AGREEMENT -25- 32 (b) Each Bank, not later than 1:00 p.m. (Detroit time) on the date any Borrowing is requested to be made, other than a Foreign Currency Bid-Option Borrowing, shall (except as provided in subsection (d) of this Section 3.5) make its share, if any, of such Borrowing available to the Agent in immediately available funds, at the Agent'sEaddress specified in or pursuant to Section 11.2, for disbursement to the Company. Unless the Agent determines that any applicable condition specified in Article VIII has not been satisfied, the Agent will make funds actually so received from the Banks available to the Company at the Agent's aforesaid address. Unless the Agent shall have received notice from any Bank prior to the date such Borrowing is requested to be made that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date such Borrowing is requested to be made in accordance with this Section 3.5. If and to the extent such Bank shall not have so made such share available to the Agent, the Agent may (but shall not be obligated to) make such amount available to the Company, and such Bank and the Company severally agree to pay to the Agent forthwith on demand such amount, together with interest thereon for each day from the date such amount is made available to the Company by the Agent until the date such amount is repaid to the Agent at (i) in the case of such Bank, the Federal Funds Rate and (ii) in the case of the Company, a rate per annum equal to the interest rate applicable to such Borrowing during such period. If such Bank shall pay such amount to the Agent together with interest, such amount so paid shall constitute a Loan by such Bank as a part of the related Borrowing for purposes of this Agreement. The failure of any Bank to make its share of any Borrowing available to the Agent shall not relieve any other Bank of its obligation to make available to the Agent its share, if any, of such Borrowing on the date such Borrowing is requested to be made, but no Bank shall be responsible for failure of any other Bank to make such share available to the Agent on the date of such Borrowing. (c) Each Bank, not later than 11:00 a.m. (Detroit time) on the date any Foreign Currency Bid-Option Borrowing is requested to be made shall (except as provided in subsection (d) of this Section 3.5) make its share, if any, of such Borrowing available to the Company by depositing the proceeds thereof in an account maintained and designated by the Company at an office or branch of such Bank (or of an Affiliate of such Bank) located in the principal financial center of the country issuing the Foreign Currency in which such Borrowing is denominated or, if neither such Bank nor any Affiliate of such Bank has an office or branch in such financial center, at such Bank's Eurodollar Lending Office or Domestic Lending Office as selected by such Bank, or by such other means requested by the Company and acceptable to such Bank. Promptly upon any such disbursement of a Foreign Currency Bid-Option Loan, the Bank making such Loan shall give written notice to the Agent by telex or telecopy of the making of such Loan, which notice shall be substantially in the form attached hereto as Exhibit H. (d) If any Bank is to make a new Syndicated Loan or Dollar Bid-Option Loan hereunder on a day on which the Company is to repay all or any part of an outstanding Syndicated Loan or Dollar Bid-Option Loan from such Bank, or if any Bank is to make a new Foreign Currency Bid-Option Loan hereunder on a day on which the Company is to repay all or any part of an outstanding Foreign Currency Bid-Option Loan of the same Foreign Currency from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference, if any, between the amount of such new Loan and the amount being repaid shall (i) be made available by such Bank to the Agent or the Company, as provided in subsection (b) or (c) of this Section 3.5 or (ii) be remitted by the Company to the Agent or such Bank as provided in Section 4.4, as the case may be. Except as provided in the first sentence of this Section 3.5(d), no Bank shall apply the proceeds of any Loan, whether a Foreign Currency Bid-Option Loan or other type of Loan, to repay all or any part of an outstanding Foreign Currency Bid-Option Loan, the entire amount of which shall, unless repaid by the application of the proceeds of a new Foreign Currency Bid-Option Loan of the same Foreign Currency as permitted in the first sentence of this Section 3.5(d), be remitted in full by the Company to the Banks when due as provided in Section 4.4. MASCOTECH, INC. CREDIT AGREEMENT -26- 33 3.6 The Notes. (a) The Syndicated Loans of each Bank shall be evidenced by a single Syndicated Note payable to the order of such Bank in an amount equal to the aggregate unpaid principal amount of such Bank's Syndicated Loans. (b) The Bid-Option Loans of each Bank shall be evidenced by a single Bid-Option Note payable to the order of such Bank in an amount equal to the Dollar Equivalent of the aggregate unpaid principal amount of such Bank's Bid-Option Loans. (c) Upon receipt of each Bank's Notes pursuant to Section 8.2, the Agent shall forward such Notes to such Bank. Each Bank shall record on its books and records, and prior to any transfer of its Notes shall endorse on the schedules forming a part thereof appropriate notations to evidence, the date of disbursement, amount and maturity of each Loan made by it, the interest rate and Interest Period applicable thereto and the date and amount of each payment of principal made by the Company with respect thereto. Any notations made by such Bank shall be prima facie evidence of the matters so recorded or endorsed. Each Bank is hereby irrevocably authorized by the Company to make such records, so to endorse schedules to its Notes and to attach to and make a part of any Note a continuation of any such schedule as and when required. Failure by any Bank to make such records or so to endorse the schedules to its Notes, or any error in recording or so endorsing any such information, shall not affect the Company's liability hereunder or under any Note. 3.7 Certain Fees. (a) Commitment Fees. [Intentionally Omitted] (b) Facility Fee. The Company will pay to the Agent for the respective accounts of the Banks a facility fee, for each calendar quarter or portion thereof from the Closing Date to but not including the Termination Date, on the amount of each Bank's Commitment, whether used or unused, during such period, at a rate equal to the Applicable Margin for Facility Fees. All accrued facility fees hereunder shall be payable in arrears with respect to each calendar quarter or portion thereof not later than the tenth day after the end of each March, June, September and December, commencing with the first such calendar quarter-end after the Closing Date, and on the Termination Date. Promptly upon receipt of such facility fees for any calendar quarter for portion thereof, the Agent shall distribute such facility fees to the Banks ratably in accordance with their respective Commitment Percentages. (c) Closing Fee. The Company will further pay to the Agent for the respective accounts of the Banks such amount as may be agreed upon between the Company and the Banks. The closing fees shall be payable on or before the Closing Date. Promptly upon its receipt thereof, the Agent shall distribute such fees to the Banks. (d) Agent's Fees. The Company will further pay to the Agent fees for its own account for its services as Agent under this Agreement in such amounts and at such times as may from time to time be agreed upon between the Company and the Agent. MASCOTECH, INC. CREDIT AGREEMENT -27- 34 3.8 Termination or Reduction of Commitments. (a) Optional Termination or Reduction. Subject to Section 5.5, the Company shall have the right at any time and from time to time, upon five Business Days' prior written notice to the Agent, to terminate or proportionately reduce the amount of the Commitments, provided, that (i) any partial reduction of the amount of the Commitments shall be in the amount of $10,000,000 or a larger multiple thereof, (ii) no such reduction shall be permitted with respect to any portion of the Commitments not in excess of the sum of the Dollar Equivalent of the aggregate outstanding principal amount of all Loans, plus the Letter of Credit Obligations Amount, plus the Dollar Equivalent of the aggregate amount of all Borrowings for which a Notice of Borrowing is then pending, plus the aggregate amount of all Letters of Credit for which a Request for Letter of Credit Issuance is then pending, (iii) the Commitments may not be terminated if any Loans or Letters of Credit are then outstanding or any Notice of Borrowing or Request for Letter of Credit Issuance is then pending and (iv) no such termination or reduction shall be permitted if, after giving effect thereto, the Dollar Equivalent of the aggregate principal amount of the outstanding Bid-Option Loans would exceed fifty percent (50%) of the aggregate amount of the Commitments. The Commitments or any portion thereof terminated or reduced pursuant to this Section may not be reinstated. The accrued facility fees with respect to the terminated Commitments or the amount of any reduction therein shall be payable on the effective date of such notice. Upon receipt of any notice from the Company pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share of any reduction of the Commitments. Each such notice shall be irrevocable by the Company once the Agent begins notifying any Bank of the contents thereof. (b) [intentionally omitted]. (c) Section 4.2(d) Compliance. On the effective date of any reduction or termination of the Commitments under this Section 3.8, the Company shall make such payments as may be required under Section 4.2(d) as a result thereof. 3.9 Mandatory Termination of Commitments. The Commitments shall terminate on the Termination Date. 3.10 Extension of Scheduled Expiration Date. (a) The Company may request that the Banks extend the Scheduled Expiration Date from February 28, 2002 to February 28, 2003. No such request shall be effective unless it is made in writing by the Company at any time after February 28, 1999. (b)(i) Upon receipt of any such written request, the Agent shall promptly distribute a copy thereof to each Bank. (ii) Each Bank shall have the time specified in such request to agree or refuse to extend the Scheduled Expiration Date, which agreement or refusal, as the case may be, must be communicated to the Agent in writing; provided, that (A) the failure of any Bank so to communicate its agreement so to extend the Scheduled Expiration Date shall be deemed to be such Bank's refusal so to extend, (B) any written communication of any Bank of its agreement so to extend shall be irrevocable and (C) any agreement of any Bank so to extend communicated to the Agent subject to any qualifications or conditions shall be deemed to be a refusal so to extend the Scheduled Expiration Date. (iii) The Agent shall promptly notify the Company which Banks have consented to such written request (a "Consenting Bank"). Any failure by the Agent to so notify the Company shall not be deemed a consent to the Company's request. (iv) Each Bank that elects not to extend the requested Scheduled Expiration Date or MASCOTECH, INC. CREDIT AGREEMENT -28- 35 fails to so notify the Agent of such consent (a "Non-Consenting Bank") hereby agrees that if any other Bank or financial institution acceptable to the Company and the Agent offers to purchase such Non-Consenting Bank's Commitment(s) for a purchase price equal to the sum of all amounts then owing with respect to the Loans and all other amounts accrued for the account of such Non-Consenting Bank and any amounts which may become owing as a result of such purchase, such Non-Consenting Bank will, promptly or upon the existing Scheduled Expiration Date for such Non-Consenting Bank, as elected by the Company, assign, sell and transfer all of its right, title and obligations with respect to the foregoing to such other Bank or financial institution pursuant to and on the terms specified in the form of Assignment and Acceptance and Section 11.6. (v) Notwithstanding anything herein to the contrary, the Scheduled Expiration Date will not be extended if the aggregate Commitments of each Consenting Bank plus the additional Commitments of each Bank or other financial institution replacing any Non-Consenting Bank pursuant to clause (iv) above and agreeing to the request does not equal or exceed 75% of the then existing aggregate Commitments. If the Scheduled Expiration Date is extended hereunder, it will not be extended for the Non-Consenting Banks whose Commitments are not purchased pursuant to clause (iv) above, and each such Non-Consenting Bank's Commitment shall remain in effect and not be terminated until the Scheduled Expiration Date that is then in effect. ARTICLE IV. PRINCIPAL PAYMENTS; INTEREST; ETC 4.1 Scheduled Principal Payments. Unless earlier payment is required under this Agreement, or made pursuant to Section 4.2, the Company shall pay the entire principal amount of each Loan on the last day of the Interest Period applicable to such Loan. 4.2 Prepayments of Principal. The following provisions apply in respect of prepayment of the Loans by the Company: (a) The Company may prepay Floating Rate Loans in whole or in part on any Business Day in amounts aggregating $5,000,000 or any larger multiple of $5,000,000 (unless such prepayment would cause the aggregate outstanding principal amount of Floating Rate Loans to be less than $5,000,000, in which event prepayment may only be made in an amount equal to the entire outstanding principal amount of Floating Rate Loans), by paying the principal amount being prepaid together with accrued interest thereon to the date of prepayment. Each prepayment in part of such Loans shall be applied to such Loans of the Banks ratably in accordance with their respective shares of the aggregate outstanding principal amount of the Floating Rate Loans. (b) The Company may, upon at least three Business Days' notice to the Agent, prepay any Fixed Base Rate Syndicated Borrowing in whole or in part on any Business Day in the amount of $10,000,000 or any larger multiple of $5,000,000 (unless such prepayment would cause the aggregate outstanding principal amount of such Fixed Base Rate Syndicated Borrowing to be less than $10,000,000, in which event prepayment may only be made in an amount equal to the outstanding unpaid principal amount of such Fixed Base Rate Syndicated Borrowing), by paying the principal amount being prepaid together with accrued interest thereon to the date of prepayment; provided, however, that the Company shall compensate the Banks pursuant to Section 5.5 for any losses or expenses incurred as a result thereof. Each prepayment in part of any Fixed Base Rate Syndicated Borrowing shall be applied to the Fixed Base Rate Syndicated Loans comprising such Borrowing of the Banks ratably in accordance with their respective shares of the aggregate outstanding principal amount of such Loans. MASCOTECH, INC. CREDIT AGREEMENT -29- 36 (c) Unless otherwise required by this Agreement, the Company may not prepay any Bid-Option Loan in whole or in part without the consent of the Bank that made such Bid-Option Loan. (d) Notwithstanding SectionE4.2(a), (b) and (c), if on any date: (i) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal amount of Loans plus (B) the Letter of Credit Obligations Amount exceeds the aggregate amount of the Commitments; or (ii) the Dollar Equivalent of the aggregate outstanding principal amount of Bid-Option Loans exceeds fifty percent (50%) of the Commitments; or (iii) the Dollar Equivalent of the aggregate outstanding principal amount of Foreign Currency Bid-Option Loans exceeds $50,000,000; then the Company shall pay forthwith the principal amount of such excess, together with accrued interest thereon to the date of payment; provided, however, that the Company shall compensate the Banks pursuant to Section 5.5 for any losses or expenses incurred as a result thereof; and provided further, however, that (A) no such payment otherwise required under clause (i) of this Section 4.2(d) solely because of currency exchange rate fluctuations affecting the Dollar Equivalent of the aggregate outstanding principal amount of Foreign Currency Bid-Option Loans shall be required unless such payment is due on a date when a payment of principal of any Loan is otherwise due hereunder, and (B) notwithstanding clause (A) of this proviso, no such payment otherwise required under subsection (ii) or (iii) of this Section 4.2(d) shall be required if due solely because of currency exchange rate fluctuations affecting the Dollar Equivalent of the aggregate outstanding principal amount of Foreign Currency Bid-Option Loans since the last date on which any of such Foreign Currency Bid-Option Loans were made. (e) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (in accordance with Section 4.4) of such prepayment. Each such notice shall be irrevocable by the Company once the Agent begins notifying any Bank of the contents thereof. 4.3 Interest Payments. The Company shall pay interest to the Banks on the unpaid principal amount of each Loan, for the period commencing on the date such Loan is made until such Loan is paid in full, on each Interest Payment Date and at maturity (whether at stated maturity, by acceleration or otherwise), and thereafter on demand, at the following rates per annum (subject, however, to the provisions of Section 11.12): (a) With respect to each Floating Rate Loan, at the Floating Rate. (b) With respect to each CD Rate Loan, at the CD Rate, provided that if any CD Rate Loan or any portion thereof shall, as a result of clause (b) of the definition of CD Rate Interest Period, have an Interest Period of less than thirty (30) days, such CD Rate Loan or portion thereof shall bear interest during such Interest Period at the Floating Rate. (c) With respect to each Eurodollar Rate Syndicated Loan, the Syndicated Eurodollar Rate, provided that if any Eurodollar Rate Syndicated Loan or any portion thereof shall, as a result of clause (c) of the definition of Eurodollar Rate Interest Period, have an Interest Period of less than one month, such Loan or portion thereof shall bear interest during such Interest Period at the Floating Rate. MASCOTECH, INC. CREDIT AGREEMENT -30- 37 (d) With respect to each Eurodollar Rate Dollar Bid-Option Loan, the Bid-Option Eurodollar Rate, provided that if any Eurodollar Rate Bid-Option Loan or any portion thereof shall, as a result of clause (c) of the definition of Eurodollar Rate Interest Period, have an Interest Period of less than one month, such Loan or portion thereof shall bear interest during such Interest Period at the Floating Rate. (e) With respect to each Absolute Rate Dollar Bid-Option Loan and Foreign Currency Bid-Option Loan, the Bid-Option Absolute Rate quoted for such Loan by the Bank making such Loan. Notwithstanding the foregoing subsections (a) through (e), the Company shall (subject to the provisions of Section 11.12) pay interest on demand at the Overdue Rate on the outstanding principal amount of any Loan and any other amount payable by the Company hereunder (other than interest) which is not paid in full when due (whether at stated maturity, by acceleration or otherwise) for the period commencing on the due date thereof until the same is paid in full. 4.4 Payment Procedures. (a) All payments of any facility fees, closing fees, Letter of Credit fees, Agent'sEfees, or other fees hereunder and of principal of, and interest on, the Loans, other than Foreign Currency Bid-Option Loans, and of reimbursement obligations in respect of Letters of Credit shall be made in Dollars and in funds immediately available at the Agent'sEprincipal office in Detroit, Michigan not later than 1:00 p.m. (Detroit time) on the date on which such payment shall become due. All payments of principal of, and interest on, the Foreign Currency Bid-Option Loans shall be made in the currencies in which such Loans are denominated and in funds immediately available, freely transferable and cleared at the office or branch from which the Loan was made under Section 3.5(c) not later than 3:00 p.m. local time on the date on which such payment shall become due. Promptly upon receipt of any payment of principal of the Foreign Currency Bid-Option Loans the Bank receiving such payment shall give written notice to the Agent by telex or telecopy of the receipt of such payment, which notice shall be substantially in the form attached hereto as ExhibitEI. Whenever any payment of principal of, or interest on, the Loans or of any fee shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day (unless as a result thereof, in respect of Eurodollar Rate Loans, such date would fall in the next calendar month, in which case it shall be advanced to the next preceding Business Day) and, in the case of a payment of principal, interest thereon shall be payable for any such extended time. (b) Payments of principal of or interest on Existing Loans shall be promptly distributed by the Existing Agent to each Existing Bank ratably in proportion to each Existing Bank's Existing Commitment. Payments of principal of Syndicated Loans that comprise a Syndicated Borrowing, including any Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated Borrowing, shall be promptly distributed by the Agent to the Banks that made such Syndicated Loans ratably in proportion to their respective shares of the outstanding principal amount of such Syndicated Borrowing. Payments of interest on Syndicated Loans that comprise a Syndicated Borrowing, including any Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated Borrowing, shall be promptly distributed by the Agent to the Banks that made such Syndicated Loans so that each such Bank receives a portion of such payment equal to the amount of interest then owing to such Bank on such Loans multiplied by a fraction, the denominator of which is the total amount of interest then owing to all such Banks on such Loans and the numerator of which is the amount of such payment. Payments of principal of or interest on any Dollar Bid-Option Loans that comprise a Dollar Bid-Option Borrowing shall be promptly distributed by the Agent to the Banks that made such Dollar Bid-Option Loans ratably in accordance with their respective Dollar Bid-Option Percentages. (c) During any period when Dollar Bid-Option Loans are outstanding, if the Agent cannot reasonably determine whether a particular payment received by the Agent from the Company was MASCOTECH, INC. CREDIT AGREEMENT -31- 38 intended to be applied to the principal of or interest on one or more Dollar Bid-Option Borrowings or to the principal of or interest on Syndicated Borrowings, or if the amount of any payment by the Company is insufficient to pay all amounts then due and payable with respect to Dollar Bid-Option Loans and Syndicated Loans (including Substitute Loans), the Agent shall first apportion such payment between the Dollar Bid-Option Loans and the Syndicated Loans (including Substitute Loans) (i) if such payment is of principal, ratably in accordance with the aggregate principal amount of each such type of Loans on which payment is then due, and (ii) if such payment is of interest, ratably in accordance with the aggregate amount of interest that is then due on each such type of Loans. After such apportionment, (i) the Agent shall distribute the portion of the payment received and allocated to the Syndicated Loans (including Substitute Loans) to the Banks as provided for payments of principal of or interest on, as the case may be, Syndicated Loans under Section 4.4(b), and (ii) the portion of the payment received and allocated to the Dollar Bid-Option Loans on which a payment is then due shall first be allocated among the different Dollar Bid-Option Borrowings of which such Dollar Bid-Option Loans are a part (A) if such payment is of principal, ratably in accordance with the aggregate principal amount of each such Dollar Bid-Option Borrowing, and (B) if such payment is of interest, ratably in accordance with the aggregate amount of interest that is then due on each such Dollar Bid-Option Borrowing. After such allocation, the Agent shall distribute the amount allocated to each Dollar Bid-Option Borrowing to the Banks that made the Dollar Bid-Option Loans comprising such Dollar Bid-Option Borrowing ratably in accordance with their respective Dollar Bid-Option Percentages. (d) Any prepayments of Bid-Option Loans made under Section 4.2(d) may be applied to any one or more Bid-Option Borrowings as the Company may select; provided that such payments shall be applied by the Agent, in the case of Dollar Bid-Option Loans, or made directly by the Company, in the case of Foreign Currency Bid-Option Loans, to the Banks participating in any such Bid-Option Borrowing ratably in accordance with their respective Dollar Bid-Option Percentages or Foreign Currency Bid-Option Percentages, as the case may be. 4.5 Computation of Interest and Fees. Facility fees, Agent fees and Letter of Credit fees, and interest on the Floating Rate Loans and other amounts due hereunder, other than Fixed Rate Loans, shall be computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. Interest on the Fixed Rate Loans shall be computed on the basis of a year of 360 days and actual days elapsed. 4.6 No Setoff or Deduction. All payments of principal of and interest on the Loans and other amounts payable by the Company hereunder shall be made by the Company without setoff or counterclaim, and free and clear of, and without deduction or withholding for, or on account of, any present or future taxes, levies, imposts, duties, fees, assessments, or other charges of whatever nature, imposed by any governmental authority, or by any department, agency or other political subdivision or taxing authority. 4.7 Other Provisions Applicable to Foreign Currency Bid-Option Loans. Foreign Currency Bid-Option Loans will be made by any Bank, if at all, in the context of an international transaction, and the specification of payment in the related Foreign Currency at a specific place pursuant to this Agreement is of the essence. Such Foreign Currency shall be the currency of account and payment of such Loans under this Agreement and the Bid-Option Notes. Notwithstanding anything in this Agreement, the obligation of the Company in respect of such Loans shall not be discharged by an amount paid in any other currency or at another place, whether pursuant to a judgment or otherwise, to the extent the amount so paid, on prompt conversion into the applicable Foreign Currency and transfer to such Bank under normal banking procedure, does not yield the amount of such Foreign Currency due under this Agreement and the Bid-Option Notes. In the event that any payment, whether pursuant to a judgment or otherwise, upon conversion and transfer, does not result in payment of the amount of such Foreign Currency due under this Agreement and the Bid-Option Notes, such Bank shall have an independent cause of action against the Company for the currency deficit. MASCOTECH, INC. CREDIT AGREEMENT -32- 39 ARTICLE V. CHANGE IN CIRCUMSTANCES 5.1 Impossibility; Interest Rate Inadequate or Unfair. (a) If before the beginning of any Eurodollar Rate Interest Period or any CD Rate Interest Period: (i) the Agent is advised by either Reference Bank that deposits in Dollars (in the applicable amounts) are not being offered to such Reference Bank in the relevant market for such Eurodollar Rate Interest Period or CD Rate Interest Period, as the case may be, or (ii) the Required Banks advise the Agent that the Eurodollar Base Rate or the CD Base Rate will not adequately and fairly reflect the cost to such Banks of maintaining, making or funding, for such Eurodollar Rate Interest Period or CD Rate Interest Period, Eurodollar Rate Loans or CD Rate Loans, as the case may be, to which such Eurodollar Rate Interest Period or CD Rate Interest Period applies, the Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, the obligations, if any, of the Banks to make Eurodollar Rate Loans or CD Rate Loans, as the case may be, shall be suspended. In the case of Eurodollar Rate Loans, unless the Company notifies the Agent (i) not later than 11:00 a.m. (Detroit time) on the second Business Day before the beginning of such Eurodollar Rate Interest Period that the Company elects that the Borrowing shall be a CD Rate Borrowing or (ii) not later than 3:00 p.m. (Detroit time) on the Business Day before the beginning of such Eurodollar Rate Interest Period that the Company elects not to borrow on such date, such Borrowing shall, subject to the provisions of Section 8.1, be a Floating Rate Borrowing. In the case of CD Rate Loans, unless the Company notifies the Agent not later than 3:00 p.m. (Detroit time) on the first Business Day before the beginning of such CD Rate Interest Period that the Company elects not to borrow on such date, such Borrowing shall, subject to the provisions of Section 8.1, be a Floating Rate Borrowing. Promptly after the Agent receives any such notice from the Company under this Section 5.1(a), the Agent shall notify each Bank of the contents thereof. Any such notice from the Company shall be irrevocable once the Agent begins notifying any Bank of the contents thereof. (b) If deposits in Dollars (in the applicable amounts) are not being offered to a Reference Bank in the relevant market for any Eurodollar Rate Interest Period or CD Rate Interest Period, by reason of circumstances affecting such Reference Bank and not affecting the London or Nassau interbank market or the United States market for certificates of deposit, as the case may be, generally, the Agent shall, in consultation with the Company and with the consent of the Required Banks, appoint another Bank to act as a Reference Bank hereunder. 5.2 Illegality. If, after the date of this Agreement, the introduction of, or any change in, any applicable law, rule or regulation or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority shall make it unlawful or impossible for such Bank (or its Applicable Lending Office) to honor its binding legal obligations, if any, hereunder to make, maintain or fund any type of Fixed Rate Loans, such Bank shall so notify the Agent, and the Agent shall forthwith give notice thereof to the Company, whereupon until such Bank notifies the Agent that the circumstances giving rise to such suspension no longer exist, the MASCOTECH, INC. CREDIT AGREEMENT -33- 40 obligation, if any, of such Bank to make such type of Fixed Rate Loans shall be suspended. Before any Bank gives any notice of unlawfulness or impossibility to the Agent under this Section 5.2, such Bank shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. Upon receipt of such notice, the Company shall prepay in full the then outstanding principal amount of each affected Fixed Rate Loan of such Bank together with accrued interest thereon (a) on the last day of the then current Interest Period applicable to such Loan if such Bank may lawfully continue to maintain and fund such Loan to such day, or (b) immediately if such Bank may not lawfully continue to fund and maintain such Loan to such day. Concurrently with prepaying each such Fixed Rate Loan, the Company shall borrow a Floating Rate Loan (or, if the Company so elects by at least three Business Days' notice to the Agent and such Bank, a Fixed Base Rate Syndicated Loan of an unaffected type) in an equal principal amount from such Bank, for an Interest Period coinciding with the remaining term of the Interest Period applicable to such Fixed Rate Loan, and such Bank shall make such a Loan, provided that there has been no acceleration of the amounts due under the Notes pursuant to Article IX. 5.3 Increased Cost; Yield Protection. (a) If, after the date hereof, the introduction of, or any change in, any applicable law, treaty, rule or regulation (whether domestic or foreign and including, without limitation, the Federal Deposit Insurance Act, as amended, and Regulation D of the Board of Governors of the Federal Reserve System) or in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive of any such authority, central bank or comparable agency (whether or not having the force of law), (i) shall subject any Bank (or its Applicable Lending Office) to any tax, duty or other charge with respect to its obligation to make any Loans, its Notes, any of its Loans or any of the Letters of Credit or shall change the basis of taxation of payments to any Bank (or its Applicable Lending Office) of the principal of or interest on any of its Fixed Rate Loans or in respect of its obligation, if any, to make any Loans or to participate in the risk of Letters of Credit (except for changes in the rate of tax on the overall net income of such Bank or its Applicable Lending Office imposed by the jurisdiction in which such Bank's principal executive office or Applicable Lending Office is located), or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System, but excluding (A) with respect to any CD Rate Loan any reserve requirements to the extent included in clause (ii) of subpart (a) of the definition of CD Base Rate when calculating the CD Base Rate with respect to such CD Rate Loan, and (B) with respect to any Eurodollar Rate Loan any reserve requirements to the extent included in clause (b) of the definition of Eurodollar Base Rate when calculating the Eurodollar Base Rate with respect to such Eurodollar Rate Loan), special deposit or similar requirement (including, without limitation, any deposit insurance assessment in respect of deposits held outside the United States, but excluding with respect to any CD Rate Loan any assessment to the extent included in clause (b) of the definition of CD Base Rate when calculating the CD Base Rate with respect to such CD Rate Loan), against assets of, deposits with or for the account of, or credit extended by, any Bank's Applicable Lending Office, or shall impose on any Bank (or its Applicable Lending Office or the relevant interbank market or the United States certificate of deposit market) any other condition affecting its obligation, if any, to MASCOTECH, INC. CREDIT AGREEMENT -34- 41 make Loans or to participate in the risk of Letters of Credit or affecting its Loans or the Letters of Credit or affecting the Company's obligations under the Notes in respect of such Loans, and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining its existing or future Fixed Rate Loans or of participating in the risk of Letters of Credit, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under the Notes (in respect of Fixed Rate Loans or Letters of Credit) by an amount deemed by such Bank to be material, then such Bank may notify the Company (with a copy of any such notice to be provided to the Agent) of any such fact of which it has knowledge and demand compensation therefor; provided that, if such Bank fails to demand such compensation (or notify the Company that it will or may demand such compensation) promptly upon becoming aware of the facts entitling it to do so or, if such Bank is contesting the cause of such increased cost or reduced sum received or receivable, promptly after the earlier of (A) the final determination of such contest or (B) an officer of such Bank who is responsible for the administration of the credit outstanding under this Agreement from such Bank to the Company becoming aware of such facts, such Bank shall not be entitled to such compensation for the period before the date on which it actually demands (or notifies the Company that it will or may demand) such compensation; provided, further, that if such Bank is contesting the cause of such increased cost or reduced sum received or receivable, such Bank shall not in any event be entitled to such compensation for any period prior to six months before it notifies the Company that such Bank may or will demand such compensation. The Company agrees to pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction within 15 days after demand by such Bank. A certificate of such Bank setting forth the basis for determining such additional amount or amounts necessary to compensate such Bank shall be conclusive in the absence of manifest error. Each such Bank will designate a different Applicable Lending Office if such designation would avoid the need for, or reduce the amount of such compensation and would not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. In the event that the Company is required to compensate any Bank for any increased cost to such Bank pursuant to this Section 5.3(a), the Company shall have the right, upon at least five Business Days' prior notice to such Bank through the Agent, to prepay in full any outstanding Fixed Rate Loans that are related to such increased cost of such Bank, together with accrued interest thereon to the date of prepayment; provided that prepayment of such Fixed Rate Loans shall not relieve the Company of its obligation to compensate such Bank in accordance with this Section 5.3(a), the amount of which compensation shall be due at the time of such prepayment, notwithstanding any other provision of this Section 5.3(a). Concurrently with prepaying each such Fixed Rate Loan of such Bank, the Company shall borrow a Floating Rate Loan (or, if the Company shall so elect in its notice of prepayment, a Fixed Rate Loan of another type) in an equal principal amount from such Bank for an Interest Period coinciding with the remaining term of the Interest Period applicable to such Fixed Rate Loan, and such Bank shall make such a Floating Rate Loan (or Fixed Rate Loan of the other type), provided that there has been no acceleration of the amount due under the Notes pursuant to Article IX. The Company shall pay compensation owing to any Bank(s) under this Section 5.3(a) notwithstanding any subsequent replacement (pursuant to Section 11.13) of the Bank(s) making demand for such compensation. (b) In the event that any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not presently applicable to any Bank or the Agent, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Bank or the Agent with any guideline, request or directive of any such authority (whether or not having the force of law), including any risk-based capital guidelines, affects or would affect the amount of capital required or expected to be maintained by such Bank or the Agent (or any corporation controlling such Bank or the Agent) and such Bank or the Agent, as the case may be, determines that the amount of such capital is increased by or based upon the existence of such Bank's or the Agent's MASCOTECH, INC. CREDIT AGREEMENT -35- 42 obligations or Loans hereunder and such increase has the effect of reducing the rate of return on such Bank's or the Agent'sE(or such controlling corporation's) capital as a consequence of such obligations or Loans hereunder to a level below that which such Bank or the Agent (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank or the Agent to be material, then such Bank or the Agent may notify the Company of any such fact of which it has knowledge and the Company shall pay to such Bank or the Agent, as the case may be, from time to time, upon request by such Bank (with a copy of such request to be provided to the Agent) or the Agent, additional amounts sufficient to compensate such Bank or the Agent (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which such Bank or the Agent reasonably determines to be allocable to the existence of such Bank's or the Agent'sEobligations or Loans hereunder; provided that, if such Bank or the Agent fails to notify the Company of any such fact promptly upon becoming aware thereof or, if such Bank or the Agent is contesting the cause of such increase in the amount of capital or reduced rate of return, promptly after the earlier of (A) the final determination of such contest or (B) an officer of such Bank who is responsible for the administration of the credit outstanding under this Agreement from such Bank to the Company becoming aware of any such fact, such Bank or the Agent, as the case may be, shall not be entitled to such compensation for the period before the date on which it actually notifies the Company of such fact; provided, further, that if such Bank or the Agent is contesting the cause of such increase in the amount of capital or reduced rate of return, such Bank or the Agent, as the case may be, shall not in any event be entitled to such compensation for any period prior to six months before it notifies the Company that such Bank or the Agent, as the case may be, may or will demand such compensation. A statement as to the amount of such compensation, prepared in good faith and in reasonable detail by such Bank or the Agent, as the case may be, and submitted by such Bank or the Agent to the Company, shall be conclusive in the absence of manifest error in computation. The Company shall pay such compensation for the periods covered by such notice notwithstanding any replacement (pursuant to Section 11.13) of the Bank(s) making demand for such compensation. 5.4 Substitute Loans. If (a) the obligation, if any, of any Bank to make any type of Fixed Rate Loans has been suspended pursuant to Section 5.2 or (b) any Bank has demanded compensation under Section 5.3(a) and the Company shall, by at least five Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section 5.4 shall apply to such Bank, then, unless and until such Bank notifies the Company that the circumstances giving rise to such suspension or demand for compensation no longer apply: (i) all Loans which would otherwise be made by such Bank as the affected type of Fixed Rate Loans shall be made instead as Floating Rate Loans, or if the Company shall so elect in the Notice of Borrowing, another type of Fixed Rate Loan (whichever type is not affected by such circumstances) for an Interest Period coincident with the related Fixed Rate Borrowing, and (ii) after each of its affected Fixed Rate Loans has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Substitute Loans instead. 5.5 Funding Losses. If the Company makes any payment of principal with respect to any Fixed Rate Loan on any other date than the last day of an Interest Period applicable thereto (whether pursuant to Section 3.8, 4.2, 5.1, 5.2, 5.3 or 5.4, Article IX or otherwise), or if the Company fails to borrow any Fixed Rate Loan after the related Notice of Borrowing has been given to the Agent, or if the Company fails to make any payment of principal or interest in respect of a Fixed Rate Loan when due, the Company shall reimburse each Bank on demand for any resulting loss or expense incurred by such Bank, including without limitation any loss incurred in obtaining, liquidating or employing deposits from third parties, whether or not such Bank shall have funded or committed to fund such Loan. A statement as to the amount of such loss or expense, prepared in good faith and in reasonable detail by such Bank and submitted by such Bank to the Company, MASCOTECH, INC. CREDIT AGREEMENT -36- 43 shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts payable to each Bank under this Section 5.5 shall be made as though such Bank shall have actually funded or committed to fund the relevant Fixed Rate Loan through the purchase of an underlying deposit in an amount equal to the amount of such Loan and having a maturity comparable to the related Interest Period; provided, however, that such Bank may fund any Fixed Rate Loan in any manner it sees fit and the foregoing assumption shall be utilized only for the purpose of calculation of amounts payable under this Section 5.5. ARTICLE VI. REPRESENTATIONS AND WARRANTIES The Company hereby represents and warrants to the Agent and the Banks that: 6.1 Corporate Existence and Power. Each of the Company and its Domestic Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, and is duly qualified as a foreign corporation in each State or other jurisdiction in the United States of America in which the conduct of its operations or the ownership of its properties requires such qualification and failure so to qualify would materially and adversely affect the Company and its Subsidiaries taken as a whole. All of such corporations have all requisite corporate power to own their properties and to carry on their businesses, considered as a whole, substantially as now owned and as now being conducted. The Company has full power, authority and legal right to execute and deliver this Agreement and the Notes, to perform and observe the terms and provisions hereof and thereof, and to borrow hereunder. 6.2 Corporate Authority; No Violations; Governmental Filings; Etc. The execution, delivery and performance by the Company of this Agreement, the issuance of the Notes and the borrowings hereunder have been duly authorized by all necessary corporate action and do not and will not violate the provisions of any applicable law or regulation or of the certificate of incorporation or by-laws of the Company or any Subsidiary or any order of any court, regulatory body or arbitral tribunal and do not and will not result in the breach of, or constitute a default or require any consent under, or create any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary pursuant to, any indenture or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or its property may be bound or affected. Neither the execution, delivery and performance of this Agreement nor the issuance of the Notes nor any borrowing hereunder requires, for the validity thereof, nor does the enforceability of this Agreement or any of the Notes require, any filing with, or consent, authorization or approval of, any state or federal agency or regulatory authority, other than filings, consents or approvals which have been made or obtained or which, in the case of any such borrowing, will be made or obtained prior to the due date for such filing, consent or approval. 6.3 Binding Effect. This Agreement constitutes, and the Notes when executed and delivered by the Company for value will constitute, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms. 6.4 Litigation. There are no suits, proceedings, or actions at law or in equity or by or before any governmental commission, board, bureau, or other administrative agency, pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or affecting the Company or any of its Subsidiaries, which, in the reasonable opinion of the Company, either (i) are likely to have a material adverse effect on the financial condition or business of the Company and its Subsidiaries taken as a whole or (ii) will in any manner affect the enforceability or validity of this Agreement or any Note. MASCOTECH, INC. CREDIT AGREEMENT -37- 44 6.5 Taxes. The Company and each Subsidiary has filed (or has obtained extensions of the time by which it is required to file) all United States federal income tax returns, and all other tax returns which are required to be filed and are material to the business, operations or financial position of the Company and its Subsidiaries taken as a whole, and has paid all taxes shown due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary, except such taxes, if any, as are being contested in good faith and as to which, in the reasonable opinion of the Company, adequate reserves have been provided in accordance with generally accepted accounting principles. The Company does not know of any proposed tax assessment against it or any Subsidiary or of any basis for one, except to the extent any such assessment has been, in the reasonable opinion of the Company, adequately provided for in the consolidated tax reserves of the Company and its Subsidiaries in accordance with generally accepted accounting principles. 6.6 Financial Condition. The consolidated balance sheet of the Company and its Consolidated Subsidiaries and consolidated statements of income, shareholders' equity and cash flows of the Company and its Consolidated Subsidiaries for the fiscal year ended December 31, 1995, certified by Coopers & Lybrand, independent certified public accountants, and the interim unaudited consolidated balance sheet and interim unaudited consolidated statements of income, shareholders' equity and cash flows of the Company and its Consolidated Subsidiaries, as of or for the nine-month period ended on September 30, 1996, copies of which have been furnished to the Banks, fairly present the consolidated financial position of the Company and its Consolidated Subsidiaries as at the dates thereof, and the consolidated results of operations of the Company and its Consolidated Subsidiaries for the respective periods indicated, all in accordance with generally accepted accounting principles consistently applied (except as disclosed in the notes thereto and subject, in the case of interim statements, to year-end audit adjustments). Except as disclosed in the financial statements as of or for the nine-month period ended September 30, 1996, there has been no material adverse change in the consolidated operations or condition, financial or otherwise, of the Company and its Consolidated Subsidiaries considered as a whole, since December 31, 1995. 6.7 Compliance with ERISA. Each of the Company and each ERISA Affiliate of the Company (a) has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and (b) is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan. Neither the Company nor any ERISA Affiliate of the Company has (x) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (y) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Code, in each case securing an amount greater than $10,000,000, or (z) incurred any liability under Title IV of ERISA, other than a liability to the PBGC for premiums under Section 4007 of ERISA, which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries. 6.8 Environmental Matters. In the ordinary course of its business, the Company conducts appropriate reviews of the effect of Environmental Laws on the business, operations and properties of the Company and its Subsidiaries, in the course of which it identifies and evaluates pertinent liabilities and costs (including, without limitation, capital or operating expenditures required for clean-up or closure of properties presently or previously owned or for the lawful operation of its current facilities, required constraints or changes in operating activities, and evaluation of liabilities to third parties, including employees, together with MASCOTECH, INC. CREDIT AGREEMENT -38- 45 pertinent costs and expenses). On the basis of this review, the Company has reasonably concluded that Environmental Laws are not likely to have a material adverse effect on the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. 6.9 Compliance with Laws. The Company complies, and has caused each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder), except where (a) the necessity of compliance therewith is contested in good faith by appropriate proceedings and the Company has established appropriate reserves for liability for noncompliance therewith in accordance with generally accepted accounting principles, (b) no officer of the Company is aware that the Company or the relevant Subsidiary has failed to comply therewith, or (c) the Company has reasonably concluded that failure to comply is not likely to have a material adverse effect on the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, taken as a whole. ARTICLE VII. COVENANTS Until all the Commitments and Letters of Credit have expired or been terminated and all Loans and reimbursement and other obligations of the Company hereunder have been paid in full, the Company covenants that: 7.1 Financial Statements. The Company will deliver to each of the Banks: (a) as soon as practicable and in any event within 46 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, (i) an unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries, as at the end of each such quarter, and (ii) unaudited consolidated statements of income and cash flows of the Company and its Consolidated Subsidiaries, for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each of the statements required by this subsection (a), in comparative form, corresponding figures as of the end of and for the corresponding period of the preceding fiscal year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer or chief accounting officer of the Company as having been prepared in all material respects in accordance with generally accepted accounting principles and as to fairness of presentation; (b) as soon as practicable and in any event within 90 days after the end of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, shareholders' equity, and cash flows of the Company and its Consolidated Subsidiaries for such year, setting forth in each of the statements required by this subsection (b), in comparative form, corresponding figures as of the end of and for the preceding fiscal year, and all in reasonable detail and certified without material qualifications by Coopers & Lybrand, or by other independent certified public accountants of recognized national standing selected by the Company and reasonably acceptable to the Agent; (c) as soon as practicable and in any event within 30 days after the sending or filing thereof, copies of all such financial statements and reports as it shall send to its security holders and of all final prospectuses under the Securities Act of 1933 (other than form S-8), reports on forms 10-Q, 10-K and 8-K and all similar regular and periodic reports filed by it (i) with any federal department, bureau, commission or agency from time to time having jurisdiction with respect to the sale of securities or (ii) with any securities exchange; (d) if and when the Company or any ERISA Affiliate of the Company (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with MASCOTECH, INC. CREDIT AGREEMENT -39- 46 respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer, any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable ERISA Affiliate is required or proposes to take; provided that no such certificate shall be required unless the aggregate unpaid actual or potential liability of the Company and the ERISA Affiliates involved in all events referred to in clauses (ii) through (vii) above of which officers of the Company have obtained knowledge and have not previously reported under this subparagraph (d) exceeds $15,000,000; and (e) with reasonable promptness, such other information regarding the financial condition of the Company or any of its Subsidiaries as any Bank may from time to time reasonably request. 7.2 Certificates of No Default and Compliance. (a) Concurrently with each delivery of the financial statements pursuant to subsections (a) and (b) of Section 7.1, the Company will deliver to the Agent (with a copy delivered to each Bank) a certificate, signed by the chief accounting officer or chief financial officer of the Company (i) stating that to the best of his knowledge after due inquiry, at the date of such financial statements no Default had occurred and was continuing, or, if a Default had occurred and was continuing, specifying the nature and period of existence thereof and what action the Company has taken or proposes to take with respect thereto; and (ii) setting forth as of the date of such financial statements, in reasonable detail, the calculations employed to determine compliance with Sections 7.5, 7.7, 7.8 and 7.9 and an explanation in reasonable detail of any differences between generally accepted accounting principles as then in effect and generally accepted accounting principles used in making such calculations, as may be permitted under Section 1.2. The certificate will be accompanied by a calculation of the ratio of (i) Senior Debt as of the end of such fiscal quarter to (ii) EBITDA Minus Capital Expenditures as of the end of such fiscal quarter (calculated on a pro forma basis as appropriate). (b) Within 60 days after the end of each fiscal quarter of each fiscal year of the Company (including the last fiscal quarter of each such fiscal year), the Company will deliver to the Agent (with a copy delivered to each Bank) a certificate, signed by the chief accounting officer, chief financial officer, treasurer or assistant treasurer of the Company, setting forth in reasonable detail the calculation of the Senior Leverage Ratio and the Interest Coverage Ratio, as of the Determination Date and for the Determination Period, respectively, with respect to the next forthcoming Application Period, and identifying the Applicable Margin for such Application Period as a result of such calculations. (c) Within fifteen Business Days after any officer of the Company obtains knowledge of a Default, the Company will, unless the same shall have been cured within such fifteen Business Day period, give written notice to each of the Banks thereof, specifying the nature thereof, the period of existence thereof and what action the Company proposes to take with respect thereto. MASCOTECH, INC. CREDIT AGREEMENT -40- 47 7.3 Preservation of Corporate Existence, Etc. The Company will preserve and maintain its corporate existence, and qualify and remain qualified as a validly existing corporation in good standing in each jurisdiction in which the conduct of its operations or the ownership of its properties requires such qualification and failure so to qualify would materially and adversely affect the Company and its Subsidiaries taken as a whole. 7.4 Current Ratio. [Intentionally Omitted] 7.5 Total Leverage Ratio. The Company will not permit or suffer the Total Leverage Ratio to be greater than (a) 3.75 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from January 1, 1997 through December 30, 1998, (b) 3.00 to 1.0 as of the last day of any fiscal quarter of the Company during the period from December 31, 1998 through December 30, 1999, (c) 2.75 to 1.0 as of the last day of any fiscal quarter of the Company during the period from December 31, 1999 through December 30, 2000 or (d) 2.50 to 1.0 as of the last day of any fiscal quarter of the Company thereafter. 7.6 Net Worth. [Intentionally Omitted]. 7.7 Tangible Capital Funds. The Company will not permit or suffer Tangible Capital Funds to at any time be less than the sum of (a) $450,000,000 plus (b) 66-2/3% of Net Income Minus Preferred Dividends for the period from January 1, 1998 through the then latest fiscal year end of the Company; provided that for purposes of this Section 7.7, Net Income shall exclude the pre-tax amount attributable to recognition of the Deferred Trimas Gain and the Deferred MSX Gain or any portion thereof as income. 7.8 Senior Debt Coverage Ratio. (a) The Company will not permit or suffer the Senior Debt Coverage Ratio to be greater than 5.00 to 1.00 at any time. (b) In addition, if as of the last day of each of any two consecutive fiscal quarters of the Company, the Total Leverage Ratio is equal to or greater than 1.00 to 1.00, the Company will not permit or suffer the Senior Debt Coverage Ratio to be greater than the Maximum Allowed Senior Debt Coverage Ratio as of the Relevant Days immediately following both of such fiscal quarters. (c) As used in this Section 7.8, the term "Maximum Allowed Senior Debt Coverage Ratio" means (i) 3.75 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from the Closing Date through June 30, 1997, (ii) 3.50 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from July 1, 1997 through December 31, 1998, and (iii) 3.00 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending after December 31, 1998. For purposes of this Section 7.8, all Senior Debt which is repaid with cash received by the Company from Masco Corporation for the purchase of preferred stock or subordinated debt securities pursuant to the Securities Purchase Agreement within forty-five days after the last day of any fiscal quarter of the Company shall be deemed repaid as of the last day of such fiscal quarter, and during such forty-five day period no Default shall be deemed to have occurred due to noncompliance with this Section 7.8. 7.9 Subsidiary Indebtedness. The Company will not permit or suffer the aggregate amount of Debt of its Subsidiaries (other than Debt owing to the Company or any of its Subsidiaries) at any time to be greater than 15% of the sum of (a) Senior Debt plus (b) the unused amount of the Commitments. MASCOTECH, INC. CREDIT AGREEMENT -41- 48 7.10 Negative Pledge. Neither the Company nor any Consolidated Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal amount not exceeding $25,000,000; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Consolidated Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset (or acquiring a corporation or other entity which owned such asset), provided that such Lien attaches to such asset concurrently with or within 90 days after such acquisition; (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Consolidated Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Consolidated Subsidiary and not created in contemplation of such acquisition; (f) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; (g) any Lien in favor of the holder of Debt (or any Person acting for or on behalf of such holder) arising pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings so long as the execution or other enforcement thereof is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings and the Company or such Consolidated Subsidiary, as the case may be, has established appropriate reserves against such claims in accordance with generally accepted accounting principles; (h) Liens incidental to the normal conduct of its business or the ownership of its assets which (i) do not secure Debt and (ii) do not in the aggregate materially detract (due to the amount of the liability secured by such Liens or otherwise) from the value of the assets of the Company and the Company's Consolidated Subsidiaries taken as a whole or in the aggregate materially impair the use thereof in the operation of the business of the Company and the Company's Consolidated Subsidiaries taken as a whole; and (i) Liens not otherwise permitted by the foregoing clauses of this Section; provided that (i) the aggregate outstanding principal amount of Debt secured by all such Liens on Current Assets shall not at any time exceed 20% of Current Assets and (ii) the aggregate outstanding principal amount of Debt secured by all such Liens (including Liens referred to in clause (i) of this proviso) shall not at any time exceed the sum of 5% of Net Worth plus 20% of Current Assets, provided, further, that for purposes of this Section 7.10(i), Current Assets shall not include any assets that are classified as Current Assets solely because they are held for sale; provided, however, that the restrictions set forth in this Section 7.10 shall not apply to "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System), if and to the extent that the value of the margin stock with respect to which the rights of the Company and its Subsidiaries are MASCOTECH, INC. CREDIT AGREEMENT -42- 49 restricted by this Section 7.10 would otherwise exceed 25% of the value of all assets with respect to which the rights of the Company and its Subsidiaries are restricted by this Section 7.10. 7.11 Dispositions of Assets; Mergers and Consolidations; Restricted Transfers. (a) The Company will not (i) directly or indirectly sell, lease, transfer or otherwise dispose of all or substantially all of its assets or (ii) merge or consolidate with any other Person unless the Company shall be the continuing or surviving corporation of such merger or consolidation. (b) The Company will not, and will not permit any Consolidated Subsidiary to, directly or indirectly make a Restricted Transfer of its assets to any Person if, immediately after giving effect thereto, the aggregate amount of assets disposed of in all Restricted Transfers by the Company and its Consolidated Subsidiaries in the twelve months then ended would exceed 15% of the total assets of the Company and its Consolidated Subsidiaries as shown on the most recent balance sheet delivered to the Banks under Section 7.1; provided, for purposes of this Section 7.11(b), the aggregate amount of assets disposed of in all Restricted Transfers by the Company and the Consolidated Subsidiaries prior to the Closing Date shall be deemed to be equal to zero. For purposes of this subsection (b), the term "Restricted Transfer" means a direct or indirect sale, lease, transfer or other disposition of assets (other than cash, margin stock, or the sale of inventory in the ordinary course of business) to any Person (other than the Company or a Substantially-Owned Consolidated Subsidiary) if, and to the extent that, in connection with such transaction (and as a substantial part of the consideration incident thereto), the Company or any Consolidated Subsidiary receives an equity ownership interest in such Person or any right to receive payments which are specifically contingent in amount or duration upon the earnings of such Person or any portion of such Person's business. (c) Notwithstanding any other provision of this Section 7.11, no disposition of assets, merger, consolidation or Restricted Transfer referred to in subsection (a) or (b) of this Section shall be permitted if, immediately after giving effect thereto, any Default would exist. 7.12 Changes in Subordinated Debt. The Company will not (a) transfer, convey, assign or deliver to any holder of any Subordinated Debt, or to any trustee, paying agent or other fiduciary for the benefit of the holder of any Subordinated Debt (including any defeasance), any cash, securities (other than securities constituting Subordinated Debt) or other assets of the Company or any Subsidiary in payment or on account of, or as provision for, principal, premium, if any, or interest on any Subordinated Debt which is not required under the instruments and agreements relating to such Subordinated Debt (provided that any payment which is blocked by any creditors of the Company or any of its Subsidiaries pursuant to the terms of the applicable instrument or agreement shall not be deemed to be required) or (b) or amend, modify or waive any term or provision of any instrument or agreement relating to any Subordinated Debt such that it would not constitute "Subordinated Debt" as defined herein if (i) at the time of any such transfer, conveyance, assignment, delivery, amendment, modification or waiver there shall exist and be continuing, or if immediately after giving effect thereto as a reasonably foreseeable result thereof on a pro forma basis there would exist or would be caused thereby, an Event of Default or Default, or (ii) unless the Agent is given at least five (5) Business Days (or such shorter period of time acceptable to the Agent) prior notice thereof, any such transfer, conveyance, assignment or delivery is made more than seven (7) days in advance of a scheduled payment or prepayment on any Subordinated Debt or in an amount in excess of the amount of such scheduled payment or prepayment. 7.13 Use of Proceeds. None of the proceeds of the Loans made under this Agreement will be used in violation of any applicable law or regulation including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System. MASCOTECH, INC. CREDIT AGREEMENT -43- 50 7.14 Fiscal Year. The Company will not change its fiscal year from beginning on JanuaryE1 of the calendar year and ending on December 31 of the calendar year. 7.15 Compliance with Laws. The Company will comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder) except where (a) the necessity of compliance therewith is contested in good faith by appropriate proceedings, (b) no officer of the Company is aware that the Company or the relevant Subsidiary has failed to comply therewith or (c) the Company has reasonably concluded that failure to comply is not likely to have a material adverse effect on the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, taken as a whole. ARTICLE VIII. CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES The obligation of the Agent to issue any Letter of Credit, the obligation of each Bank to make a Syndicated Loan on the occasion of each Syndicated Borrowing hereunder, and the willingness of any Bank to consider, in its sole discretion, making any Bid-Option Loan hereunder, is subject to the performance by the Company of all its obligations under this Agreement and to the satisfaction of the following further conditions: 8.1 Each Borrowing and Letter of Credit Issuance. In the case of each Borrowing (other than a Floating Rate Borrowing deemed disbursed under Section 3.3(e)) and Letter of Credit Issuance hereunder: (a) Receipt by the Agent of (i) in the case of each Borrowing, the Notice of Borrowing from the Company containing any information required by Section 3.2 or 3.4, as the case may be, and (ii) in the case of each Letter of Credit Issuance, the Request for Letter of Credit Issuance from the Company as required by Section 3.3, in each case signed by an officer or any other employee of the Company previously designated to the Agent in writing by the Chairman, President or any Vice President of the Company as having authority until further notice to request a Borrowing or Letter of Credit Issuance under this Agreement, and, in the case of each Letter of Credit Issuance, together with an application for the related Letter of Credit and other related documentation requested by and acceptable to the Agent appropriately completed and duly executed by such designated officer or other employee and all fees required under Section 3.3(c); (b) The fact that both before and at the conclusion of the Borrowing or Letter of Credit Issuance: (i) in the case of a Refunding Borrowing, no Event of Default shall have occurred and be continuing and (ii) in the case of any other Borrowing or any Letter of Credit Issuance, no Default shall have occurred and be continuing; (c) The fact that the representations and warranties contained in this Agreement (except, in the case of a Refunding Borrowing, the representations and warranties set forth in Section 6.4(i), Section 6.5, the last sentence of Section 6.6, clause (a) of the first sentence of Section 6.7 and Sections 6.8 and 6.9) shall be true and correct in all material respects or, with respect to such representations and warranties that include a materiality standard, in all respects, on and as of the date of such Borrowing or Letter of Credit Issuance with the same force and effect as if made on and as of such date; and MASCOTECH, INC. CREDIT AGREEMENT -44- 51 (d) Receipt by the Agent of such other opinions, documents, evidence, materials and information with respect to the matters contemplated hereby as the Agent or the Required Banks may reasonably request. Each Borrowing by the Company and Letter of Credit Issuance pursuant to this Agreement, including the first such Borrowing or Letter of Credit Issuance, shall be deemed to be a representation and warranty by the Company on the date of such Borrowing or Letter of Credit Issuance as to the facts specified in clauses (b) and (c) of this Section 8.1. 8.2 Initial Borrowing or Letter of Credit Issuance. In the case of the initial Borrowing or Letter of Credit Issuance pursuant to this Agreement: (a) Receipt by the Agent for the account of each Bank of a duly executed Syndicated Note and a duly executed Bid-Option Note, each dated on or before the date of such Borrowing or Letter of Credit Issuance; and (b) Receipt by the Agent of all the items, and completion of all the matters, required by Section 8.3. 8.3 Closing. On or prior to the Closing Date, the Company shall furnish to the Banks the following items, and the following matters shall be completed: (a) An opinion of counsel for the Company, substantially in the form of ExhibitEM hereto, and covering such other matters as any Bank may reasonably request, dated the Closing Date; (b) An opinion of Dickinson, Wright, Moon, Van DusenE& Freeman, special counsel for the Agent, substantially in the form of Exhibit N hereto, dated the Closing Date; (c) Certified copies of all corporate action taken by the Company to authorize the execution, delivery and performance of this Agreement and the Notes, and the Borrowings and Letter of Credit Issuances hereunder, and such other corporate documents and other papers as any Bank may reasonably request, including, without limitation, certified copies of the Company's articles of incorporation and by-laws; (d) A certificate of a duly authorized officer of the Company, dated the Closing Date, as to the incumbency, and setting forth a specimen or facsimile signature, of each of the persons (i) who has signed this Agreement on behalf of the Company; (ii) who has signed the Notes on behalf of the Company; and (iii) who will, until replaced by other persons duly authorized for that purpose, act as the representatives of the Company for the purpose of signing documents in connection with this Agreement and the transactions contemplated hereby; (e) A certificate of a senior officer of the Company to the effect set forth in Section 8.1(b) and (c); (f) The closing fees payable under Section 3.7, which shall be paid to the Agent for the account of the Banks; (g) A certificate, signed by the chief accounting officer or chief financial officer of the Company, setting forth in reasonable detail the calculations of the Senior Leverage Ratio as of December 31, 1996 and the Interest Coverage Ratio for the period of four consecutive fiscal quarters of the Company MASCOTECH, INC. CREDIT AGREEMENT -45- 52 ending December 31, 1996, and identifying the Applicable Margin for the period from the Closing Date to the beginning of the next Application Period as a result of such calculations; and (h) The Company shall pay all Existing Loans, all interest due thereon and all fees and other liabilities owing pursuant to the Existing Credit Agreement, other than the principal and interest due on the Existing Bid-Option Loans. ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES 9.1 Events of Default. If any one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) The Company shall fail to pay when due any installment of principal of any Note or shall fail to pay within five days of the due date thereof any interest on any Note or any facility fee, closing fee, Letter of Credit fee, or Agent'sEfee payable under this Agreement, or any reimbursement obligation under Section 3.3 (unless satisfied by the deemed disbursement of Floating Rate Loans); or (b) The Company shall fail to observe or perform any covenant contained in any of Sections 7.3, 7.5 to 7.12 inclusive and 7.14; or (c) The Company shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clauses (a) and (b) above) for thirty (30) days after written notice thereof has been given to the Company by any Bank or the Agent; or (d) Any representation or warranty of the Company or any officer of the Company to the Banks contained herein or in any certificate, statement or report furnished to the Banks hereunder shall prove to have been incorrect or misleading in any material respect on the date when made or deemed made, provided that, if any representation and warranty deemed to have been made by the Company pursuant to the last sentence of Section 8.1 as to the satisfaction of the condition of borrowing set forth in clause (b)(i) of Section 8.1 shall have been incorrect solely by reason of the existence of an Event of Default of which the Company was not aware when such representation and warranty was deemed to have been made and which was cured before or promptly after the Company became aware thereof, then such representation and warranty shall be deemed not to have been incorrect in any material respect; or (e) The Company or any Significant Subsidiary shall fail to pay at maturity, or within any applicable period of grace, any Debt (other than a Loan and other than Acquired Debt in an aggregate outstanding principal amount not exceeding $15,000,000) having an aggregate principal amount in excess of $5,000,000, and such failure has not been waived, or shall fail to observe or perform any term, covenant or agreement (other than such a term, covenant or agreement to or for the benefit of a Bank or Affiliate thereof restricting the sale, pledge or other disposition by the Company or any Significant Subsidiary of "margin stock" having a value in excess of 25% of the value of the assets referred to in Section 221.2(g)(2)(i) of Regulation U unless the Board of Governors of the Federal Reserve System or its staff advises the Agent in writing that the existence of this subsectionE(e) without this parenthetical exception would not in such circumstances render this Agreement "secured directly or indirectly by margin stock" within the meaning of its MASCOTECH, INC. CREDIT AGREEMENT -46- 53 RegulationEU), contained in any agreement (other than this Agreement) by which it is bound evidencing or securing indebtedness for borrowed money (other than Acquired Debt in an aggregate outstanding principal amount not exceeding $15,000,000) for such period of time as would cause or permit the holder or holders (or any Persons acting for or on behalf of such holder or holders) thereof or of any obligations issued thereunder to accelerate the maturity thereof or of any such obligations in an aggregate principal amount in excess of $5,000,000, and such failure has not been waived; provided that for purposes of this subsection (e), a failure by the Company or any Significant Subsidiary to observe or perform any term, covenant or agreement in respect of the industrial revenue bonds identified on ScheduleE2 attached hereto, or to pay on the due date therefor the debt outstanding thereunder, shall not be deemed a Default or contribute to the $5,000,000 aggregate limitation set forth above, so long as the Company or such Significant Subsidiary satisfies all obligations to pay premium, if any, principal of, and interest when due on such bonds (whether or not related to an acceleration of maturity) within five days after the due date therefor; or (f) The Company or any Significant Subsidiary shall (i) apply for or consent to the appointment of a receiver, custodian, trustee, liquidator or the like of itself or of a significant portion of its assets; (ii) be unable or admit in writing its inability to pay its debts as they mature; (iii) make a general assignment for the benefit of creditors; (iv) be adjudicated a bankrupt or insolvent; or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any insolvency law, or any answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceedings, or a resolution of either the shareholders or the Board of Directors of such corporation shall be adopted for the purpose of effecting any of the foregoing; or (g) A proceeding shall be instituted without the application, approval or consent of the Company or any Significant Subsidiary in any court of competent jurisdiction seeking, in respect of the Company or such Significant Subsidiary, adjudication in bankruptcy, dissolution, winding up, reorganization, a composition or arrangement with creditors, a readjustment of debts, the appointment of a receiver, custodian, trustee, liquidator or the like of the Company or such Significant Subsidiary or of a significant portion of its assets, or other like relief in respect of the Company or such Significant Subsidiary under any insolvency or bankruptcy law, and the same shall continue undismissed or unstayed and in effect for any period of sixty consecutive days; or (h) Final judgment for the payment of money in excess of $1,000,000 in amount shall be rendered by a court of record against the Company or any Significant Subsidiary and the Company or such Significant Subsidiary shall not discharge the same or provide for its discharge, or procure a stay of execution thereof, within sixty days from the date of entry thereof, and within said period of sixty days or such longer period during which execution of such judgment shall have been stayed, move to vacate said judgment or appeal therefrom and cause the execution thereof to be stayed pending determination of such motion or during such appeal; or (i) The Company or any ERISA Affiliate of the Company shall fail to pay when due an amount or amounts aggregating in excess of $1,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Benefit Liabilities in excess of $25,000,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by the Company or any ERISA Affiliate of the Company, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan and such proceeding shall not have been dismissed within thirty days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or MASCOTECH, INC. CREDIT AGREEMENT -47- 54 (j)(i) Any Person or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended), other than any Person in the Masco Group or any group that includes any Person in the Masco Group (A) shall have acquired beneficial ownership of 25% or more of the capital stock having ordinary voting power in the election of directors of the Company or (B) shall obtain the power (whether or not exercised) to elect a majority of the Company's directors or (ii) the Board of Directors of the Company shall not consist of a majority of Continuing Directors; "Continuing Directors" shall mean the directors of the Company on the Closing Date and each other director, if such other director's nomination for election to the Board of Directors of the Borrower is recommended by a majority of the then Continuing Directors; then, and in each such case, the Agent may and, upon being directed to do so by the Required Banks, shall, by written notice to the Company, (i) immediately terminate the Commitments, (ii) declare the principal of and interest accrued on all the Notes, all unpaid reimbursement obligations in respect of drawings under Letters of Credit, and all other amounts owing under this Agreement to be immediately due and payable or (iii) demand immediate delivery of cash collateral, and the Company agrees to deliver such cash collateral upon demand, in an amount equal to the maximum amount that may be available to be drawn at any time prior to the stated expiry of all outstanding Letters of Credit, or any one or more of the foregoing, whereupon the Commitments shall terminate forthwith and all such amounts, including such cash collateral, shall become immediately due and payable without presentment or demand for payment, notice of non-payment, protest or further notice or demand of any kind, all of which are expressly waived by the Company; provided, however, that in the case of the occurrence of any event described in the foregoing clauses (f) and (g) the Commitments shall automatically terminate forthwith and all such amounts, including such cash collateral, shall automatically become immediately due and payable without action upon the part of the Required Banks and without the requirement of any such notice, and without presentment, demand, protest or other notice of any kind, all of which are hereby waived. Such cash collateral delivered in respect of outstanding Letters of Credit shall be deposited in a special cash collateral account to be held by the Agent as collateral security for the payment and performance of the Company's obligations under this Agreement and the Notes to the Banks and the Agent. 9.2 Remedies. The Agent may and, upon being directed to do so by the Required Banks, shall, in addition to the remedies provided in Section 9.1, exercise and enforce any and all other rights and remedies available to it or the Banks, whether arising under this Agreement, the Notes or under applicable law, in any manner deemed appropriate by the Agent, including suit in equity, action at law, or other appropriate proceedings, whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in this Agreement or in the Notes or in aid of the exercise of any power granted in this Agreement or the Notes. 9.3 Set Off. Upon the failure of the Company to pay any indebtedness under this Agreement or the Notes at its maturity (whether at stated maturity, by acceleration or otherwise) or, in the case of such indebtedness other than principal of the Loans, when due (after allowing for any grace period provided with respect thereto under Section 9.1(a)), each Bank may at any time and from time to time, without notice to the Company (any requirement for such notice being expressly waived by the Company) set off and apply against any and all of the obligations of the Company now or hereafter existing under this Agreement and the Notes, whether owing to such Bank or any other Bank or the Agent, 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 Bank to or for the credit or the account of the Company and any property of the Company from time to time in possession of such Bank, regardless of whether or not such Bank shall have made any demand hereunder or any indebtedness owing by such Bank may be contingent and unmatured. The rights of the Banks under this Section 9.3 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Banks may have. MASCOTECH, INC. CREDIT AGREEMENT -48- 55 ARTICLE X. THE AGENTS AND THE BANKS 10.1 Appointment and Authorization. Each Bank hereby irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. The provisions of this Article X are solely for the benefit of the Agent and the Banks, and the Company shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Banks and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Company. 10.2 Agent and Affiliates. The Agent in its capacity as a Bank hereunder shall have the same rights and powers hereunder as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent. The Agent and its Affiliates may (without having to account therefor to any Bank) accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Company or any Subsidiary of the Company as if it were not acting as Agent hereunder, and may accept fees and other consideration therefor without having to account for the same to the Banks. 10.3 Scope of Agent's Duties. The Agent shall have no duties or responsibilities except those expressly set forth herein, and shall not, by reason of this Agreement, have a fiduciary relationship with any Bank, and no implied covenants, responsibilities, duties, obligations or liabilities shall be read into this Agreement or shall otherwise exist against the Agent. As to any matters not expressly provided for by this Agreement (including, without limitation, collection and enforcement action under the Notes), the Agent shall not be required to exercise any discretion or take any action, but may request instructions from the Required Banks. The Agent shall in all cases be fully protected from liability to the Banks in acting, or in refraining from acting, pursuant to the written instructions of the Required Banks or, when expressly required by this Agreement, all the Banks, which instructions and any action or omission pursuant thereto shall be binding upon all of the Banks; provided, however, that the Agent shall not be required to act or omit to act if, in the judgment of the Agent, such action or omission may expose the Agent to personal liability or is contrary to this Agreement, any Note, or applicable law. 10.4 Reliance by Agent. The Agent shall be entitled to rely upon any certificate, notice, document or other communication (including any cable, telegram, telex, facsimile transmission or oral communication) believed by it to be genuine and correct and to have been sent or given by or on behalf of a proper person. The Agent may treat the payee of any Note as the holder thereof. The Agent may employ agents (including, without limitation, collateral agents) and may consult with legal counsel (who may be counsel for the Company), independent public accountants and other experts selected by it and shall not be liable to the Banks, except as to money or property received by it or its authorized agents, for the negligence or misconduct of any such agent selected by it with reasonable care or for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 10.5 Default. The Agent shall not be deemed to have knowledge of the occurrence of any Default, unless the Agent has received written notice from a Bank or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that the Agent receives such a notice, the Agent shall give written notice thereof to the Banks. MASCOTECH, INC. CREDIT AGREEMENT -49- 56 10.6 Liability of Agent. Neither the Agent nor any of its directors, officers, agents, or employees shall be liable to the Banks for any action taken or not taken by it or them in connection herewith with the consent or at the request of the Required Banks or, when expressly required by this Agreement, all the Banks or in the absence of its or their own gross negligence or willful misconduct. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (a) any recital, statement, warranty or representation contained in this Agreement or any Note, or in any certificate, report, financial statement or other document furnished in connection with this Agreement, (b) the performance or observance of any of the covenants or agreements of the Company, (c) the satisfaction of any condition specified in Article VIII, except as to the delivery to the Agent of documents that appear on their face to conform to the requirements of Article VIII (other than requirements of any Bank under Section 8.3(c) that are not known to the Agent), or (d) the validity, effectiveness, legal enforceability, value or genuineness of this Agreement, the Notes, or any other instrument or document furnished in connection herewith. 10.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and agrees that it has, independently and without reliance on the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and the Company's Subsidiaries and its own decision to enter into this Agreement, and that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decision in taking or not taking action under this Agreement. The Agent shall not be required to keep itself informed as to the performance or observance by the Company of this Agreement, the Notes or any other documents referred to or provided for herein or to inspect the properties or books of the Company and, except for notices, reports and other documents and information expressly required to be furnished to the Banks by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Bank with any information concerning the affairs, financial condition or business of the Company or any of its Subsidiaries which may come into the possession of the Agent or any of its Affiliates. 10.8 Indemnification. The Banks agree to indemnify the Agent (to the extent not reimbursed by the Company, but without limiting any obligation of the Company to make such reimbursement), ratably according to their respective Commitment Percentages from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever (including, without limitation, fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or the transactions contemplated hereby or any action taken or omitted by the Agent under this Agreement; provided, however, that no Bank shall be liable for any portion of such claims, damages, losses, liabilities, costs or expenses resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including, but not limited to, reasonable fees and expenses of counsel) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Company, but without limiting the obligation of the Company to make such reimbursement; provided, however, that no Bank shall be liable for any portion of such expenses incurred as a result of the Agent's gross negligence or willful misconduct. Each Bank agrees to reimburse the Agent promptly upon demand for its ratable share of any amounts owing to the Agent by the Banks pursuant to this Section; provided that no Bank shall be responsible for failure of any other Bank to make such share available to the Agent. If the indemnity furnished to the Agent under this Section shall, in the reasonable judgment of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity from the Banks (other than for the Agent's gross negligence or willful misconduct) and cease, or not commence, to take any action until such additional indemnity is furnished. MASCOTECH, INC. CREDIT AGREEMENT -50- 57 10.9 Resignation of Agent. The Agent may resign as such at any time upon thirty days' prior written notice to the Company and the Banks. In the event of any such resignation, the Required Banks shall, by an instrument in writing delivered to the Company and the Agent, appoint a successor, which shall be (a) a Bank or (b) a commercial bank organized under the laws of the United States or any State thereof and having a combined capital and surplus of at least $500,000,000. If a successor is not so appointed or does not accept such appointment before the Agent'sEresignation becomes effective, the resigning Agent may appoint a temporary successor to act until such appointment by the Required Banks is made and accepted or if no such temporary successor is appointed as provided above by the resigning Agent, the Required Banks shall thereafter perform all the duties of the Agent hereunder until such appointment by the Required Banks is made and accepted. Any successor to the Agent shall execute and deliver to the Company and the Banks an instrument accepting such appointment and thereupon such successor Agent, without further act, deed, conveyance or transfer shall become vested with all of the properties, rights, interests, powers, authorities and obligations of its predecessor hereunder with like effect as if originally named as Agent hereunder. Upon request of such successor Agent, the Company and the resigning Agent shall execute and deliver such instruments of conveyance, assignment and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor Agent all such properties, rights, interests, powers, authorities and obligations. The provisions of this Article X shall thereafter remain effective for such resigning Agent with respect to any actions taken or omitted to be taken by such Agent while acting as the Agent hereunder. 10.10 Sharing of Payments. The Banks agree among themselves that, in the event that any Bank shall obtain payment in respect of any Loan or Letter of Credit reimbursement obligation owing to such Bank under this Agreement through the exercise of a right of set-off, banker's lien, counterclaim or otherwise in excess of its ratable share as provided for in this Agreement, such Bank shall promptly purchase from the other Banks participations in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all of the Banks share such payment in accordance with their respective ratable shares as provided for in this Agreement. The Banks further agree among themselves that if payment to a Bank obtained by such Bank through the exercise of a right of set-off, banker's lien, counterclaim or otherwise as aforesaid shall be rescinded or must otherwise be restored, each Bank which shall have shared the benefit of such payment shall, by repurchase of participations theretofore sold, return its share of that benefit to each Bank whose payment shall have been rescinded or otherwise restored, together with interest thereon at the per annum rate, if any, at which such Bank whose payment shall have been restored is liable with respect to such restored payment. The Company agrees that any Bank so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including set-off, banker's lien or counterclaim, with respect to such participation as fully as if such Bank were a holder of such Loan or other obligation in the amount of such participation. The Banks further agree among themselves that, in the event that amounts received by the Banks and the Agent hereunder are insufficient to pay all such obligations when due, the fees and other amounts owing to the Agent in such capacity shall be paid therefrom before payment of obligations owing to the Banks under this Agreement. Except as otherwise expressly provided in this Agreement, if any Bank or the Agent shall fail to remit to the Agent or any other Bank an amount payable by such Bank or the Agent to the Agent or such other Bank pursuant to this Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Agent or such other Bank at a rate per annum equal to the rate at which borrowings are available to the payee in its overnight federal funds market. 10.11 Withholding Tax Exemption. Each Bank that is not organized and incorporated under the laws of the United States or any State thereof agrees to file with the Agent and the Company, in duplicate, (a) on or before the later of (i) the Closing Date and (ii) the date such Bank becomes a Bank under this Agreement and (b) thereafter, for each taxable year of such Bank (in the case of a Form 4224) or for each third taxable year of such Bank (in the case of any other form) during which interest or fees arising under this MASCOTECH, INC. CREDIT AGREEMENT -51- 58 Agreement and the Notes are received, unless not legally able to do so as a result of a change in United States income tax law enacted, or treaty promulgated, after the date specified in the preceding clause (a), on or prior to the immediately following due date of any payment by the Company hereunder, a properly completed and executed copy of either Internal Revenue Service Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue Service Form W-9 and any additional form necessary for claiming complete exemption from United States withholding taxes (or such other form as is required to claim complete exemption from United States withholding taxes), if and as provided by the Code or other pronouncements of the United States Internal Revenue Service, and such Bank warrants to the Company that the form so filed will be true and complete; provided that such Bank's failure to complete and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as the case may be, and any such additional form (or any successor form or forms) shall not relieve the Company of any of its obligations under this Agreement, except as otherwise provided in this Section 10.11 10.12 The Co-Agents. Each Co-Agent, in such capacity, shall have no authority, duties, responsibilities, obligations, liabilities or functions under this Agreement or the Notes. ARTICLE XI. MISCELLANEOUS 11.1 Amendments, Etc. (a) No amendment, modification, termination or waiver of any provision of this Agreement nor any consent to any departure therefrom shall be effective unless the same shall be in writing and signed by the Company (except with respect to waivers by the Required Banks or all the Banks) and the Required Banks and, to the extent any rights or duties of the Agent may be affected thereby, the Agent, provided, however, that no such amendment, modification, termination, waiver or consent shall, without the consent of the Agent and all of the Banks, (i) subject to Section 3.10, authorize or permit the extension of time for, or any reduction of the amount of, any payment of the principal of, or interest (including the Applicable Margin) on, any Loan, or any fees or other amount payable hereunder, or (ii) except as expressly authorized hereunder, amend, extend or terminate the respective Commitment of any Bank, or (iii) modify the provisions of this Section regarding the taking of any action under this Section, or the definition of Required Banks, or (iv) modify the several nature of the obligations of the Banks hereunder, modify the sharing provisions among the Banks in Section 10.10, modify the first sentence of SectionE11.6 or modify any other provision of this Agreement which by its terms requires the consent of all the Banks. (b) Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. (c) Notwithstanding anything herein to the contrary, no Bank that is in default of any of its obligations, covenants or agreements under this Agreement shall be entitled to vote (whether to consent or to withhold its consent) with respect to any amendment, modification, termination or waiver of any provision of this Agreement or any departure therefrom or any direction from the Banks to the Agent, and, for purposes of determining the Required Banks at any time when any Banks are in default under this Agreement, the Commitments and Loans of such defaulting Banks shall be disregarded; provided that no action of a type described in the proviso in Section 11.1(a) shall be binding on a defaulting Bank without its written consent thereto. 11.2 Notices. MASCOTECH, INC. CREDIT AGREEMENT -52- 59 (a) Except as otherwise provided in subsection 11.2(c) hereof, all notices and other communications to or upon the parties hereto shall be deemed to have been duly given or served if sent in writing (including telecommunications) to the party to which such notice or other communication is required or permitted to be given or served under this Agreement, to the address or telex or telecopy number set forth below the name of such party on the signature pages hereof, or at such other address or telex or telecopy number as the parties hereto may hereafter specify to the others in writing. If for purposes of receiving Invitations for Bid-Option Quotes and information regarding Notices of Bid-Option Rate Borrowings, a Bank wishes to receive such communications at an address or telex or telecopy number different from its address or telex or telecopy number for other purposes under this Agreement, the Agent shall communicate with such Bank for such purposes at such different address, telex or telecopy number following the Agent's receipt of a written notice from such Bank requesting that the Agent do so. All mailed notices or other communications shall be by registered or certified mail, postage prepaid, with return receipt requested. All notices or other communications sent by means of telecopy, telex or other wire transmission shall be made with request for assurance of receipt in a manner typical with respect to communications of that type. Written notices or other communications shall be deemed delivered upon receipt if delivered by hand, 3 Business Days after mailing if mailed, or 1 Business Day after deposit with an overnight courier service if delivered by overnight courier. Notices or other communications provided by any of the other means referred to above shall be deemed delivered upon receipt. Notwithstanding the foregoing, all notices to the Agent shall be effective only when actually received by the Agent, and all notices from the Agent to any Bank regarding such Bank's obligation to fund Loans or to make payment under Section 3.3(d) shall be effective only when actually received by such Bank. (b) Notices by the Company to the Agent with respect to terminations or reductions of the Commitments pursuant to SectionE3.8, requests for Loans and Letter of Credit Issuances pursuant to SectionE3.2, 3.3 or 3.4, and notices of prepayment pursuant to Section 4.2 shall be irrevocable and binding on the Company. (c) Any notice to be given by the Agent or any Bank to the Agent or any Bank hereunder, may be given by telephone, and shall be promptly confirmed in writing upon the request of the recipient. Any such notice so given by telephone shall be deemed effective upon receipt thereof by the party to whom such notice is to be given. 11.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on the part of the Agent or any Bank, nor any delay or failure on the part of the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver of such right, power or privilege or otherwise prejudice the Agent's or such Bank's rights and remedies hereunder; nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right, power or privilege. No right or remedy conferred upon or reserved to the Agent or any Bank under this Agreement, or any Note, is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy granted hereunder or thereunder or now or hereafter existing under any applicable law. Every right and remedy granted by this Agreement or by applicable law to the Agent or any Bank may be exercised from time to time and as often as may be deemed expedient by the Agent or any Bank and, unless contrary to the express provisions of this Agreement, or the Notes, irrespective of the occurrence or continuance of any Default. 11.4 Reliance on and Survival of Various Provisions. All terms, covenants, agreements, including, without limitation, under Sections 5.3, 5.5 and 11.5, representations and warranties of the Company made herein or in any certificate, report, financial statement or other document furnished by or on behalf of the Company pursuant to this Agreement shall be deemed to be material and to have been relied upon by the Banks, notwithstanding any investigation heretofore or hereafter made by any Bank or on such Bank's behalf, and shall survive the repayment in full of the Loans and the termination of the Commitments. MASCOTECH, INC. CREDIT AGREEMENT -53- 60 11.5 Expenses and Indemnification. (a) The Company shall pay, or reimburse the Agent or any Bank, as the case may be, for (i) all reasonable out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default, (ii) all reasonable costs and expenses of the Agent or such Bank, including reasonable fees and disbursements of counsel, in connection with any action or proceeding relating to a court order, injunction or other process or decree restraining or seeking to restrain the Agent from paying any amount under, or otherwise relating in any way to, any Letter of Credit and any and all costs and expenses which it may incur relative to any payment under any Letter of Credit, provided, that the Company shall not be liable under this clause (ii) to the extent, but only to the extent, any such costs and expenses of the Agent or any Bank are caused by the Agent's or such Bank's breach of this Agreement or gross negligence, and (iii) if an Event of Default occurs, all reasonable expenses incurred by the Agent or such Bank, including reasonable fees and disbursements of counsel (including in-house counsel), in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom. The Company shall indemnify each Bank against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement or the Notes. (b) The Company shall indemnify each Bank and the Agent, and their respective officers, directors, employees and agents, and hold each Bank and the Agent, and their respective officers, directors, employees and agents, harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of counsel for any Bank or the Agent or any such Person in connection with any investigative, administrative or judicial proceeding, whether or not such Bank, the Agent or any such Person, as the case may be, shall be designated a party thereto) which may be incurred by any Bank, by the Agent or by any such Person, substantially relating to or arising out of any actual or proposed use of proceeds of Loans or Letters of Credit for the purpose of acquiring assets or capital stock of any other Person; provided that none of the Agent, any Bank or any such Person shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. (c) The Company hereby further indemnifies and agrees to hold the Banks and the Agent, and their respective officers, directors, employees and agents harmless from and against any and all claims, damages, losses, liabilities, costs and expenses of any kind or nature whatsoever which the Banks or the Agent or any such Person may incur or which may be claimed against any of them by reason of or in connection with any Letter of Credit, and neither any Bank nor the Agent or any of their respective officers, directors, employees or agents shall be liable or responsible for: (i) the use which may be made of any Letter of Credit or for any acts or omissions of any beneficiary in connection therewith; (ii) the validity, sufficiency or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by the Agent to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of any Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (iv) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or (v) any other event or circumstance whatsoever arising in connection with any Letter of Credit; provided, however, that the Company shall not be liable hereunder to the Banks and the Agent and such other Persons and the Agent shall be liable to the Company to the extent, but only to the extent, of any direct, as opposed to consequential or incidental, damages suffered by the Company which were caused by (A) the Agent'sEwrongful dishonor of any Letter of Credit after the presentation to it by the beneficiary thereunder of a draft or other demand for payment and other documentation strictly complying with the terms and conditions of such Letter of Credit, or MASCOTECH, INC. CREDIT AGREEMENT -54- 61 (B) the Agent's payment under any Letter of Credit to the extent, but only to the extent, that such payment constitutes gross negligence or willful misconduct of the Agent. The inclusion of any event in clauses (i) - (vii) of Section 3.3(f) shall not by itself preclude a finding that such event constitutes gross negligence or willful misconduct of the Agent. It is understood that in making any payment under a Letter of Credit the Agent will rely on documents presented to it under such Letter of Credit as to any and all matters set forth therein without further investigation and regardless of any notice or information to the contrary, and such reliance and payment against documents presented under a Letter of Credit substantially complying with the terms thereof shall not be deemed gross negligence or willful misconduct of the Agent in connection with the payment. 11.6 Successors and Assigns. (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that the Company may not, without the prior written consent of all the Banks, assign its rights or obligations hereunder or under the Notes, and the Banks shall not be obligated to make any Loan hereunder to any Person other than the Company, and the Agent shall not be obligated to issue any Letter of Credit for the account of any Person other than the Company or any Consolidated Subsidiary of the Company. (b) The Agent from time to time in its sole discretion may appoint agents for the purpose of servicing and administering this Agreement and the transactions contemplated hereby and enforcing or exercising any rights or remedies of the Agent provided under this Agreement, the Notes or otherwise. In furtherance of such agency, the Agent may from time to time direct that the Company provide notices, reports and other documents contemplated by this Agreement (or duplicates thereof) to such agent. The Company hereby consents to the appointment of such agent and agrees to provide all such notices, reports and other documents and to otherwise deal with such agent acting on behalf of the Agent in the same manner as would be required if dealing with the Agent itself. (c) Any Bank may sell a participation interest to any financial institution(s), and such financial institution(s) may further sell a participation interest (undivided or divided) to any financial institution(s), in its Commitment and the Loans and risk of the Letters of Credit and such Bank's or such participating financial institution's, as the case may be, rights and benefits under this Agreement and the Notes, and to the extent of that participation, such participant or participants shall have the same rights and benefits against the Company under Section 9.3 as it or they would have had if such participant or participants were the Bank making the Loans to the Company hereunder, provided, however, that in purchasing such participation interest(s) each such participant shall be deemed to have agreed to share with the Banks the proceeds thereof as provided in Section 10.10 as fully as if such participant were a Bank hereunder; and provided further, however, that (i) the obligations under this Agreement of each Bank selling a participation interest hereunder shall remain unmodified and fully effective and enforceable against such Bank, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Bank shall remain the holder of its Notes for all purposes of this Agreement, (iv) the Company, the Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, and (v) such Bank shall not grant to its participant(s) any rights to consent or withhold consent to any action taken by such Bank or the Agent under this Agreement other than action requiring the consent of all of the Banks hereunder. Each Bank shall give the Company prior written notice of each sale by such Bank of a participation interest under this Section 11.6(c). Each participant shall be entitled to the benefits of Sections 5.3 and 5.5 with respect to its participation interest as if it were a Bank; provided that no participant shall be entitled to receive any greater amount pursuant to such Sections 5.3 and 5.5 than the Bank that originally sold such participation interest would have been entitled to receive in respect of such participation interest had no such sale taken place. MASCOTECH, INC. CREDIT AGREEMENT -55- 62 (d) Any Bank may, with the prior written consent of the Company and the Agent (which consent in each case will not unreasonably be withheld, and which consent in the case of the Company may not be withheld if there is any Event of Default under Section 9.1(a), (f) or (g)) assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Syndicated Loans owing to it, its share of the risk of Letters of Credit, and the Syndicated Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations (other than any Bid-Option Loan or Bid-Option Note), (ii) the amount of the Commitment of any assignee Bank as of any date, after giving effect to each assignment to such assignee that is effective on such date, shall in no event be less than $10,000,000, (iii) except in the case of an assignment of all of a Bank's rights and obligations under this Agreement, (A) the amount of the Commitment of the assigning Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to each such assignment) shall in no event be less than $5,000,000 or an integral multiple of $5,000,000, or such lesser amount as the Company and the Agent may consent to and (B) after giving effect to each such assignment, the amount of the Commitment of the assigning Bank shall in no event be less than $10,000,000, (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register (as hereinafter defined), an Assignment and Acceptance in the form of ExhibitEK hereto (an "Assignment and Acceptance"), together with the Notes subject to such assignment and a processing and recordation fee of $3,000, and (v) any Bank may without the consent of the Company or the Agent, and without paying any fee, assign to any Affiliate of such Bank that is a bank or financial institution all of its rights and obligations under this Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank hereunder and (ii) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto). (e) By executing and delivering an Assignment and Acceptance, (i) the Bank assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (A) other than as provided in such Assignment and Acceptance, such assigning Bank 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 any instrument or other document furnished pursuant hereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any instrument or other document furnished pursuant hereto; and (B) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its obligations under this Agreement or any instrument or other document furnished pursuant hereto, and (ii) the assignee thereunder confirms to the assignor thereunder and the other parties hereto as follows: (A) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 6.6 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; (B) such assignee will, independently and without reliance upon the Agent, such assigning Bank or any other Bank 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; (C) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (D) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Bank and agrees that shall be bound by all the terms and provisions of this Agreement. MASCOTECH, INC. CREDIT AGREEMENT -56- 63 (f) The Agent shall maintain a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Loans owing to, each Bank from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent demonstrable error, and the Company, the Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank at any reasonable time and from time to time upon reasonable prior notice. (g) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an assignee and, unless such assignment is of only a portion of such assigning Bank's rights and obligations hereunder, the Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and the Agent and the Company have given their written consent under Section 11.6(d) (if required), (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. Within five Business Days after its receipt of such notice, the Company, at its own expense, shall execute and deliver to the Agent (in exchange for the surrendered Notes unless such assignment is of only a portion of such assigning Bank's rights and obligations hereunder) a new Syndicated Note to the order of such assignee and a new Bid-Option Note to the order of such assignee. Such new Syndicated Note and Bid-Option Note shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibits A and B hereto, respectively. (h) If any Reference Bank makes an assignment of all of its Commitment and Syndicated Loans to an unaffiliated institution pursuant to subsection (d) above, or if the Fixed Rate Loans of any Reference Bank are repaid pursuant to Section 5.2 or 5.3, the Agent shall, with the consent of the Required Banks and the Company, appoint another Bank to act as Reference Bank hereunder. No assignee of any Bank shall be entitled to receive any greater payment under SectionE5.3 than such Bank would have been entitled to receive with respect to the rights assigned or otherwise transferred, unless such assignment is made by reason of the provisions of Section 5.2 or 5.3 requiring such Bank to designate a different lending office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. (i) Each Bank may assign to one or more banks or other financial institutions any Bid-Option Note held by it. Any such Bank assigning a Bid-Option Note shall for all purposes of this Agreement be deemed to be the holder of such Note, and no assignee under this Section 11.6(i) shall as a result of such assignment become a "Bank" under this Agreement. (j) Notwithstanding any other provision set forth in this Agreement, any Bank may at any time create a security interest in, or assign, all or any portion of its rights under this Agreement (including, without limitation, the Loans owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System; provided that such creation of a security interest or assignment shall not release such Bank from its obligations under this Agreement. 11.7 Confidentiality. Each Bank agrees that all documentation and other information made available by the Company to such Bank under the terms of this Agreement shall (except (a) to the extent required by legal or governmental process or otherwise by law, or (b) if such documentation and other information is publicly available or hereafter becomes publicly available other than by action of such Bank, or was theretofore known to such Bank independent of any disclosure thereto by the Company, or (c) to the extent of necessary disclosure to such Bank's accountants, attorneys or regulators, or (d) in any litigation or similar proceedings related to this Agreement, the Notes or any Letter of Credit) be held in the strictest MASCOTECH, INC. CREDIT AGREEMENT -57- 64 confidence by such Bank and disclosed only to those officers, employees and agents of such Bank or of any Affiliate of such Bank involved in the administration of the credit from time to time outstanding from such Bank to the Company or otherwise involved in servicing, maintaining or further developing the relationship between such Bank and the Company, each of which officers, employees and agents shall, except as permitted under this Section 11.7 generally with respect to such Bank, hold such documentation and other information in the strictest confidence and to be used only in connection with this Agreement; provided that (i) such Bank may disclose such documentation and other information, and all other information that has been delivered to such Bank by or on behalf of the Company prior to the Closing Date in connection with such Bank's credit evaluation of the Company and its Subsidiaries, to any other financial institution to which such Bank sells or proposes to sell a participation or other interest in any of its Loans hereunder (or under any other credit agreement with the Company), if such other financial institution, prior to such disclosure, agrees for the benefit of the Company to comply with the provisions of this Section 11.7 (including the provisions of this Section 11.7 allowing further disclosure to other financial institutions to whom a sale of a participation or other interest is proposed), or to any Federal Reserve Bank and (ii) such Bank may disclose the provisions of this Agreement and the Notes and the amounts, maturities and interest rates of its Loans and the amounts of Letters of Credit (and similar information relating to any other credit agreement with the Company) to any purchaser or potential purchaser of any interest of such Bank in any Loan to the Company. 11.8 Counterparts; Effectiveness of Telecopied Signatures. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of a telecopied signature on this Agreement shall be as effective against the signer as delivery of its original signature. 11.9 Table of Contents and Headings. The table of contents and the headings of the various subdivisions hereof are for the convenience of reference only and shall in no way modify any of the terms or provisions hereof. 11.10 Construction of Certain Provisions. If any provision of this Agreement refers to any action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, whether or not expressly specified in such provision. 11.11 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any such covenant, the fact that it would be permitted by an exception to, or would be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or any event or condition which with notice or lapse of time, or both, could become such a Default if such action is taken or such condition exists. 11.12 Interest Rate Limitation. Notwithstanding any provisions of this Agreement or the Notes, in no event shall the amount of interest paid or agreed to be paid by the Company exceed an amount computed at the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of this Agreement or the Notes at the time performance of such provision shall be due, shall involve exceeding the interest rate limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under applicable law, and if for any reason whatsoever any Bank shall ever receive as interest an amount which would be deemed unlawful under such applicable law such interest shall be automatically applied to the payment of principal of the Loans outstanding hereunder (whether or not then due and payable) and not to the payment of interest, or shall be refunded to the Company if such principal and all other obligations of the Company to the Banks have been paid in full. MASCOTECH, INC. CREDIT AGREEMENT -58- 65 11.13 Substitution of Banks. (a) Upon five Business Days' written notice in the form of Exhibit L delivered to the Agent and the applicable Bank, the Company may replace any one or more of the Banks. Upon the date of its effectiveness, such notice shall terminate the Commitment of such Bank entirely, provided that the Company shall prepay each Loan of such Bank (if any) in full on the effective date of such termination, together with accrued interest thereon, all amounts due pursuant to Sections 5.3 and 5.5, all accrued facility fees with respect to such Bank and all other amounts owing to such Bank hereunder to such effective date. (b) If the Company shall terminate the Commitment of any Bank pursuant to the provisions of subsection (a) of this Section 11.13, the Company shall designate another bank or other banks (which may be one of the Banks) (in either case, an "Additional Bank") to be parties to this Agreement, provided, that (i) without the consent of the Agent, the total number of Additional Banks (other than those that were already Banks) may not exceed the total number of Banks whose Commitments are terminated pursuant to Section 11.13(a) plus three, (ii) the amount of the Commitment of any Additional Bank may not be less than $10,000,000, (iii) the amount of the Commitment(s) of the Additional Bank(s) (or, if any such Additional Bank already is a Bank, the added portion of such Bank's Commitment) shall in the aggregate equal the amount of the Commitment so terminated and (iv) the Company or the Additional Bank, and not the Bank being terminated pursuant to subsection (a) of this Section 11.13, shall pay the processing and recordation fee required under Section 11.6(d)(iv). Any Additional Bank shall become a party to this Agreement and be considered a Bank hereunder for all purposes if (i) it shall agree in writing to be bound by all of the terms and provisions of this Agreement, such agreement to specify the amount of the Commitment of such Additional Bank and to be otherwise in form and substance satisfactory to the Agent, (ii) it shall make Syndicated Loans to the Company in principal amounts which bear the same ratio to the amounts of the Syndicated Loans of other Banks (including other Additional Banks) then outstanding or to be concurrently outstanding as the amount of the Commitment of such Additional Bank bears to the then aggregate amount of the Commitments of such other Banks (including other Additional Banks), and (iii) a copy of such agreement and of evidence satisfactory to the Agent of the making of such Loans shall be furnished to the Agent. 11.14 Collateral. Each of the Banks represents to the Agent and each of the other Banks that it, in good faith, is not relying upon any "margin stock"(as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 11.15 Governing Law. This Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. 11.16 Integration and Severability. This Agreement and the Notes embody the entire agreement and understanding among the Company, the Agent, and the Banks, and supersede all prior agreements and understandings, relating to the subject matter hereof and thereof. In case any one or more of the obligations of the Company under this Agreement or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of the Company shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of the Company under this Agreement or any Note in any other jurisdiction. 11.17 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT, THE CO-AGENTS AND THE COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MASCOTECH, INC. CREDIT AGREEMENT -59- 66 MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM RELATED HERETO OR THERETO. NONE OF THE BANKS, THE AGENT, THE CO-AGENTS OR THE COMPANY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the Closing Date, notwithstanding the date and year first above written. "COMPANY": MASCOTECH, INC. By: /s/ Timothy Wadhams ------------------------------- Timothy Wadhams Its: Vice President- Controller and Treasurer 21001 Van Born Road Taylor, Michigan 48180 Attention: Timothy Wadhams Fax: (313) 374-6118 "AGENT": NBD BANK By: /s/ Richard H. Huttenlocher. ---------------------------- Richard H. Huttenlocher. Its: First Vice President 611 Woodward Avenue Detroit, Michigan 48226 Attention: Michigan Banking Division Telex: 230729 Fax: (313) 225-2290 MASCOTECH, INC. CREDIT AGREEMENT -60- 67 "CO-AGENTS": COMERICA BANK By: /s/ ------------------------------- Its: Account Officer THE BANK OF NEW YORK By: /s/ ------------------------------- Its: --------------------------- NATIONSBANK, N.A. By: /s/ ------------------------------- Its: Vice President BANK OF AMERICA ILLINOIS By: /s/ Steve Ahrenholz ------------------------------- Steve Ahrenholz Its: Vice President MASCOTECH, INC. CREDIT AGREEMENT -61- 68 "COMMITMENT": "BANKS": $97,500,000 NBD BANK By: /s/ Richard H. Huttenlocher ------------------------------- Richard H. Huttenlocher Its: First Vice President Domestic and Eurodollar Lending Offices 611 Woodward Avenue Detroit, Michigan 48226 Attention: Michigan Banking Division Telex: 230729 Fax: (313) 225-2290 MASCOTECH, INC. CREDIT AGREEMENT -62- 69 $70,000,000 COMERICA BANK By: /s/ ------------------------------- Its: Account Officer Domestic and Eurodollar Lending Office: 500 Woodward Avenue Detroit, Michigan 48226 Attention: -------------------------- Telex: 170363 Fax: (313) 222-9514 MASCOTECH, INC. CREDIT AGREEMENT -63- 70 $55,000,000 THE BANK OF NEW YORK By: /s/ ------------------------------- Its: Vice President Domestic and Eurodollar Lending Office: One Wall Street New York, New York 10286 Attention: Susan Baratta ------------------------- Telex: TRT177363 Fax: (212) 635-6434 MASCOTECH, INC. CREDIT AGREEMENT -64- 71 $45,000,000 NATIONSBANK, N.A. By: /s/ ------------------------------- Its: Vice President Domestic and Eurodollar Lending Office: NationsBank Plaza NC1-002-17-21 Charlotte, North Carolina 28255 Attention: Renita Hines ------------------------- Fax: (704) 386-8694 MASCOTECH, INC. CREDIT AGREEMENT -65- 72 $45,000,000 BANK OF AMERICA ILLINOIS By: /s/ Steve K. Ahrenholz ------------------------------ Steve K. Ahrenholz Its: Vice President Domestic and Eurodollar Lending Office: 231 South LaSalle Street Chicago, Illinois 60697 Attention: Zack Zarr Fax: (312) 974-9626 MASCOTECH, INC. CREDIT AGREEMENT -66- 73 $40,000,000 PNC BANK, NATIONAL ASSOCIATION By: /s/ ------------------------------- Its: Assistant Vice President Notices: 500 West Madison Street Suite 3140 Chicago, Illinois 60606 Fax: (312) 906-3420 Domestic and Eurodollar Lending Office: Fifth Avenue and Wood Street Pittsburgh, PA 15265 Attention: --------------------------- MASCOTECH, INC. CREDIT AGREEMENT -67- 74 $32,500,000 MICHIGAN NATIONAL BANK By: /s/ Joseph M. Redoutey ------------------------------- Joseph M. Redoutey Its: Commercial Relationship Manager -------------------------- Domestic and Eurodollar Lending Office: 27777 Inkster Road 10-36 Farmington Hills, MI 48333-9065 Attention: Joseph M. Redoutey Fax: (810) 473-4345 MASCOTECH, INC. CREDIT AGREEMENT -68- 75 $27,500,000 THE ROYAL BANK OF CANADA By: /s/ Patrick K. Shields ---------------------------------- Patrick K. Shields Its: Manager, Corporate Banking ----------------------------- Domestic and Eurodollar Lending Office: Grand Cayman Branch Royal Bank of Canada One Financial Square 23rd Floor New York, New York 10005-3531 Attention: Linda Smith Fax: (212) 428-2372 MASCOTECH, INC. CREDIT AGREEMENT -69- 76 $25,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: /s/ ---------------------------------- Its: Vice President ----------------------------- Domestic and Eurodollar Lending Office: 60 Wall Street New York, New York 10260-0060 Attention: ---------------------------- Telex: 177615 or 620106 Fax: (212) 648-5336 MASCOTECH, INC. CREDIT AGREEMENT -70- 77 $25,000,000 NATIONAL CITY BANK By: /s/ ---------------------------------- Its: Vice President ----------------------------- Domestic and Eurodollar Lending Office: 1900 E. Ninth Street Cleveland, Ohio 44114 Attention:___________________________ Telex: 212537 Fax: (216) 575-9396 MASCOTECH, INC. CREDIT AGREEMENT -71- 78 $22,500,000 CIBC INC. By: /s/ ---------------------------------- Its: Director CIBC Wood Gundy Securities Corp., As Agent ----------------------------- Domestic and Eurodollar Lending Office (Borrowing Notices): Atlanta Agency Two Paces Ferry West 2727 Paces Ferry Road, Suite 1200 Atlanta, Georgia 30339 Attention: Kelli Jones Fax: (770) 319-4950 Other Notices: 425 Lexington Avenue New York, New York 10017 Attention: Brian O'Callahan Fax: (212) 885-4940 with a copy to: Atlanta Agency Two Paces Ferry West 2727 Paces Ferry Road, Suite 1200 Atlanta, Georgia 30339 Attention: Klu Auchter Fax: (770) 319-4950 MASCOTECH, INC. CREDIT AGREEMENT -72- 79 $22,500,000 THE FUJI BANK, LTD. By: /s/ Peter L. Chinniei ---------------------------------- Peter L. Chinniei Its: Joint General Manager ----------------------------- Domestic and Eurodollar Lending Office: 225 W. Wacker Drive Chicago, Illinois 60606 Attention: Cely Navarro ---------------------------- Telex: 253114 Fax: (312) 621-0539 MASCOTECH, INC. CREDIT AGREEMENT -73- 80 $17,500,000 KEYBANK, NATIONAL ASSOCIATION By: /s/ ---------------------------------- Its: Assistant Vice President ----------------------------- Domestic and Eurodollar Lending Office: 127 Public Square, N.E. Cleveland, Ohio 44114 Attention: Thomas A. Crandell ---------------------------- Telex: ------ Fax: (216) 689-4981 MASCOTECH, INC. CREDIT AGREEMENT -74- 81 $17,500,000 CORESTATES BANK By: /s/ ---------------------------------- Its: Vice President ----------------------------- Domestic and Eurodollar Lending Office: 1345 Chestnut Street, P.O. Box 7618 Philadelphia, PA 19101-7618 Attention: Diane Cypher ---------------------------- Telex: 71-499-0118 ----------- Fax: (215) 973-6745 MASCOTECH, INC. CREDIT AGREEMENT -75- 82 $17,500,000 FLEET NATIONAL BANK By: /s/ ------------------------------ Robert J. Lord Its: Vice President Domestic and Eurodollar Lending Office: One Federal Street Boston, MA 02211 Attention: Anahid Varjabedian Telex: ------ Fax: (617) 346-0145 MASCOTECH, INC. CREDIT AGREEMENT -76- 83 $15,000,000 THE SANWA BANK, LIMITED, CHICAGO BRANCH By: /s/ Kenneth C. Eichwald --------------------------------- Kenneth C. Eichwald Its: First Vice President and Assistant General Manager ---------------------------- Domestic and Eurodollar Lending Office: 10 South Wacker Drive, 31st Floor Chicago, Illinois 60606 Attention: Richard H. Ault Fax: (312) 346-6677 MASCOTECH, INC. CREDIT AGREEMENT -77- 84 EXHIBIT A SYNDICATED NOTE February 28, 1997 Detroit, Michigan For value received, MASCOTECH, INC., a Delaware corporation (the "Company"), promises to pay to the order of ___________________________________ (the "Bank"), the unpaid principal amount of each Syndicated Loan made by the Bank to the Company pursuant to the Credit Agreement referred to below, on the last day of the Interest Period relating to such Loan. The Company further promises to pay interest on the aggregate unpaid principal amount of such Syndicated Loans on the dates and at the rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in Dollars in immediately available funds at the Agent's principal office in Detroit, Michigan. Presentment, demand for payment, notice of non-payment, protest and further notice or demand of any kind in connection with this Syndicated Note are hereby expressly waived by the Company and each endorser or guarantor hereof. This Syndicated Note evidences one or more Syndicated Loans made under the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified from time to time (the "Credit Agreement"), by and among the Company, the banks (including the Bank) party thereto, NBD Bank, as Agent, and Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America Illinois, as Co-Agents, to which reference is hereby made for a statement of the circumstances under which this Syndicated Note is subject to prepayment and under which its due date may be accelerated. Capitalized terms used but not defined in this Syndicated Note shall have the respective meanings ascribed thereto in the Credit Agreement. This Syndicated Note is made under, and shall be governed by and construed in accordance with, the laws of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. MASCOTECH, INC. By:______________________________ Its:___________________________ 85 EXHIBIT B BID-OPTION NOTE February 28, 1997 Detroit, Michigan For value received, MASCOTECH, INC., a Delaware corporation (the "Company"), promises to pay to the order of ___________________________________ (the "Bank"), the unpaid principal amount of each Bid-Option Loan made by the Bank to the Company pursuant to the Credit Agreement referred to below, on the last day of the Interest Period relating to such Loan. The Company further promises to pay interest on the aggregate unpaid principal amount of such Bid-Option Loans on the dates and at the rates provided for in the Credit Agreement. All such payments of principal and interest with respect to Dollar Bid-Option Loans shall be made in Dollars in immediately available funds at the Agent's principal office in Detroit, Michigan. All such payments of principal and interest with respect to Foreign Currency Bid-Option Loans shall be made in the currencies in which such Loans are denominated and in funds immediately available, freely transferrable and cleared at the office or branch of the Bank from which such Loans were made. Presentment, demand for payment, notice of non-payment, protest and further notice or demand of any kind in connection with this Bid-Option Note are hereby expressly waived by the Company and each endorser or guarantor hereof. This Bid-Option Note evidences one or more Bid-Option Loans made under the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified from time to time (the "Credit Agreement"), by and among the Company, the banks (including the Bank) party thereto, NBD Bank, as Agent, and Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America Illinois, as Co-Agents, to which reference is hereby made for a statement of the circumstances under which this Bid-Option Note is subject to prepayment and under which its due date may be accelerated. Capitalized terms used but not defined in this Bid-Option Note shall have the respective meanings ascribed thereto in the Credit Agreement. This Bid-Option Note is made under, and shall be governed by and construed in accordance with, the laws of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. MASCOTECH, INC. By:______________________________ Its:___________________________ 86 EXHIBIT C NOTICE OF SYNDICATED BORROWING [Date] To each Bank party to the referenced Credit Agreement c/o NBD Bank, as Agent for the Banks 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a Syndicated Borrowing pursuant to Section 3.2 of the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among the Company, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. The Syndicated Borrowing is to be made on _____________, 19__, in the amount of $_______________. The Syndicated Loans comprising such Borrowing shall be made as __________________________________ [insert either CD Rate, Eurodollar Rate or Floating Rate] Loans. [The Interest Period shall be ___________________ [insert permitted Interest Period for a CD Rate Borrowing or Eurodollar Rate Borrowing].] Such Syndicated Borrowing shall be evidenced by the Company's Syndicated Notes. MASCOTECH, INC. By:__________________________________ Its:______________________________ 87 EXHIBIT D REQUEST FOR LETTER OF CREDIT ISSUANCE [Date] To each Bank party to the referenced Credit Agreement c/o NBD Bank, as Agent for the Banks 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a Letter of Credit Issuance pursuant to Section 3.3 of the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among the Company, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. The Letter of Credit is to be issued on ________________, 19__, shall be for the account of ________*, shall be in the maximum amount of $_____________, shall be to and for the benefit of __________________, shall have a stated expiry date of _______________, 19__, and shall contain the further terms and conditions set forth in the attached letter of credit application of the Agent. MASCOTECH, INC. By:______________________________ Its:__________________________ ________________ * Specify the Company or identify a Consolidated Subsidiary. 88 EXHIBIT E BID-OPTION QUOTE REQUEST [Date] NBD Bank, as Agent for the Banks 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests offers to make Bid-Option Loans comprising the Bid-Option Borrowing(s) described below pursuant to Section 3.4(b) of the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among the Company, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Date of Bid-Option Borrowing(s): ________, 19__ Type of Bid-Option Borrowing(s): [Dollar: ____________ [Absolute Rate] [Eurodollar Rate] [Foreign Currency: _____ [desired currency]] Aggregate Amount of each Bid-Option Borrowing: (a) _______________* (b) _______________ (c) _______________ Interest Period: (a) ______________** (b) ______________ (c) ______________ MASCOTECH, INC. By:_______________________________________ Its:___________________________________ *Must be (a) $25,000,000 or a larger multiple of $5,000,000, in the case of Dollar Bid-Option Borrowings, or (b) not less than the Dollar Equivalent of $5,000,000, in the case of Foreign Currency Bid-Option Borrowings. **Must comply with the definition of the term "Bid-Option Interest Period." 89 EXHIBIT F INVITATION FOR BID-OPTION QUOTES [Date] To: [Name of Bank] Attention: ____________________ Reference is made to the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Pursuant to Section 3.4(c) of the Credit Agreement, NBD Bank, as Agent, is pleased on behalf of the Company to invite you to submit Bid-Option Quotes to the Company for the Bid-Option Borrowing(s) described below. Date of Bid-Option Borrowing(s): ________, 19__ Type of Bid-Option Borrowing(s): [Dollar: __________ [Absolute Rate] [Eurodollar Rate] [Foreign Currency: _____ [desired currency]] Aggregate Amount of Each Bid-Option Borrowing: Interest Period: (a) ____________________ (a) ________________ (b) ____________________ (b) ________________ (c) ____________________ (c) ________________ Please respond to this invitation by no later than [9:00 a.m.]* [10:00 a.m.]** [2:00 p.m.]*** (Detroit time) on _________________, 19__. **** NBD BANK, as Agent By: ______________________________________ Its: _________________________________ * Absolute Rate Dollar Bid-Option Borrowings. ** Eurodollar Rate Dollar Bid-Option Borrowings. *** Foreign Currency Bid-Option Borrowings. **** The proposed date of Borrowing in the case of Absolute Rate Dollar Bid-Option Borrowings. The fourth Business Day prior to the proposed date of Borrowing in the case of Eurodollar Rate Dollar Bid-Option Loans. The third Business Day prior to the proposed date of Borrowing in the case of Foreign Currency Bid-Option Borrowings. 90 EXHIBIT G BID-OPTION QUOTE [Date] NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Michigan Banking Division Reference is made to the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified, by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in such Agreement. In response to your Invitation for Bid-Option Quotes dated _____, 19__, _________________________ (the "Bank"), hereby makes the following offer[s] to make [a] Bid-Option Loan[s]: 1. Quoting Bank: ____________________________ Contact Person: _________________________ 2. Date of proposed Borrowing: __________, 19__(1) 3. Quotes: Type of Bid-Option Loans: Absolute Rate Dollar, Eurodollar Bid-Option Absolute Rate Dollar or Foreign Rate or Bid-Option Currency (also specify Principal Eurodollar Rate Interest the foreign currency)(2) Amount(3) Margin(4) Period(5) ----------------------- --------- ------------------- ----------- 91 (a) _______________________ _________ ___________________ ___________ (b) _______________________ _________ ___________________ ___________ (c) _______________________ _________ ___________________ ___________ 4. The aggregate amount of Bid-Option Loans which may be accepted by the Company pursuant to this Bid-Option Quote shall not exceed $_________.6 The Bank acknowledges and agrees that this Bid-Option Quote (a) is irrevocable and (b) subject to the terms and conditions of the Credit Agreement, obligates it to make a Bid-Option Loan for which any quote is accepted, in whole or in part. [Name of Bank] By: ______________________________________ Its: _________________________________ (1). As specified in the related Invitation for Bid-Option Quotes. (2). As specified in the related Invitation for Bid-Option Quotes. (3). The Dollar Equivalent of the principal amount (a) must be (i) in the case of Dollar Bid-Option Loans, $5,000,000 or a larger multiple thereof, or (2) in the case of Foreign Currency Bid-Option Loans, not less than $1,000,000, and (b) may not exceed the Dollar Equivalent of the aggregate amount of the related Bid-Option Borrowing specified in the related Invitation for Bid-Option Quotes. (4). Specify rate of interest per annum (rounded up to the nearest 1/10,000th of 1%) or applicable margin, which may be positive or negative, expressed as a percentage (rounded up to the nearest 1/10,000th of 1%), as the case may be. (5). As specified in the related Invitation for Bid-Option Quotes. (6). Must be at least equal to the minimum amount specified in note 3 above. 92 EXHIBIT H NOTICE OF DISBURSEMENT OF FOREIGN CURRENCY BID-OPTION LOAN [Date] NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher Reference is made to the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Pursuant to Section 3.5(c) of the Credit Agreement, ________________ hereby notifies you of its disbursement of a Foreign Currency Bid-Option Loan on ______________, 19___. Such Loan is denominated in __________ [specify currency] and is in the original principal amount of ___________.* The Interest Period applicable to such Loan is _______________. [Name of Bank] By: ______________________________________ Its: _________________________________ * Specify amount in the currency in which the Loan is denominated. 93 EXHIBIT I NOTICE OF RECEIPT OF FOREIGN CURRENCY BID-OPTION LOAN PAYMENT [Date] NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher Reference is made to the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Pursuant to Section 4.4(a) of the Credit Agreement, _______________ hereby notifies you of its receipt of payment in the amount of __________* of the principal of the Foreign Currency Bid-Option Loan disbursed by it on ___________, 19__ in the original principal amount of __________*. After application of such payment, the outstanding principal balance of such Loan is _____________. [Name of Bank] By: ______________________________________ Its: _________________________________ * Specify amount in the currency in which the Loan is denominated. 94 EXHIBIT K ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement, dated as of February 28, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MASCOTECH, INC., the Banks and Co-Agents party thereto, and NBD BANK, as agent for the Banks (in such capacity, the "Agent"). Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. The "Assignor" and the "Assignee" referred to on Schedule 1 agree as follows: 1. The Assignor hereby sells and assigns (without recourse) to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement (other than the Bid-Option Loans and Bid-Option Notes) as of the Effective Date (as hereinafter defined) equal to the percentage interest specified on Schedule 1 of all of the Assignor's outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Syndicated Loans owing to the Assignee will be as set forth on Schedule 1. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any instrument or other document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any instrument or other document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the performance or observance by the Company of any of its obligations under the Credit Agreement or any instrument or other document furnished pursuant thereto; and (iv) [attaches the Syndicated Note held by the Assignor and] requests that the Agent arrange for the Company to issue a new Syndicated Note and a new Bid-Option Note payable to the order of the Assignee. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 6.6 thereof and copies of the financial statements delivered pursuant to Section 7.1 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, any Co-Agent, the Assignor or any other Bank 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 the Credit Agreement; (iii) appoints and authorizes the Agent to take 95 such action as agent on its behalf and to exercise such powers and discretion and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with thehe terms of the Credit Agreement all of the obligations that are required to be it performed by it as a Bank; and (v) if the Assignee is organized under the laws of a jurisdiction outside of the United States, attaches the forms prescribedhe by the Internal Revenue Service of the United States certifying as to theee's Assignee's status for purposes of determining exemption from United Statesg withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement and the Notes and such other documents as are necessary to indicate that all such payments are subject to such taxes at a rate reduced by an applicable tax treaty. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1. 5. Upon consent hereto by the Company and the Agent and such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and have the rights and obligations of a Bank thereunder with a Commitment in the amount indicated for the Assignee on Schedule 1 and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest, commitment fees and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Syndicated Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Michigan. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 96 EXHIBIT L NOTICE OF SUBSTITUTION OF BANKS [Date] NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher [Terminated Bank] ___________________________ ___________________________ Attention: ________________ Reference is made to the Credit Agreement, dated as of February 28, 1997, as amended, supplemented or otherwise modified (the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Pursuant to Section 11.13(a) of the Credit Agreement, the Company hereby terminates the Commitment of ___________________ (the "Terminated Bank") effective _____________, 19__.* On such date, the Company shall prepay each Loan of such Bank in full, together with accrued interest thereon, all amounts due pursuant to Sections 5.3 and 5.5 of the Credit Agreement, all accrued facility fees with respect to such Bank and all other amounts owing to such Bank under the Credit Agreement to such date. Pursuant to Section 11.13(b) of the Credit Agreement, the Company hereby designates ______________ [and __________] to replace the Terminated Bank. MASCOTECH, INC. By: ______________________________________ Its: __________________________________ * Must be not less than five Business Days after notice. 97 EXHIBIT M February __, 1997 To the Banks, Co-Agents and Agent party to the Credit Agreement described herein, in care of NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher Ladies and Gentlemen: Reference is made to the Credit Agreement, dated as of February 28, 1997 (the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation, the banks (the "Banks") and the co-agents (the "Co-Agents") party thereto, and NBD Bank, as agent (in such capacity, the "Agent") for the Banks. I am Vice President and Corporate Counsel for the Company, and in the capacity of counsel for the Company I have been requested by the Company to give my opinion pursuant to Section 8.3(a) of the Credit Agreement. For purposes of this opinion, the terms used in this opinion which are not defined herein shall have the respective meanings set forth in the Credit Agreement. I have examined the Credit Agreement and the Notes, the Convertible Subordinated Debentures referred to in the definition of the term "Subordinated Debt" in the Credit Agreement and the indenture governing the issuance of such Convertible Subordinated Debentures (the "Subordinated Debt Documents"), and certified copies of the Company's certificate of incorporation, by-laws and board of directors' resolutions authorizing the Company's participation in the transactions contemplated by the Credit Agreement. I have also examined copies of all such documents and records of the Company and all such other documents and records, and have made such investigations of law, as I have deemed necessary and relevant as a basis for my opinion. Based upon the foregoing, it is my opinion that: (a) The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to do business and is in good standing in the State of Michigan. (b) The Company has all requisite corporate power and authority to conduct its business substantially as now being conducted and to own its properties. (c) The Company has full power, authority and legal right to execute and deliver 98 To the Banks, Co-Agents and Agent February __, 1997 Page 2 the Credit Agreement and the Notes, to perform and observe the terms and provisions thereof, and to borrow thereunder. The execution, delivery and performance by the Company of its obligations under the Credit Agreement and the Notes and the borrowings thereunder have been duly authorized by the proper corporate proceedings and do not contravene any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or any Subsidiary, or any order of any court, regulatory body or arbitral tribunal or any judgment, order or decree, or, to my knowledge after due inquiry, any agreement or instrument, binding on the Company or any Subsidiary, or, to my knowledge after due inquiry, result in the creation of any lien, charge or encumbrance upon any of their respective property or assets pursuant to any agreement or instrument to which any of them is a party or binding upon any of them. (d) The Credit Agreement and the Notes constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (e) There are, to my knowledge after due inquiry, no suits, proceedings or actions at law or in equity or by or before any governmental commission, board, bureau, or other administrative agency pending or threatened against or affecting the Company or any Subsidiary, (i) in which there is a reasonable possibility of an adverse decision which is likely to materially and adversely affect the financial condition or business of the Company and its Subsidiaries, taken as a whole, or (ii) which will in any manner affect the enforceability or validity of the Credit Agreement or any Note. (f) No approval, consent or authorization of or filing or registration with any state or federal agency or regulatory authority is necessary for the execution or delivery by the Company of the Credit Agreement or the issuance of the Notes, for the validity or enforceability of the Credit Agreement or the Notes, or for the performance by the Company of any of the terms or conditions thereof or for any borrowing by the Company thereunder. (g) The Notes represent Senior Indebtedness as that term is defined in the Subordinated Debt Documents. The opinion expressed in paragraph (d) above is subject to the qualifications that the enforcement of the rights and remedies set forth in the Credit Agreement and the Notes is subject to the effect of applicable bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, and to general principles of equity, whether applied in a proceeding at law or in equity. 99 To the Banks, Co-Agents and Agent February __, 1997 Page 3 Very truly yours, David B. Liner Vice President and Corporate Counsel MascoTech, Inc. 100 EXHIBIT N February 28, 1997 To the Banks, Co-Agents and Agent party to the Credit Agreement described herein, in care of NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Richard Huttenlocher RE: MASCOTECH, INC. CREDIT AGREEMENT DATED AS OF FEBRUARY 28, 1997 Ladies and Gentlemen: We have acted as special counsel for the Agent (as defined below) in connection with the Credit Agreement, dated as of February 28, 1997 (the "Credit Agreement"), by and among MascoTech, Inc. (the "Company"), the banks (the "Banks") and co-agents (the "Co-Agents") party thereto, and NBD Bank, as agent (in such capacity, the "Agent") for the Banks, providing, among other things, for the extension to the Company of a bank credit in the principal sum of the Dollar Equivalent of $575,000,0000. Capitalized terms not otherwise defined herein are used with the respective meanings ascribed thereto in the Credit Agreement. In connection with this opinion we have examined: (a) a copy of the Certificate of Incorporation of the Company certified to _______ __, 1997 by the Secretary of State of Delaware and to ________ __, 1997 by an officer of the Company, (b) a copy of the Bylaws of the Company certified to _______ __, 1997 by an officer of the Company, (c) copies of Certificates of Good Standing of the Company under the laws of the States of Delaware and Michigan dated, respectively, _________ __, 1997 and _____________ __, 1997, (d) a copy of resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of the Credit Agreement and the Notes, certified as true and correct by an officer of the Company, (e) a certificate of incumbency and specimen signatures of authorized officers of the Company, in the form being delivered to the Agent pursuant to Section 8.3(d) of the Credit Agreement, (f) a certificate of a senior officer of the Company, in the form being delivered to the Agent pursuant to Section 8.3(e) of the Credit Agreement, (g) a certificate of the chief ____ officer of the Company, in the form being delivered to the Agent pursuant to Section 8.3(g) of the Credit Agreement, and (h) the Credit Agreement and the Notes. We have also examined the opinion of Mr. David B. Liner, Vice President and Corporate Counsel of the Company, dated February __, 1997, addressed to you and delivered to the Agent pursuant to Section 8.3(a) of the Credit Agreement. We have made no independent investigation of any of the foregoing matters 101 To the Banks, Co-Agents and Agent September 2, 1997 Page 2 or of any other matters. Based solely on such information, it is our opinion that: (a) the documents referred to above and delivered by the Company are substantially responsive to the requirements of the Credit Agreement; and (b) while we have not independently considered the matters covered by the opinion of Mr. Liner furnished pursuant to Section 8.3(a) of the Credit Agreement to the extent necessary to enable us to express the conclusions stated therein, such opinion is in substantially acceptable legal form and is substantially responsive to the requirements of the Credit Agreement. Very truly yours, 102 EXHIBIT O TERMS OF SUBORDINATION These terms of subordination refer to the Credit Agreement dated as of February 28, 1997 by and among MascoTech, Inc., the banks party thereto, the co-agents referred to therein and NBD Bank, as agent. In addition to Debt of the Company which qualifies as Subordinated Debt pursuant to clauses (b) and (c) of the definition of Subordinated Debt in the Credit Agreement, Subordinated Debt under the Credit Agreement shall also include, without duplication, all Indebtedness (as hereinafter defined) constituting Debt now outstanding or hereafter created, issued, guaranteed, incurred or assumed by the Company which is subordinate to the payment of principal, premium, if any, and interest on the Notes by provisions not less favorable in any material respect to the holders of the Notes than the provisions (a) of the Indenture dated as of November 1, 1986, by and between the Company and Morgan Guaranty Trust Company of New York, as Trustee, as amended and supplemented by Agreement of Appointment and Acceptance of Successor Trustee dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First National Bank of Chicago and the Supplemental Indenture dated as of August 5, 1994 between MascoTech, Inc. and The First National Bank of Chicago as Trustee a copy of which has been supplied to the Agent and in the form in which it has been supplied to the Agent prior to the Closing Date, and any Indebtedness of the Company that may be issued thereunder, would be to the holders of "Senior Indebtedness", as that term is defined in such Indenture, or (b) described below: 1. Defined Terms. All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. All the following terms shall have the meanings described below: "Article" means Sections 1 through 13, inclusive, of this Exhibit O. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "Cash Equivalents" means, at any time: (i) any evidence of Indebtedness with a -1- 103 maturity of 180 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) certificates of deposit, time deposits, Eurodollar time deposits and bankers' acceptances with a maturity of 180 days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500,000,000; (iii) commercial paper with a maturity of 180 days or less issued by a corporation that is not an Affiliate of the Company organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody's or at least an equivalent rating category of another nationally recognized securities rating agency; and (iv) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the government of the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within 180 days from the date of acquisition; provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985. "Credit Agreement" means (a) the Credit Agreement dated as of February __, 1997, by and among the Company, the banks party thereto, the co-agents referred to therein and NBD Bank, as agent (the "MascoTech Credit Agreement"), together with all amendments, documents and instruments from time to time delivered in connection with the MascoTech Credit Agreement (including, without limitation, any guaranty agreements and security documents), and as the MascoTech Credit Agreement and such other agreements, documents and instruments may be amended, amended and restated, renewed, extended, restructured, supplemented or otherwise modified from time to time, and (b) any credit agreement, loan agreement, note purchase agreement, indenture or other agreement, document or instrument refinancing, refunding or otherwise replacing the MascoTech Credit Agreement or any other agreement deemed a Credit Agreement under clause (a) hereof or this clause (b), whether or not with the same agent, trustee, representative lenders or holders, and irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Credit Agreement" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Subsidiaries and their respective successors and assigns or (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder. "Designated Senior Indebtedness" means (a) all Senior Indebtedness under the -2- 104 Credit Agreement and (b) any other Senior Indebtedness which is specifically designated by the Company in the instrument evidencing such Senior Indebtedness as "Designated Senior Indebtedness". "Indebtedness" means, with respect to any Person, without duplication, (a) all liabilities of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities incurred in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit, banker's acceptances or other similar credit transaction, (b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade accounts payable arising in the ordinary course of business, (d) all capitalized lease obligations of such Person, (e) all Indebtedness referred to in the preceding clauses (a) to (d) of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligations being deemed to be the lesser of the value of such property or asset or the amount of the obligation so secured), (f) all guarantees of Indebtedness referred to in this definition by such Person, (g) all redeemable capital stock of such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends, (h) all obligations under or in respect of currency exchange contracts, interest rate swaps and other interest rate protection obligations of such Person and i) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a) through (h) above. For purposes hereof, (x) the "maximum fixed repurchase price" of any redeemable capital stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such redeemable capital stock as if such redeemable capital stock were purchased on any date on which Indebtedness shall be required to be determined pursuant hereto, and if such price is based upon, or measured by, the fair market value of such redeemable capital stock, such fair market value shall be determined in good faith by the board of directors of the issuer of such redeemable capital stock, and (y) Indebtedness is deemed to be incurred pursuant to a revolving credit facility each time an advance is made thereunder. "Moody's" means Moody's Investors Service, Inc. and its successors. "Non-Payment Default" means any event (other than a Payment Default) the occurrence of which entitles one or more Persons to accelerate the maturity of any -3- 105 Designated Senior Indebtedness. "Payment Blockage Period" has the meaning set forth in Section 4. "Payment Default" means any default in the payment of principal of (or premium, if any, on) or interest on Designated Senior Indebtedness beyond any applicable grace period with respect thereto. "S & P" means Standard and Poor's Corporation and its successors. "Securities" means any instrument or other document evidencing any of the Subordinated Indebtedness at any time. "Senior Indebtedness" means the principal of, premium, if any, and interest on any Indebtedness of the Company, whether outstanding on the date hereof or hereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Securities. Without limiting the generality of the foregoing, "Senior Indebtedness" shall also include all obligations of the Company, whether outstanding on the date hereof or thereafter created, incurred or assumed, under or in respect of the Credit Agreement, whether for principal, interest (including, without limitation, interest accruing after the filing of a petition initiating any proceeding under any state or federal bankruptcy law whether or not such interest is an allowable claim), reimbursement of amounts drawn under letters of credit issued or arranged for pursuant thereto, guarantees in respect thereof, and all charges, fees, expenses (including reasonable fees and expenses of counsel) and other amounts in respect of the Credit Agreement incurred by or owing to the Banks, the Co-Agents or the Agent under the Credit Agreement or their representative, agent or trustee, and all other obligations of the Company incurred under or in respect of the Credit Agreement, including, without limitation, any interest rate protection obligations and in respect of premiums, indemnities or otherwise, and all indebtedness under the Credit Agreement which is disallowed, avoided or subordinated pursuant to Section 548 of the Federal Bankruptcy Code or any applicable state fraudulent conveyance law. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a) Indebtedness evidenced by the Securities, (b) Indebtedness that is expressly subordinate or junior in right of payment to any Senior Indebtedness of the Company, (c) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of the Federal Bankruptcy Code, is by its terms without recourse to the Company, (d) any repurchase, redemption or other obligation in respect of redeemable capital stock, (e) to the extent it might constitute Indebtedness, amounts owing for goods, materials or services purchased in the ordinary course of business or consisting of trade payables or other current liabilities (other than any current liabilities owing under the Credit Agreement or the current portion -4- 106 of any long-term Indebtedness which would constitute Senior Indebtedness but for the operation of this clause (e)), (f) to the extent it might constitute Indebtedness, amounts owed by the Company for compensation to employees or for services rendered to the Company, (g) to the extent it might constitute Indebtedness, any liability for federal, state, local or other taxes owed or owing by the Company, (h) Indebtedness of the Company to a Subsidiary of the Company or any other Affiliate of the Company or any of such Affiliate's Subsidiaries and (i) that portion of any Indebtedness (other than owing pursuant to the Credit Agreement), which at the time of issuance is issued in violation of the Subordinated Indebtedness. "Subordinated Indebtedness" means all indebtedness, obligations and liabilities of the Company or any of its Subsidiaries to any of the holders of the Securities issued pursuant hereto, whether now existing or hereafter arising, including without limitation any extensions, renewals, increases or other modifications thereof, all principal, interest and fees and costs under or in any way arising therefrom, and all indebtedness, obligations and liabilities of the Company or any of its Subsidiaries to any such holder under the Federal Bankruptcy Code or under any similar state law. "Subordinated Indenture" means the indenture pursuant to which the Securities are issued. "Trustee" means any Person acting as the trustee for the holders of the Securities and any successor trustee. "U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. 2. Subordinated Indebtedness Subordinated to Senior Indebtedness. -5- 107 The Company covenants and agrees, and each holder of any Subordinated Indebtedness, by its acceptance thereof, likewise covenants and agrees, for the benefit of the holders, from time to time, of Senior Indebtedness that, to the extent and in the manner hereinafter set forth, the Subordinated Indebtedness is hereby expressly made subordinate and subject in right of payment as provided herein to the prior payment in full in cash or Cash Equivalents of all Senior Indebtedness. 3. Payment over of Proceeds upon Dissolution, etc. In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or its assets, or (b) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any other marshalling of assets or liabilities of the Company, then and in any such event: (1) the holders of Senior Indebtedness shall be entitled to receive payment in full in cash or Cash Equivalents of all amounts due on or in respect of all Senior Indebtedness, or provision shall be made for such payment, before the holders of any Subordinated Indebtedness are entitled to receive any payment or distribution of any kind or character (other than any payment or distribution in the form of equity securities or subordinated securities of the Company or any successor obligor with respect to the Senior Indebtedness provided for by a plan of reorganization or readjustment that, in the case of any such subordinated securities, are subordinated in right of payment to all Senior Indebtedness that may at the time be outstanding to substantially the same extent as, or to a greater extent than, the Subordinated Indebtedness is so subordinated as provided in this Article (such equity securities or subordinated securities hereinafter being "Permitted Junior Securities")); and (2) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities), by set-off or otherwise, to which the holders of the Subordinated Indebtedness or the Trustee would be entitled but for the provisions of this Article shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, to the extent necessary to make payment in -6- 108 full in cash or Cash Equivalents of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and (3) in the event that, notwithstanding the foregoing provisions of this Section, the Trustee or any holder of any Subordinated Indebtedness shall have received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, in respect of the Subordinated Indebtedness before all Senior Indebtedness is paid in full or payment thereof provided for in cash or Cash Equivalents, then and in such event such payment or distribution (other than a payment or distribution in the form of Permitted Junior Securities) shall be received and held in trust for the benefit of the holders of Senior Indebtedness and paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash or Cash Equivalents, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in the Subordinated Indenture shall not be deemed a dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purpose of this Article if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in the Subordinated Indenture under which the Securities are issued. -7- 109 4. Suspension of Payment When Senior Indebtedness in Default. (a) Unless Section 3 shall be applicable, upon (1) the occurrence of a Payment Default and (2) receipt by the Trustee of written notice of such occurrence, then no payment or distribution of any assets of the Company of any kind or character shall be made by the Company on account of the Subordinated Indebtedness or on account of the purchase or redemption or other acquisition of any Subordinated Indebtedness unless and until such Payment Default shall have been cured or waived in writing or shall have ceased to exist or such Senior Indebtedness shall have been discharged or paid in full in cash or Cash Equivalents, after which the Company shall resume making any and all required payments in respect of the Subordinated Indebtedness, including any missed payments. (b) Unless Section 3 shall be applicable, upon (1) the occurrence of a Non-Payment Default and (2) receipt by the Company or the Trustee from the representative of holders of such Designated Senior Indebtedness of written notice of such occurrence, then no payment or distribution of any assets of the Company of any kind or character shall be made by the Company on account of any Subordinated Indebtedness or on account of the purchase or redemption or other acquisition of any Subordinated Indebtedness for a period ("Payment Blockage Period") commencing on the earlier of the date of receipt by the Company or the date of receipt by the Trustee of such notice from such representative unless and until (subject to any blockage of payments that may then be in effect under paragraph (a) of this Section) (x) more than 179 days shall have elapsed since receipt of such written notice by the Company or the Trustee, whichever was earlier, (y) such Non-Payment Default shall have been cured or waived in writing or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or (z) such Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from such representative initiating such Payment Blockage Period, after which, in the case of clause (x), (y) or (z), the Company shall resume making any and all required payments in respect of any Subordinated Indebtedness, including any missed payments. Notwithstanding any other provision of this Agreement, only one Payment Blockage Period may be commenced within any consecutive 360-day period, and no event of default with respect to Designated Senior Indebtedness which existed or was continuing on the date of the commencement of any Payment Blockage Period initiated by or on behalf of such Designated Senior Indebtedness shall be, or be made, the basis for the commencement of a second Payment Blockage Period whether or not within a period of 360 consecutive days unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days subsequent to the commencement of such initial Payment Blockage Period (it being acknowledged that any subsequent action, or any breach of any financial covenant for a period commencing after the date of commencement of such Payment Blockage Period, that, in either case, would give rise to a Non-Payment -8- 110 Default pursuant to any provision under which a Non-Payment Default previously existed or was continuing shall constitute a new Non-Payment Default for this purpose; provided that, in the case of a breach of a particular financial covenant, the Company shall have been in compliance for at least one full period of not less than 90 consecutive days commencing after the date of commencement of such Payment Blockage Period). In no event will a Payment Blockage Period extend beyond 179 days from the date of the receipt by the Trustee of the notice and there must be a 181-consecutive day period in any 360-day period during which no Payment Blockage Period is in effect. (c) In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the holder of any Subordinated Indebtedness prohibited by the foregoing provisions of this Section, then and in such event such payment shall be received and held in trust for the benefit of the holders of Senior Indebtedness and paid over and delivered forthwith to the Company. 5. Payment Permitted If No Default. Nothing contained herein or in any instrument evidencing the Subordinated Indebtedness shall prevent the Company, at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, assignment for the benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 3 or under the conditions described in Section 4, from making payments at any time of principal of (and premium, if any, on) or interest on the Subordinated Indebtedness. 6. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full in cash or Cash Equivalents of all Senior Indebtedness, the holders of the Subordinated Indebtedness shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any, on) and interest on the Subordinated Indebtedness shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which the holders of the Subordinated Indebtedness or the Trustee would be entitled except for the provisions in this Article, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the holders of the Subordinated Indebtedness, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. 7. Provisions Solely to Define Relative Rights. -9- 111 The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the holders of the Subordinated Indebtedness on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in the Subordinated Indenture or in any Securities is intended to or shall (a) impair, as between the Company and the holders of the Subordinated Indebtedness, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Securities the principal of (and premium, if any, on) and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under the Subordinated Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness. 8. Trustee to Effectuate Subordination. Each holder of any Security by its acceptance thereof authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee its attorney-in-fact for any and all such purposes. 9. No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of the Subordinated Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (b) Without in any way limiting the generality of paragraph (a) of this Section 9, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the holders of the Securities, without incurring responsibility to the holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the holders of the Subordinated Indebtedness to the holders of Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time or payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (2) sell, exchange, -10- 112 release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any Person liable in any manner for the collection of Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company or any other Person. 10. Notice to Trustee (a) The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of the Subordinated Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the receipt of any such written notice, the Trustee shall be entitled in all respects to assume that no such facts, subject to Sections 3.15(a) through 3.15(d) of the Trust Indenture Act of 1939, exist; provided, however, that, if the Trustee shall not have received the notice as provided for in this Section 10 at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any, on) or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. -11- 113 11. Reliance on Judicial Order or Certificate of Liquidating Agent Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to Sections 3.15(a) through 3.15(d) of the Trust Indenture Act of 1939, and the holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. 12. Rights of Trustee As a Holder of Senior Indebtedness; Preservation of Trustee's Rights The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in the Subordinated Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to the fees and expenses, and other claims of and payments to, the Trustee in its capacity as trustee under the Subordinated Indenture. 13. No Suspension of Remedies. Nothing in this Article shall limit the right of the Trustee or the holders of Securities to take any action to accelerate the maturity of the Securities or to pursue any rights or remedies hereunder or under applicable law, provided that the right to receive payment on the Subordinated Indebtedness is subject to the provisions of Sections 3 and 4. 14. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from cash or the proceeds of U.S. Government Obligations held in trust under the Subordinated Indenture by the Trustee (or other qualifying trustee) and which were deposited in accordance with the terms of the Subordinated Indenture and not in violation of this Article for the payment of principal of (and premium, if any, on) and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article, and none of the holders of the Subordinated Indebtedness shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness or any other creditor of the Company. -12- 114 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE Percentage interest of Assignor's Commitment assigned: $____________% Assignee's Commitment: $_____________ Aggregate outstanding principal amount of Syndicated Loans assigned: $_____________ Effective Date (if other than date of acceptance by Agent): ______________ [NAME OF ASSIGNOR], as Assignor By ______________________________ Its: Dated: ____________________, 19__ [NAME OF ASSIGNEE], as Assignee By ______________________________ Its: Domestic Lending Office: Eurodollar Lending Office: Consented to and Consented to this ___ day accepted this ___ day of ___________________, 19__ of ____________, 19__ NBD Bank, as Agent MascoTech, Inc. By: ___________________________ By: _____________________________ Its: ______________________ Its: ________________________ 115 SCHEDULE 2 City of Fort Wayne, Indiana Industrial Development Revenue Bonds (ND Tech Project) 116 SCHEDULE 1 Applicable Margin for Eurodollar Rate Syndicated Loans and Letters of Credit
APPLICABLE MARGIN Interest Coverage Interest Coverage Interest Coverage FOR EURODOLLAR RATE Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage SYNDICATED LOANS Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or AND LETTERS OF Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than CREDIT CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00 Senior Leverage Ratio greater than 1.15:1.00 1.00% 0.75% 0.625% 0.50% 0.40% Senior Leverage Ratio equal to or less than 1.15:1.00 and greater than 0.80:1.00 0.80% 0.625% 0.50% 0.40% 0.325% Senior Leverage Ratio equal to or less than 0.80:1.00 and greater than 0.55:1.00 0.675% 0.50% 0.40% 0.325% 0.25% Senior Leverage Ratio equal to or less than 0.55:1.00 0.55% 0.40% 0.325% 0.25% 0.25%
PAGE 1 of 3 117 SCHEDULE 1 (CONTINUED) Applicable Margin for CD Rate Loans
Interest Coverage Interest Coverage Interest Coverage Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or FOR CD RATE LOANS Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00 Senior Leverage Ratio greater than 1.15:1.00 1.125% 0.875% 0.750% 0.625% 0.525% Senior Leverage Ratio equal to or less than 1.15:1.00 and greater than 0.80:1.00 0.925% 0.750% 0.625% 0.525% 0.450% Senior Leverage Ratio equal to or less than 0.80:1.00 and greater than 0.55:1.00 0.800% 0.625% 0.525% 0.450% 0.375% Senior Leverage Ratio equal to or less than 0.55:1.00 0.675% 0.525% 0.450% 0.375% 0.375%
PAGE 2 of 3 118 SCHEDULE 1 (CONTINUED) Applicable Margin for Facility Fees
Interest Coverage Interest Coverage Interest Coverage Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or FOR FACILITY FEES Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00 Senior Leverage Ratio greater than 1.15:1.00 0.25% 0.225% 0.225% 0.20% 0.175% Senior Leverage Ratio equal to or less than 1.15:1.00 and greater than 0.80:1.00 0.225% 0.225% 0.20% 0.175% 0.15% Senior Leverage Ratio equal to or less than 0.80:1.00 and greater than 0.55:1.00 0.225% 0.20% 0.175% 0.15% 0.125% Senior Leverage Ratio equal to or less than 0.55:1.00 0.20% 0.175% 0.150% 0.125% 0.125%
PAGE 3 of 3 EX-10.G 3 EXHIBIT 10G 1 EXHIBIT 10.g CONFORMED COPY PROMISSORY NOTE $151,375,000.00 October 31, 1996 FOR VALUE RECEIVED, MascoTech, Inc., a Delaware corporation with its principal offices located at 21001 Van Born Road, Taylor, Michigan 48180 ("MascoTech"), hereby promises to pay to the order of Masco Corporation, a Delaware corporation with its principal offices located at 21001 Van Born Road, Taylor, Michigan 48180 ("Payee"), in lawful money of the United States of America, the principal sum of One Hundred Fifty One Million Three Hundred Seventy Five Thousand Dollars ($151,375,000.00) (the "Principal Amount"), together with interest, in accordance with the terms hereof. This Note is referred to in, and issued pursuant to, that certain Stock Purchase Agreement, dated as of October 15, 1996, by and between MascoTech and Payee (the "Stock Purchase Agreement"). Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Stock Purchase Agreement. The Principal Amount shall be due and payable in one, lump-sum payment on September 30, 1997 (the "Maturity Date"). Interest from the date hereof on the unpaid Principal Amount shall accrue at the per annum rate of six and five-eights percent (6-5/8%), and shall be payable in four installments on December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997. Notwithstanding the first paragraph of this Note, MascoTech may repay all or any portion of the Principal Amount and any accrued interest thereon by transferring any publicly-traded securities (debt or equity) of Emco Limited that MascoTech holds at the time of payment which were held on the date hereof. Any such Emco Limited securities shall be valued at an amount equal to 97% of the average of the closing prices for such securities on the Toronto Stock Exchange during the 20 trading days ending on the third day prior to the date of payment, expressed in U.S. Dollars at the prevailing exchange rate on the date of payment. Any such payment in Emco Limited securities shall be subject to applicable regulatory approvals, which MascoTech and Payee agree to diligently seek to obtain upon MascoTech's written notice to Payee of its intention to transfer to Payee any Emco Limited securities. This Note may be prepaid in whole at any time or in part from time to time, with accrued interest, without penalty or premium. MascoTech agrees to pay all costs of collection of any amounts due hereunder when incurred, including, without limitation, reasonable attorneys' fees and expenses, unless prohibited by law. 2 MascoTech hereby waives presentment for payment, demand, notice of dishonor, notice of protest and all other notices and demands in connection with the delivery, acceptance, performance or default of this Note and agrees that this Note may not be changed, modified or terminated orally, but only by an agreement in writing signed by MascoTech and Payee. This Note shall become immediately due and payable upon notice by Payee to MascoTech if one or more of the following events shall have occurred and be continuing (except in the case of the events specified in clauses (e) and (f) in which event this Note shall become immediately due and payable without any such notice): (a) any event or condition shall occur which results in the acceleration of the maturity of any indebtedness for borrowed money in excess of $10,000,000 or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such indebtedness or any person acting on such holder's behalf to accelerate the maturity thereof; (b) default in the payment of interest upon this Note when it becomes due and payable and continuance of such default for a period of 5 days; or (c) default in the payment of all or any part of the principal of this Note as and when the same shall become due and payable; (d) any representation or warranty of MascoTech in the Stock Purchase Agreement should prove to have been incorrect in any material respect when made or deemed made; (e) MascoTech shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors; (f) an involuntary case or other proceeding shall be commenced against MascoTech seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against MascoTech under the federal bankruptcy laws as now or hereafter in effect; (g) a judgment or order for the payment of money in excess of $5,000,000 shall be rendered against MascoTech and such judgment or order shall continue unsatisfied and unstayed for a period of 20 days. 3 This Note shall be governed by, and construed in accordance with, the law of the State of Michigan. Any notice or other communication under this Note shall be in writing and shall be considered given when mailed by certified or registered mail, return receipt requested, to the Chief Financial Officer of MascoTech or the Payee, as the case may be, at the address set forth in the first paragraph of this Note (or at such other address as either party may specify by notice to the other). IN WITNESS WHEREOF, the undersigned has caused this Note to be executed in its corporate name by a duly authorized officer, as of the date first written above. MASCOTECH, INC. By: /s/ Timothy Wadhams ----------------------------------- Name: Timothy Wadhams Title: Vice President EX-10.H 4 EXHIBIT 10H 1 EXHIBIT 10.h CONFORMED COPY PROMISSORY NOTE $7,625,000.00 October 31, 1996 FOR VALUE RECEIVED, MascoTech, Inc., a Delaware corporation with its principal offices located at 21001 Van Born Road, Taylor, Michigan 48180 ("MascoTech"), hereby promises to pay to the order of Richard A. Manoogian, c/o Masco Corporation, 21001 Van Born Road, Taylor, Michigan 48180 ("Payee"), in lawful money of the United States of America, the principal sum of Seven Million Six Hundred Twenty Five Thousand Dollars ($7,625,000.00) (the "Principal Amount"), together with interest, in accordance with the terms hereof. This Note is referred to in, and issued pursuant to, that certain Stock Purchase Agreement, dated as of October 15, 1996, by and between MascoTech and Payee (the "Stock Purchase Agreement"). Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Stock Purchase Agreement. The Principal Amount shall be due and payable in one, lump-sum payment on September 30, 1997 (the "Maturity Date"). Interest from the date hereof on the unpaid Principal Amount shall accrue at the per annum rate of six and five-eights percent (6-5/8%), and shall be payable in four installments on December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997. This Note may be prepaid in whole at any time or in part from time to time, with accrued interest, without penalty or premium. MascoTech agrees to pay all costs of collection of any amounts due hereunder when incurred, including, without limitation, reasonable attorneys' fees and expenses, unless prohibited by law. MascoTech hereby waives presentment for payment, demand, notice of dishonor, notice of protest and all other notices and demands in connection with the delivery, acceptance, performance or default of this Note and agrees that this Note may not be changed, modified or terminated orally, but only by an agreement in writing signed by MascoTech and Payee. This Note shall become immediately due and payable upon notice by Payee to MascoTech if one or more of the following events shall have occurred and be continuing (except in the case of the events specified in clauses (e) and (f) in which event this Note shall become immediately due and payable without any such notice): (a) any event or condition shall occur which results in the acceleration of the maturity of any indebtedness for borrowed money in excess of $10,000,000 or enables (or, with the 2 giving of notice or lapse of time or both, would enable) the holder of such indebtedness or any person acting on such holder's behalf to accelerate the maturity thereof; (b) default in the payment of interest upon this Note when it becomes due and payable and continuance of such default for a period of 5 days; or (c) default in the payment of all or any part of the principal of this Note as and when the same shall become due and payable; (d) any representation or warranty of MascoTech in the Stock Purchase Agreement should prove to have been incorrect in any material respect when made or deemed made; (e) MascoTech shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors; (f) an involuntary case or other proceeding shall be commenced against MascoTech seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against MascoTech under the federal bankruptcy laws as now or hereafter in effect; (g) a judgment or order for the payment of money in excess of $5,000,000 shall be rendered against MascoTech and such judgment or order shall continue unsatisfied and unstayed for a period of 20 days. This Note shall be governed by, and construed in accordance with, the law of the State of Michigan. Any notice or other communication under this Note shall be in writing and shall be considered given when mailed by certified or registered mail, return receipt requested, to the Chief Financial Officer of MascoTech or to the Payee, as the case may be, at the address set forth in the first paragraph of this Note (or at such other address as either party may specify by notice to the other). 3 IN WITNESS WHEREOF, the undersigned has caused this Note to be executed in its corporate name by a duly authorized officer, as of the date first written above. MASCOTECH, INC. By: /s/ Timothy Wadhams -------------------------------------------- Name: Timothy Wadhams Title: Vice President EX-10.V 5 EXHIBIT 10V 1 EXHIBIT 10.v April 21, 1992 Mr. Brian P. Campbell, President TriMas Corporation 315 E. Eisenhower Parkway Suite 300 Ann Arbor, Michigan 48180 Dear Brian: This will confirm our understanding to modify the Registration Agreement dated December 27, 1988 among TriMas Corporation, Masco Corporation and Masco Industries (the "Registration Agreement"). The Registration Agreement currently limits Masco Corporation and Masco Industries from requesting more than one registration within a period of twelve months. At the request of your underwriters, each of Masco Corporation and Masco Industries agrees that it will not, for a period of 120 days after the effective date of TriMas' definitive prospectus relating to its proposed offering of Common Stock, provided that such effective date is prior to May 15, 1992, (i) offer for sale, sell, contract to sell or otherwise dispose of any shares of TriMas Common Stock, or (ii) exercise any Common Stock registration rights granted to each of them in the Registration Agreement (including but not limited to requesting registration of shares owned by others). In return for the foregoing, and whether or not TriMas' current registration statement is declared effective, TriMas agrees that the Registration Agreement is hereby modified so that if Masco Corporation or Masco Industries requests registration of shares of TriMas Common Stock heretofore sold to the respective executives of Masco Corporation and Masco Industries pursuant to the Executive Agreements (as defined below), and such registration is filed during 1992, they may also request that TriMas file not earlier than January 1, 1993 a second registration statement covering additional such shares of TriMas Common Stock heretofore sold pursuant to the Executive Agreements, even if such second registration is within twelve months of the effective date of the initial filing during 1992 (so long as such request otherwise complies with the terms of the Registration Agreement and is made not less than 90 days from the date of the initial such request). It is understood that if a registration request is made in 1992 and the registration statement is for any reason not filed during 1992, Masco Corporation or Masco Industries shall be entitled, prior to filing, to increase the number of shares covered by such request. All other provisions contained in the Registration Agreement including but not limited to those limiting registration requests are unaffected hereby. 2 In connection with the foregoing, we advise you as follows: 1. All executives who have purchased TriMas stock from Masco Corporation or Masco Industries have done so pursuant to the agreements which shall be provided to you prior to any request for registration (the "Executive Agreements"). 2. None of the executives who have purchased TriMas stock pursuant to the Executive Agreements have notified Masco Corporation or Masco Industries that they wish to sell any of their TriMas stock in the immediate future. 3. The Executive Agreements currently contain restrictions on sales of stock by the executive which do not permit the executives to sell in a registered offering more than 50% of such executive's TriMas stock subject to the Executive Agreements during 1992, and 75% of such stock by the end of 1993. Masco Corporation and Masco Industries will not amend, waive or modify the Executive Agreements to permit any sales in a registered offering in excess of these restrictions. Please confirm TriMas' agreement with the modifications set forth above which will become effective upon signature as provided below. Sincerely, MASCO CORPORATION MASCO INDUSTRIES, INC. By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian --------------------------- --------------------------- Richard A. Manoogian Richard A. Manoogian TriMas Corporation and the Oversight Committee of its Board of Directors concur with the foregoing. TRIMAS CORPORATION OVERSIGHT COMMITTEE By /s/ Brian P. Campbell By /s/ Herbert S. Amster ------------------------ ---------------------------- Brian P. Campbell Herbert S. Amster By /s/ Helmut F. Stern ---------------------------- Helmut F. Stern 3 AMENDMENT TO REGISTRATION AGREEMENT This is an Amendment dated as of May 15, 1996 to a Registration Agreement dated as of December 27, 1988 and amended as of April 21, 1992, January 5, 1993 and May 26, 1994 (the "Registration Agreement") among TriMas Corporation, a Delaware corporation ("TriMas"), Masco Corporation, a Delaware corporation ("Masco"), and MascoTech, Inc. (formerly Masco Industries, Inc.), a Delaware corporation ("Industries"). WHEREAS, TriMas, Masco, and Industries wish to amend the Registration Agreement to alter the arrangements for registration of the Executive Shares owned by Richard A. Manoogian. NOW, THEREFORE, the parties hereto agree as follows: A. The second sentence of Paragraph 1(b) of the Registration Agreement is hereby amended by deleting the year "1996" and by substituting therefor the year "1997". B. Except as provided herein, the Registration Agreement shall remain in full force and effect and not otherwise be modified or affected by the provisions hereof. This Amendment to Registration Agreement may be executed in multiple counterparts. IN WITNESS WHEREOF, the undersigned have executed this Amendment to Registration Agreement as of the date first set forth above. MASCO CORPORATION MASCOTECH, INC. By /s/Richard A. Manoogian By /s/Richard A. Manoogian -------------------------- -------------------------- Richard A. Manoogian Richard A. Manoogian Chairman Chairman TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE By /s/Brian P. Campbell By /s/Herbert S. Amster ----------------------- --------------------------- Brian P. Campbell Herbert S. Amster President By /s/ Helmut F. Stern --------------------------- Helmut F. Stern 4 ACKNOWLEDGMENT I acknowledge that the Letter Agreements with each of Masco Corporation and MascoTech, Inc. dated as of June 29, 1989 are amended to conform with the Registration Agreement, as amended, and that the Letter Agreements shall otherwise continue in full force and effect. /s/Richard A. Manoogian ---------------------------------- Richard A. Manoogian EX-10.W 6 EXHIBIT 10W 1 EXHIBIT 10.w CONFORMED STOCK PURCHASE AGREEMENT THIS AGREEMENT is made as of this 23rd day of December, 1991 by and between Masco Corporation, a Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware corporation ("Industries"). Masco and Industries each own one share of the two issued and outstanding shares of Masco Capital Corporation, a Delaware corporation ("Masco Capital"), which has been jointly managed by Masco and Industries. Its most significant investment was the Junior Subordinated Discount Debentures of Payless Cashways, Inc. which were recently sold. Related bank loans and indebtedness to the shareholders have been fully repaid. Masco Capital has also made a distribution of its retained earnings. Due to Masco Capital's reduced scope, Masco and Industries deem it appropriate to place the management of Masco Capital under the exclusive control of Masco. Further, Industries desires a return of its original capital investment and to be relieved of the responsibility to provide additional funds to satisfy its pro rata portion of Masco Capital's future funding obligations. Accordingly, Industries has agreed to sell and Masco has agreed to purchase Industries' 50% interest in Masco Capital. In light of the fact that Masco Capital's investments generally have no public market, their current value, which is believed to be in excess of the current book value, is uncertain. The parties anticipate that the uncertainty will significantly decrease over the next three years as the investments are liquidated. Therefore, the parties have structured this purchase and sale to pay Industries a small premium over its current carrying cost of Masco Capital and to provide that Industries will be in at least as favorable an after-tax financial position at the time of settlement of obligations as it would have been in if the Masco Capital investment portfolio were frozen as of December 20, 1991 and then liquidated over time and the proceeds of the liquidation distributed prior to December 31, 1994. NOW, THEREFORE, in consideration of the above premises and the agreements set forth herein, the parties hereto agree as follows: 1. Conditions Precedent. The respective obligations of Masco and Industries to consummate the transactions contemplated by this Agreement are subject to (i) the approval on behalf of Masco by the Oversight Committee of the Masco Board of Directors and (ii) the approval on behalf of Industries by the Oversight Committee of the Industries Board of Directors. -1- 2 2. Agreement to Purchase and Sell. Subject to the terms and conditions of this Agreement, Industries agrees to sell, transfer and convey all of its right, title and interest in and to one share of the capital stock, par value $1.00 per share, of Masco Capital (the "Masco Capital Share") and Masco agrees to purchase the Masco Capital Share. 3. Delivery by Industries. At the Closing of the transactions contemplated hereby (the "Closing"), Industries shall deliver to Masco a certificate representing the Masco Capital Share registered in the name of Industries and endorsed to Masco Corporation. The Closing shall be held at the offices of Masco Capital in Taylor, Michigan on December 30, 1991 at 10:00 a.m. or at such other time or place as mutually agreed upon by the parties hereto. 4. Payment. The aggregate purchase price shall be equal to the sum of (i) the Closing Price (as hereinafter defined) and (ii) (A) one-half of the Incremental Value (as hereinafter defined) less (B) $5,200,000, and less (C) interest on the Closing Price accrued and compounded annually at a rate equivalent to Masco's average after-tax cost of bank borrowing from the Closing to the date of payment of such one-half of the Incremental Value; provided, however, that if Masco has no bank borrowings at a time during the term hereof, the interest rate during such time shall be the equivalent of an after-tax cost of 1% under the Prime Rate of NBD Bank, N.A. The aggregate purchase price shall be payable as follows: (a) The Closing Price shall be $49,451,500 (representing 50% of the Net Book Value indicated on the balance sheet Masco Capital prepared as of December 20, 1991 and heretofore initialled by the parties plus $5,200,000) and shall be paid upon the delivery of the Masco Capital Share as provided in Section 3. For purposes of this Agreement, the term Net Book Value shall mean Total Shareholders' Equity of Masco Capital without reflecting any write up or write down in the carrying value of the assets or liabilities of Masco Capital as a result of a change in the fair market value of such assets or liabilities. (b) Subject to the provisions of Section 10 hereof, the amount determined under Section 4(ii) shall be paid at the earlier of (i) thirty days after the date on which the Valuation (as hereinafter defined) is completed but no later than December 31, 1994 and (ii) thirty days after the date on which the last of the Investments (as hereinafter defined) shall have been sold, liquidated or otherwise turned into cash. (c) Investments shall mean the investments and assets of Masco Capital existing on December 20, 1991. (d) Incremental Value shall mean the total of: -2- 3 (i) for Investments that are sold, liquidated or otherwise turned into cash, the aggregate of the gain or loss on each such Investment determined with reference to the carrying cost of each such Investment; plus or minus (ii) for Investments which have not been sold, liquidated or otherwise turned into cash, and all non-cash proceeds (received or receivable) relating thereto, including, without limitation, dividends, interest, additional securities and securities derived from such Investments by way of reorganization, recapitalization or otherwise (the "Proceeds"), the aggregate gain or loss determined with reference to the carrying cost of each such Investment and based on a Valuation of such Investment (and Proceeds) on September 30, 1994; plus (iii) the aggregate of Masco Capital's dividend and interest income from (x) the Investments, (y) the Proceeds thereof and (z) cash realized on sale, liquidation or otherwise turning into cash of Investments from December 20, 1991 until September 30, 1994; minus (iv) all management and other fees relating to the Investments paid or payable to the investment advisors and managers of the partnerships which hold the Investments and all legal, accounting, management and other expenses reasonably incurred by Masco Capital relating to Investments, in each case from December 20, 1991 until September 30, 1994; minus (v) all federal, state and local taxes paid or payable on the aggregate income from the Investments, including without limitation dividends, interest and the gain and loss of such Investments which have been sold, liquidated or otherwise turned into cash and an appropriate reserve (to be determined by Masco in its sole discretion) to cover all such taxes which may be due after September 30, 1994 based on the Valuation of all Investments which have not been sold, liquidated or otherwise turned into cash at such date. (e) For purposes of this Agreement, Valuation shall mean the value placed on the Investments (and Proceeds), which have not been sold, liquidated or otherwise turned into cash on or before September 30, 1994, by the respective Oversight Committees of the Boards of Directors of Masco and Industries acting jointly. However, if such directors do not unanimously agree on such value, the value of the Investments (and Proceeds) shall be determined by the valuation department or group of Masco's independent public accountants (which, unless Masco informs Industries otherwise, shall be Coopers & Lybrand), and the persons performing the valuation (the "Valuation Group") shall take into account all relevant business and management considerations using customary valuation techniques. If at such time Masco's independent public -3- 4 accountants do not have a valuation department or group, then Masco shall have the right to select another independent entity to serve as the "Valuation Group" which, in Masco's reasonable judgment, is experienced and reputable with respect to such matters. All determinations by the Valuation Group shall be final and binding. (f) Masco and Industries acknowledge that the Net Book Value of $88,503,000 is based on the best information contained in the books and records of Masco Capital at December 20, 1991. As soon as practicable after the Closing (but no later than February 1, 1992) Masco Capital shall prepare a final balance sheet as of December 20, 1991 based on the books and records of Masco Capital setting forth an exact Net Book Value and deliver such balance sheet to Masco and Industries. If Industries shall not have delivered a written objection to Masco within 10 business days of receipt of such balance sheet, such balance sheet will become final. If the Oversight Committee of the Industries Board of Directors does deliver a timely written objection with which Masco does not agree, the balance sheet will be delivered to Coopers & Lybrand for a final determination of the correct Net Book Value, which shall be made no later than March 15, 1992. Upon the final determination of the Net Book Value on such balance sheet, Masco and Industries shall adjust the Closing Price based thereon by, (A) if such Net Book Value has increased from $88,503,000, paying one-half of such increase to Industries in cash within 3 business days of such determination and (B) if such Net Book Value has decreased, by deducting such decrease from the Incremental Value. Masco Capital shall also prepare a definitive list of Investments and the carrying cost thereof as of the Closing. (g) In no event shall the purchase price hereunder be less than the Closing Price as finally determined pursuant to Section 4(f) hereof. 5. Subsequent Fundings by Masco. (a) If after December 20, 1991 Masco should provide any additional funds to Masco Capital, Industries shall not share in any gain or loss resulting from such funds or be paid any amount as interest, dividends or otherwise relating thereto and any interest expense on such additional funds shall be disregarded for all purposes hereunder. (b) Notwithstanding the determination of Incremental Value in accordance with Section 4 hereof, if during the term hereof Masco Capital supplies funds to a partnership for an investment in an existing Investment and such additional investment has an impact on the value of the Investment which is disproportionate to the Investment (as valued by the Oversight Committees acting jointly at the time of such additional investment) and not reflected in the value of any security received by Masco in respect of such additional investment, the Valuation of such Investment (and Proceeds) at September 30, 1994 (or, in the case of an Investment previously sold, liquidated, or otherwise turned into cash, the amount of gain or loss realized and Proceeds thereof) shall be -4- 5 equitably adjusted by action of the Committees or, if such Committees cannot reach unanimous agreement, by the Valuation Group provided in Section 4(e). 6. Termination of Fee Agreement. The Fee Agreement dated as of December 16, 1988 among Masco, Industries and Masco Capital is hereby terminated as of December 20, 1991 and no liability of any kind will arise to either party from prior performance or neglect of its terms other than payment of fees up to and including such date. 7. Payless Preferred Supplier Agreement. It is Masco's current intention, so long as Masco is a party to the Supply Agreement dated as of August 4, 1988 by and between Masco and Payless Cashways, Inc., that Masco shall continue to designate Industries and its subsidiaries "affiliated companies" under Article I thereof; provided, however, that Masco is under no obligation to keep the Supply Agreement in effect, and provided further that Masco may in its sole discretion terminate such designation at any time upon reasonable notice. 8. Management of Masco Capital. From the date hereof, Masco shall have the sole right to manage Masco Capital, make investment decisions and take all other acts which it may deem necessary or appropriate and Masco shall have no liability to Industries with respect to such management, investment decisions or any other matter involving Masco Capital based on action or inaction of Masco or recklessness, misfeasance, gross negligence or negligence of Masco or of any of its officers, directors, employees, shareholders or agents in the handling of Masco Capital's affairs; provided, however, that if Masco is requested or required by one of the partnerships managing an Investment to make a decision which may affect the value of such Investment, Masco will notify Industries before it makes such decision. 9. Funding Commitments. Masco and Masco Capital hereby release Industries from any and all current or future funding commitments of Masco Capital which Industries may have or have had with respect to the Investments or the partnerships holding the Investments or otherwise and Masco agrees to hold Industries harmless from any loss occasioned by an attempt by any entity to enforce any such funding commitment. 10. Termination and Distribution. (a) Notwithstanding anything in this Agreement to the contrary, if the Oversight Committees of the Boards of Directors of Masco and Industries jointly determine that it is inappropriate to pay all or part of the Incremental Value based on the Valuation as of September 30, 1994, or if they otherwise jointly determine to defer such Valuation or payment, then such Committees may in their sole discretion set such payment to occur in whole or in part after a Valuation on September 30, 1995 or September 30, 1996 and pay only such portion of the Incremental Value prior to December 31, 1994 as -5- 6 such Committees shall jointly determine. In such case all references to September 30, 1994 in Section 4 or Section 5 hereof will be deemed to refer to such later valuation date. (b) Notwithstanding anything in this Agreement to the contrary, the Oversight Committees of the Boards of Directors of Masco and Industries, acting jointly, may determine following the liquidation of one or more Investments that it is appropriate for Masco to make a cash payment to Industries prior to December 31, 1994 (or December 31, 1995 or 1996 as the case may be) as an advance against amounts that such Committees believe may subsequently be due to Industries hereunder. Such advances may be made on such terms (including a requirement that Industries agree to repay such advance if, after sale, liquidation or otherwise turning into cash of all Investments, the advance was not warranted) as such Committees may establish. 11. Liquidation of Masco Capital. Nothing in this Agreement shall preclude Masco from reorganizing, merging, combining or liquidating and winding up Masco Capital; provided, however, in the event of such a transaction or series of transactions Masco shall keep separate accounts to enable it to satisfy its obligations hereunder. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. MASCO CORPORATION By /s/ Richard A. Manoogian -------------------------- MASCO INDUSTRIES, INC. By /s/ Timothy Wadhams -------------------------- Masco Capital Corporation accepts and agrees to the provisions of this Agreement relating to it. MASCO CAPITAL CORPORATION By /s/ John R. Leekley -------------------------- -6- EX-10.X 7 EXHIBIT 10X 1 EXHIBIT 10x - ------------------------------------------------------------------------------- BRIDGE CREDIT AGREEMENT dated as of January 3, 1997 Among MSX INTERNATIONAL, INC., CITICORP VENTURE CAPITAL, LTD. and MASCOTECH, INC., as Bridge Lenders - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS PAGE ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.01 Defined Terms . . . . . . . . . . . . . . . . . . 2 SECTION 1.02 Terms Generally . . . . . . . . . . . . . . . . . 17 ARTICLE II The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 2.01 Commitments . . . . . . . . . . . . . . . . . . . 17 SECTION 2.02 Loans . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.03 Borrowing Procedure . . . . . . . . . . . . . . . 18 SECTION 2.04 Evidence of Debt, Repayment of Loans . . . . . . 19 SECTION 2.05 Fees . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.06 Interest on Loans . . . . . . . . . . . . . . . . 20 SECTION 2.07 Default Interest . . . . . . . . . . . . . . . . 20 SECTION 2.08 Termination and Reduction of Commitments . . . . 20 SECTION 2.09 Repayment of Term Borrowings . . . . . . . . . . 21 SECTION 2.10 Optional Prepayment . . . . . . . . . . . . . . . 21 SECTION 2.11 Mandatory Prepayments . . . . . . . . . . . . . . 22 SECTION 2.12 Pro Rata Treatment . . . . . . . . . . . . . . . 23 SECTION 2.13 Sharing of Setoffs . . . . . . . . . . . . . . . 23 SECTION 2.14 Payments . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.15 Additional Credit Exposure . . . . . . . . . . . 24 ARTICLE III Representations and Warranties . . . . . . . . . . . . . . . . . . 26 SECTION 3.01 Organization; Powers . . . . . . . . . . . . . . 26 SECTION 3.02 Authorization . . . . . . . . . . . . . . . . . . 26 SECTION 3.03 Enforceability . . . . . . . . . . . . . . . . . 26 SECTION 3.04 Governmental Approvals . . . . . . . . . . . . . 27 SECTION 3.05 No Material Adverse Change . . . . . . . . . . . 27 SECTION 3.06 Title to Properties; Possession Under Leases . . 27 SECTION 3.07 Subsidiaries . . . . . . . . . . . . . . . . . . 27 SECTION 3.08 Litigation; Compliance with Laws . . . . . . . . 28 SECTION 3.09 Use of Proceeds . . . . . . . . . . . . . . . . . 28 SECTION 3.10 Tax Returns . . . . . . . . . . . . . . . . . . . 28 i 3 SECTION 3.11 No Material Misstatements . . . . . . . . . . . . 28 SECTION 3.12 Employee Benefit Plans . . . . . . . . . . . . . 29 SECTION 3.13 Environmental Matters . . . . . . . . . . . . . . 29 SECTION 3.14 Insurance . . . . . . . . . . . . . . . . . . . . 30 SECTION 3.15 Security Documents . . . . . . . . . . . . . . . 30 SECTION 3.16 Location of Real Property and Leased Premises . . 30 SECTION 3.17 Labor Matters . . . . . . . . . . . . . . . . . . 30 ARTICLE IV Conditions of Lending . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.01 All Credit Events . . . . . . . . . . . . . . . . 31 SECTION 4.02 First Credit Event . . . . . . . . . . . . . . . 32 ARTICLE V Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 5.01 Existence; Business and Properties; Compliance with Laws . . . . . . . . . . . . . . 34 SECTION 5.02 Insurance . . . . . . . . . . . . . . . . . . . . 34 SECTION 5.03 Obligations and Taxes . . . . . . . . . . . . . . 35 SECTION 5.04 Financial Statements, Reports, etc . . . . . . . 35 SECTION 5.05 Litigation and Other Notices . . . . . . . . . . 36 SECTION 5.06 Employee Benefits . . . . . . . . . . . . . . . . 37 SECTION 5.07 Maintaining Records; Access to Properties and Inspections . . . . . . . . . . . . . . . . . . . 37 SECTION 5.08 Use of Proceeds . . . . . . . . . . . . . . . . . 37 SECTION 5.09 Compliance with Environmental Laws . . . . . . . 37 SECTION 5.10 Further Assurances . . . . . . . . . . . . . . . 38 ARTICLE VI Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.01 Indebtedness . . . . . . . . . . . . . . . . . . 38 SECTION 6.02 Liens . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 6.03 Intentionally Omitted. . . . . . . . . . . . . . 42 SECTION 6.04 Investments, Loans and Advances . . . . . . . . . 42 SECTION 6.05 Mergers, Consolidations and Sales of Assets . . . 43 SECTION 6.06 Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends . . . 44 SECTION 6.07 Transactions with Affiliates . . . . . . . . . . 46 SECTION 6.08 Other Indebtedness and Agreements . . . . . . . . 46 SECTION 6.09 Minimum EBITDA . . . . . . . . . . . . . . . . . 47 SECTION 6.10 Fixed Charge Coverage Ratio . . . . . . . . . . . 47 SECTION 6.11 Net Worth . . . . . . . . . . . . . . . . . . . . 47 ii 4 SECTION 6.12 Capital Expenditures . . . . . . . . . . . . . . 48 SECTION 6.13 Business of the Borrower and Subsidiaries . . . . 48 ARTICLE VII Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 48 ARTICLE VIII The Administrative Agent and the Collateral Agent. . . . . . . . . 51 ARTICLE IXMiscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . 53 SECTION 9.02 Survival of Agreement . . . . . . . . . . . . . . 54 SECTION 9.03 Binding Effect . . . . . . . . . . . . . . . . . 54 SECTION 9.04 Successors and Assigns . . . . . . . . . . . . . 54 SECTION 9.05 Expenses; Indemnity . . . . . . . . . . . . . . . 55 SECTION 9.06 Applicable Law . . . . . . . . . . . . . . . . . 56 SECTION 9.07 Waivers; Amendment . . . . . . . . . . . . . . . 56 SECTION 9.08 Interest Rate Limitation . . . . . . . . . . . . 57 SECTION 9.09 Entire Agreement . . . . . . . . . . . . . . . . 57 SECTION 9.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . 57 SECTION 9.11 Severability . . . . . . . . . . . . . . . . . . 57 SECTION 9.12 Counterparts . . . . . . . . . . . . . . . . . . 58 SECTION 9.13 Headings . . . . . . . . . . . . . . . . . . . . 58 SECTION 9.14 Consent to Service of Process . . . . . . . . . . 58 SECTION 9.15 Confidentiality . . . . . . . . . . . . . . . . . 58 SCHEDULES AND EXHIBITS SCHEDULE I Subsidiary Guarantors SCHEDULE II U.K. Credit Facilities SCHEDULE 2.01 Commitments SCHEDULE 2.15 Designated Guarantee Obligations and Letters of Credit SCHEDULE 3.06 Exceptions to Performance SCHEDULE 3.07 Ownership of Subsidiaries SCHEDULE 3.08 Litigation SCHEDULE 3.13 Environmental Matters SCHEDULE 3.16 Real Property SCHEDULE 3.17 Employment Matters SCHEDULE 6.01 Indebtedness iii 5 SCHEDULE 6.02 Liens EXHIBIT A Form of Borrowing Request EXHIBIT B Pledge Agreement EXHIBIT C Security Agreement EXHIBIT D Subsidiary Guarantee Agreement EXHIBIT E Senior Subordinated Note EXHIBIT F Form of Assignment and Acceptance EXHIBIT G Administrative Questionnaire iv 6 BRIDGE CREDIT AGREEMENT dated as of January 3, 1997, among MSX INTERNATIONAL, INC., a Delaware corporation (the "Borrower"); CITICORP VENTURE CAPITAL, LTD., a New York corporation ("CVC") MASCOTECH, INC., a Delaware corporation ("MascoTech"; and, collectively with CVC and their respective permitted assignees, the "Bridge Lenders"); and a Bridge Lender or a bank or other financial institution, in each case designated by the Bridge Lenders and made a party hereto (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent") for the Bridge Lenders. Pursuant to the Acquisition Agreement dated as of November 12, 1996, as amended (the "Acquisition Agreement"), among the Borrower, MascoTech and MSX International, Inc., a Michigan corporation ("MSX"), the Borrower will acquire from MascoTech and MSX, as applicable, directly and through certain Subsidiaries, the Business (other than certain excluded assets), the APX Continuing Business, the Limited Stock and the APX- Brazil Stock (as such terms are defined in the Acquisition Agreement) (collectively, the "Acquisition"), all for aggregate consideration of approximately $144,628,000, and also consisting of the assumption by the Borrower and certain Subsidiaries of certain assumed liabilities related to the Business and the APX Continuing Business. In connection with the Acquisition, CVC and MascoTech, together with members of management, will make a cash capital contribution to the Borrower in an aggregate amount of approximately $40 million (the "Equity Contribution"). The Borrower has requested the Bridge Lenders to extend credit in the form of (a) bridge term loans on the Closing Date, in an aggregate principal amount of $40,000,000, and (b) bridge revolving loans at any time and from time to time prior to the Final Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $60,000,000. The Borrower has requested MascoTech to arrange for or guarantee the issuance of letters of credit and other credit facilities to support payment obligations incurred in the ordinary course of business by the Borrower and the Subsidiaries. The proceeds of the Term Loans are to be used, together with a portion of the proceeds of Revolving Loans to be made on the Closing Date, solely (a) to pay the cash consideration to be paid in connection with the Acquisition and (b) to pay related fees and expenses. The proceeds of the Revolving Loans (other than the Revolving Loans used for the purposes specified in the immediately preceding sentence) are to be used for working capital and other general corporate purposes of the Borrower and the Subsidiaries. The Bridge Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: 7 ARTICLE I Definitions SECTION 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below: "Additional Credit Disbursement" shall mean a payment or disbursement made by any Bridge Lender in connection with a Designated Letter of Credit or Designated Guarantee Obligation. "Additional Credit Event" shall mean the incurrence by MascoTech of any Guarantee obligation or Indebtedness in respect of (a) any Designated Letter of Credit or (b) any Designated Guarantee Obligation. "Additional Credit Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Designated Letters of Credit at such time plus (b) the aggregate amount of all Additional Credit Disbursements that have not yet been reimbursed at such time plus (c) the aggregate outstanding commitment amount of the U.K. Credit Facility (without duplication of Additional Credit Disbursements related thereto). The Additional Credit Exposure of any Bridge Lender at any time shall mean its Pro Rata Percentage of the aggregate Additional Credit Exposure at such time; provided that (i) the face amount of Additional Credit Exposure in respect of Designated Letters of Credit shall not exceed at any time $15,000,000 and (ii) the principal amount of Additional Credit Exposure in respect of Designated Guarantee Obligations shall not exceed at any time Pounds 5,000,000. "Affiliate" shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified. "Aggregate Revolving Credit Exposure" shall mean the aggregate amount of the Bridge Lenders' Revolving Credit Exposures. "Amount of Eligible Receivables" shall mean and include at any time, without duplication, the amount of Eligible Receivables set forth on the most recent financial statements of the Borrower and the Subsidiaries delivered to the Bridge Lenders pursuant to Section 5.04(e). "Asset Sale" shall mean the sale, transfer or other disposition (by way of merger or otherwise) by any Loan Party or any of the Subsidiaries to any person other than any Loan Party of (a) any Capital Stock of any of the Subsidiaries or (b) any other assets of any Loan Party or any of the Subsidiaries, provided that none of (i) any asset sale or series of related asset sales described in clause (b) above for consideration, at fair market value, of less than $250,000, (ii) any Equity Issuance (without giving effect to the exceptions set forth in such defined term) or (iii) any sale, 2 8 transfer or other disposition of assets pursuant to Section 6.05(a), (b), (c), (d) or (e) shall be deemed an "Asset Sale", for purposes of this Agreement. "Assignment and Acceptance" shall have the meaning assigned to it in Section 9.04(b) hereof. "Associate" shall mean, with respect to any person, (i) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity and (ii) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person. "Availability" shall mean at any time (i) the lesser at such time of (x) the Revolving Credit Commitment and (y) the Borrowing Base, minus (ii) the sum at such time of (u) the unpaid principal balance of the Revolving Loans, (v) the Additional Credit Exposure and (w) the unpaid principal balance of any NBD Revolving Loans. "Borrowing" shall mean a group of Loans made by the Bridge Lenders on a single date. "Borrowing Base" shall have the meaning assigned to such term in Section 2.01(b) hereof. "Borrowing Request" shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit A. "Bridge Lenders" shall have the meaning assigned to such term in the Recitals. "Business Day" shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close. "Capital Expenditures" shall mean, for any period, without duplication, the aggregate of all expenditures (whether paid in cash or other consideration) by the Borrower and its consolidated Subsidiaries during such period that, in accordance with GAAP, are or should be included in "additions to property, plant or equipment" or similar items reflected in the consolidated statement of cash flows of the Borrower and the Subsidiaries for such period. "Capital Lease Obligations" of any person shall mean an obligation of such person that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "Capital Stock" shall mean, with respect to any person, any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however 3 9 designated) equity of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, but excluding any debt securities convertible into such equity. "Cash Interest Expense" shall mean, for any period, the Interest Expense of the Borrower and the Subsidiaries for such period less all non- cash items constituting Interest Expense during such period, all calculated on a consolidated basis in accordance with GAAP. "Charges" shall have the meaning given to it in Section 9.08. "Closing Date" shall mean the date of the first Credit Event. "Closing Date Net Worth" shall mean Consolidated Net Worth as of the Closing Date. "Code" shall mean the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder, as amended from time to time. "Collateral" shall mean all the "Collateral" as defined in any Security Document. "Commitment" shall mean, with respect to any Bridge Lender, such Bridge Lender's Revolving Credit Commitment and/or Term Loan Commitment. "Consolidated EBITDA" shall mean, for any period, the Consolidated Net Income for such period, plus, without duplication, to the extent deducted in computing Consolidated Net Income, the sum of (a) income tax expense, (b) Interest Expense, (c) depreciation and amortization expense and (d) any extraordinary losses, minus, without duplication, to the extent added in computing such Consolidated Net Income, (i) any interest income and (ii) any extraordinary gains, all as determined on a consolidated basis with respect to the Borrower and the Subsidiaries in accordance with GAAP. "Consolidated Net Income" shall mean, for any period, net income or loss of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, subject to all applicable purchase accounting adjustments. "Consolidated Net Worth" shall mean, as at any date of determination, the consolidated stockholders' equity of the Borrower and the Subsidiaries, as determined on a consolidated basis in accordance with GAAP. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall have meanings correlative thereto. 4 10 "Credit Event" shall have the meaning assigned to such term in Section 4.01. "CVC" shall have the meaning assigned to such term in the Recitals. "Debentures" shall mean any junior subordinated debentures issued or issuable by the Borrower in exchange for shares of Series A Preferred Stock of the Borrower on the terms and subject to the conditions set forth in the Certificate of Incorporation of the Borrower or in payment of interest on such debentures. "Default" shall mean any event or condition that upon notice, lapse of time or both would constitute an Event of Default. "Designated Guarantee Obligations" shall mean the Guarantee obligations, not to exceed L.5,000,000 in principal amount, of MascoTech (in which the other Bridge Lenders shall have a participation hereunder) in respect of the U.K. Credit Facilities. "Designated Letter of Credit" shall mean standby and trade letters of credit described on Schedule 2.15 hereto and additional standby and trade letters of credit issued after the Closing Date of a nature substantially similar to those described on Schedule 2.15 the reimbursement obligations of which are Guaranteed by MascoTech (and in which the other Bridge Lenders shall have a participation hereunder). "Disqualified Stock" shall mean, with respect to any person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to 366 days after the Final Maturity Date. "dollars" or "$" shall mean lawful money of the United States of America. "Domestic Subsidiary" shall mean any Subsidiary incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia. "Eligible Receivables" shall mean Receivables created by the Borrower and the Subsidiaries in the ordinary course of business arising out of the sale of goods or rendition of services by the Borrower and the Subsidiaries, which are and at all times shall continue to be acceptable to each of the Bridge Lenders in all respects. Standards of eligibility may be fixed and revised form time to time solely by the Bridge Lenders. "environment" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, the workplace or as otherwise defined in any Environmental Law. 5 11 "Environmental Claim" shall mean any written accusation, allegation, notice of violation, claim, demand, order, directive, cost recovery action or other cause of action by, or on behalf of, any Governmental Authority or any person for damages, injunctive or equitable relief, personal injury (including sickness, disease or death), Remedial Action costs, property damage, natural resource damages, nuisance, pollution, any adverse effect on the environment caused by any Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon (a) the existence, or the continuation of the existence, of a Release (including sudden or non-sudden, accidental or non-accidental Releases), (b) exposure to any Hazardous Material, (c) the presence, use, handling, transportation, storage, treatment or disposal of any Hazardous Material or (d) the violation or alleged violation of any Environmental Law or Environmental Permit. "Environmental Law" shall mean any and all applicable present and future treaties, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section Section 9601 et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section Section 6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section Section 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C. Section Section 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. Section Section 2601 et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section Section 651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section Section 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section Section 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section Section 5101 et seq., and any similar or implementing state or local law, and all amendments or regulations promulgated under any of the foregoing. "Environmental Permit" shall mean any permit, approval, authorization, certificate, license, variance or filing required by or from any Governmental Authority pursuant to any Environmental Law. "Equity Contribution" shall have the meaning assigned to such term in the Recitals. "Equity Issuance" shall mean any issuance or sale by the Borrower of any shares of Capital Stock of the Borrower, except for (a) any issuance or sale to the Borrower or any Subsidiary, (b) sales or issuances of Capital Stock to management, directors or key employees of the Borrower or any Subsidiary under any stock option, stock purchase, stock grant or other similar incentive or employee benefit plan in existence from time to time or (c) issuances of Capital Stock by the Borrower upon the conversion, exercise or exchange of any class or series of the Borrower's Capital Stock pursuant to the terms thereof as set forth in the Certificate of Incorporation of the Borrower as the same may be in effect at such time. 6 12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder, as the same may be amended from time to time. "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of any Loan Party or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g) the receipt by any Loan Party or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with respect to which any Loan Party or any of its Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of the Code) or with respect to which any Loan Party or any such Subsidiary could otherwise be liable; and (i) any other event or condition with respect to a Plan or Multiemployer Plan or any plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Loan Party. "Event of Default" shall have the meaning assigned to such term in Article VII. "Excess Cash Flow" shall mean, for any fiscal year, Consolidated EBITDA of the Borrower and the Subsidiaries on a consolidated basis for such fiscal year, minus, without duplication, (a) Cash Interest Expense paid during such fiscal year, (b) scheduled principal repayments of Indebtedness made by the Borrower and the Subsidiaries on a consolidated basis during such year, (c) voluntary prepayments of Term Loans during such fiscal year, (d) permitted Capital Expenditures by the Borrower and the Subsidiaries on a consolidated basis during such fiscal year that are paid in cash and (e) cash tax liability of the Borrower and the Subsidiaries on a consolidated basis during such fiscal year. "Fees" shall mean the Administrative Agent Fees. "Final Maturity Date" shall mean December 31, 2002. 7 13 "Financial Officer" of any corporation shall mean the chief financial officer, principal accounting officer, treasurer or controller of such corporation. "Fixed Charge Coverage Ratio" at the end of any period shall mean the ratio of (i) Consolidated EBITDA divided by (ii) the sum of, without duplication, (a) Cash Interest Expense plus (b) scheduled payments of principal with respect to all Indebtedness (including scheduled payment of Capital Lease Obligations) plus (c) Capital Expenditures, in each case for the Borrower and the Subsidiaries calculated on a consolidated basis in accordance with GAAP for such period. "Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic Subsidiary. "GAAP" shall mean generally accepted accounting principles applied on a consistent basis for all periods after the date hereof. All accounting terms shall be interpreted and all accounting determinations hereunder shall be made in accordance with Section 1.02. "Governmental Authority" shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. "Guarantee" of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Hazardous Materials" shall mean all explosive or radioactive substances or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or gaseous wastes, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment, radon gas and all other substances or wastes of any nature regulated pursuant to any Environmental Law. 8 14 "Indebtedness" of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed; provided, however, that the amount of Indebtedness of such person shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Indebtedness, (f) all Guarantees by such person of Indebtedness of others, (g) all Capital Lease Obligations of such person, (h) all obligations of such person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (i) all obligations of such person as an account party in respect of letters of credit and bankers' acceptances. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof. "Indemnitee" shall have the meaning given such term in Section 9.05(b). "Information" shall have the meaning given to it in Section 9.15. "Interest Expense" shall mean, for any period, the interest expense of the Borrower during such period determined on a consolidated basis in accordance with GAAP. "Interest Payment Date" shall mean, with respect to any Loan, the last day of each June and December and at maturity. "Joint Venture" shall mean any person of which securities or other ownership interests representing at least 20% but no greater than 50% of the equity or ordinary voting power are owned, controlled or held by the Borrower or any of its Subsidiaries. "Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest (or agreement to give a security interest) in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, lease or title retention agreement relating to such asset. "Loan Documents" shall mean this Agreement, the Senior Subordinated Note, the Subsidiary Guarantee Agreement and the Security Documents. "Loan Parties" shall mean the Borrower and the Subsidiary Guarantors. 9 15 "Loan Rate" shall mean, for any day, a rate per annum equal to (a) 10.0% through June 30, 1997, (b) thereafter, 11.0% through September 30, 1997, (c) thereafter, 12.0% through December 31, 1997 and (d) thereafter, 13.0%. "Loans" shall mean the Revolving Loans and the Term Loans. "Management Investors" shall mean any officers, directors or employees of the Borrower or its Subsidiaries who acquire Capital Stock of the Borrower on or after the Closing Date and any of their direct or indirect Permitted Transferees. "MascoTech" shall have the meaning assigned to such term in the Recitals. "Material Adverse Effect" shall mean (a) a materially adverse effect on the business, assets, operations, properties or financial condition of the Borrower and its consolidated Subsidiaries, taken as a whole, or (b) material impairment of the rights of or remedies available to the Bridge Lenders under any Loan Document. "Maximum Rate" shall have the meaning given to it in Section 9.08. "Moody's" shall mean Moody's Investors Service, Inc. and its successors. "Multiemployer Plan" shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party is obligated to contribute. "NBD Revolving Loans" means the revolving or line of credit loans owing by the Borrower under the $60,000,000 revolving line of credit entered into by the Borrower on the Closing Date with NBD Bank, and any such loans made pursuant to any renewal, refinancing or replacement of such facility. "Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash proceeds thereof (including deferred cash payments as and when received (collectively, "Deferred Cash")) net of (i) costs of sale (including payment of the outstanding principal amount of, premium or penalty, if any, interest and other amounts on any Indebtedness (other than Loans) required to be repaid under the terms thereof or by applicable law as a result of such Asset Sale), (ii) taxes paid or payable in the year such Asset Sale occurs or in the following year as a result thereof, (iii) amounts (A) provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations associated with such Asset Sale or (B) held in escrow pursuant to an agreement relating to such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve or escrow, such amounts shall constitute Net Cash Proceeds (net of any taxes paid or payable)) and (iv) payments to holders of minority interests in the asset subject to such Asset Sale or in the entity selling the asset and (b) with respect to any Equity Issuance or any issuance or other disposition of Indebtedness for borrowed money, the cash proceeds thereof (including Deferred Cash) net of underwriting discounts and commissions or placement fees, 10 16 attorneys' fees, accountants' fees, filing and registration fees, trustee fees and other fees and expenses directly incurred in connection therewith net of any taxes paid or payable as a result thereof. "90%-Owned Foreign Subsidiary" shall mean a Foreign Subsidiary of which securities (except for directors' qualifying shares) or other ownership interests representing at least 90% of the equity or at least 90% of the ordinary voting power are, at the time any determination is being made, owned, controlled or held by the Borrower or any wholly owned subsidiary. "Obligations" shall mean (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) fees, costs, expenses and indemnities, (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to the Secured Parties under this Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to this Agreement or the other Loan Documents. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "Perfection Certificate" shall mean the Perfection Certificate substantially in the form of Annex I to the Security Agreement. "Permitted Foreign Indebtedness" shall mean, without duplication, Indebtedness under U.K. Credit Facility in an aggregate principal amount not to exceed L.5,000,000 and unsecured Indebtedness of MascoTech Engineering Gmblt in an aggregate principal amount not to exceed DM1,500,000. "Permitted Foreign Investments" shall mean (a) any investments in, or loans or advances to, any Foreign Subsidiary by the Borrower or any Domestic Subsidiary or (b) any letters of credit or Guarantees to support Permitted Foreign Indebtedness issued by or for the account of the Borrower or any Domestic Subsidiary. For purposes of determining the amount of any Permitted Foreign Investment outstanding at any time, (i) the amount of any investment, loan or advance made pursuant to clause (a) above shall equal the aggregate amount of the consideration (whether in cash or property, valued at the time each such investment, loan or advance is made) paid for such investment, loan or advance (net of any return of capital or principal of (but not dividends or interest 11 17 on) such investment, loan or advance) and (ii) the amount of any Permitted Foreign Investment pursuant to clause (b) above shall be the face amount of any such letter of credit or Guarantee. "Permitted Investments" shall mean: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody's; (c) investments in (i) certificates of deposit, banker's acceptances and time deposits maturity within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus profits of not less than $250,000,000 or (ii) Eurocurrency time deposits maturing within 360 days from the date of acquisition thereof with any branch or office of (A) any commercial bank organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development, and comparable in credit quality to the investments permitted under the preceding clause (i), or (B) any Bridge Lender; (d) repurchase obligations with a term of not more than 30 days for, and secured by, underlying securities of the types described in clause (a) above entered into with a bank meeting the qualifications described in clause (c) above; (e) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A-1" by Moody's; (f) investments in money market funds complying with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the Securities and Exchange Commission under the Investment Company Act of 1940, as amended; (g) in the case of any Foreign Subsidiary, investments comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States of America; and (h) other investment instruments approved in writing by the Required Bridge Lenders. 12 18 "Permitted Transferee" shall have the meaning assigned to such term in the Stockholders' Agreement. "person" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership or government, or any agency or political subdivision thereof. "Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 307 of ERISA, and in respect of which any Loan Party is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreement" shall mean the Pledge Agreement, substantially in the form of Exhibit B, among the Borrower, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties. "Prime Rate" shall mean for any applicable day, the rate of interest from time to time announced by Chemical Bank at its principal office located in New York, New York as its prime commercial lending rate as publicly announced from time to time. Each change in any interest rate provided for herein based upon the Prime Rate resulting from a change in the Prime Rate shall take effect at the time of such change in the Prime Rate. "Properties" shall have the meaning given such term in Section 3.13. "Pro Rata Percentage" of any Revolving Credit Lender at any time shall mean the percentage of the Total Revolving Credit Commitment represented by such Bridge Lender's Revolving Credit Commitment. "Receivables" shall mean and include all of the Borrower's and the Subsidiaries' accounts, instruments, documents, chattel paper and general intangibles, whether secured or unsecured, whether now existing or hereafter created or arising, and whether or not specifically assigned to the Collateral Agent for the ratable benefit of the Bridge Lenders. "Refinancing Indebtedness" shall have the meaning given such term is Section 6.01(1). "Register" shall have the meaning given such term in Section 9.04(c). "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the environment. "Remedial Action" shall mean (a) "remedial action" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental 13 19 Authority or voluntarily undertaken to: (i) cleanup, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health, welfare or the environment; or (iii) perform studies and investigations in connection with, or as a precondition to, (i) or (ii) above. "Required Bridge Lenders" shall mean, at any time, each of the Bridge Lenders. "Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement. "Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving Loans. "Revolving Credit Commitment" shall mean, with respect to each Bridge Lender, the commitment of such Bridge Lender to make Revolving Loans hereunder and Guarantee and Indebtedness obligations (including through participations under this Agreement) in respect of (a) Designated Letters of Credit and (b) Designated Guarantee Obligations in an aggregate amount at any time outstanding not in excess of the amount opposite the name of such Bridge Lender in the column entitled "Revolving Credit Commitment" in the table appearing in Schedule 2.01, or the amount in the Assignment and Acceptance pursuant to which such Bridge Lender assumed its Revolving Credit Commitment, as applicable, as such amount may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Bridge Lender pursuant to Section 9.04. "Revolving Credit Exposure" shall mean, with respect to any Revolving Credit Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans made by such Bridge Lender, plus the aggregate amount at such time of such Bridge Lender's Additional Credit Exposure. "Revolving Credit Lender" shall mean a Bridge Lender with a Revolving Credit Commitment. "Revolving Credit Note" means a note issued by the Borrower in connection with a Revolving Loan. "Revolving Loans" shall mean the loans made or deemed made by the Bridge Lenders to the Borrower pursuant to clause (b) of Section 2.01. "S&P" shall mean Standard and Poor's Ratings Group, a division of McGraw-Hill, Inc., and its successors. 14 20 "Secured Parties" shall have the meaning assigned to such term in the Security Agreement. "Security Agreement" shall mean the Security Agreement, substantially in the form of Exhibit C, among the Borrower and the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties. "Security Documents" shall mean the Security Agreement, the Pledge Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.10. "Senior Subordinated Note" shall mean the Senior Subordinated Note due 2006 issued to MascoTech by the Borrower on the Closing Date in an aggregate principal amount of not less than $30,000,000 and shall include any substantially identical notes issued in the exchange therefor after the Closing Date, pursuant to the agreement governing such notes. "Stockholders' Agreement" shall mean the Stockholders' Agreement dated as of the date hereof, among the Borrower, MascoTech, the Institutional Investor and the Management Investors, as the same may be amended, supplemented or otherwise renewed or replaced from time to time in accordance with the terms thereof and hereof. "subsidiary" shall mean, with respect to any person (herein referred to as the "parent"), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent, provided that the term "subsidiary," when used in respect of the Borrower or any of its subsidiaries, shall not include any foreign joint venture in which the Borrower or any such subsidiary owns less than or equal to 50% of the equity interest in such joint venture. "Subsidiary" shall mean any subsidiary of the Borrower. "Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee Agreement, substantially in the form of Exhibit D, made by the Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the Secured Parties. "Subsidiary Guarantor" shall mean each Subsidiary party to the Subsidiary Guarantee Agreement. "Term Loan Borrowing" shall mean a Borrowing comprised of Term Loans. 15 21 "Term Loan Borrowing" shall mean a Borrowing comprised of Term Loans. "Term Loan Commitment" shall mean, with respect to each Bridge Lender, the commitment of such Bridge Lender to make Term Loans hereunder in an aggregate amount at any time outstanding not in excess of the amount opposite the name of such Bridge Lender in the column entitled "Term Loan Commitment" in the table appearing in Schedule 2.01 or the amount in the Assignment and Acceptance pursuant to which such Bridge Lender assumed its Term Loan Commitment, as applicable. "Term Loan Repayment Amount" shall have the meaning assigned to such term in Section 2.09(a)(i). "Term Loan Repayment Date" shall have the meaning assigned to such term in Section 2.09(a)(i). "Term Note" means a note issued by the Borrower in connection with a Term Loan. "Term Loans" shall mean the loans made by the Bridge Lenders to the Borrower pursuant to Section 2.01(a). "Total Revolving Credit Commitment" shall mean, at any time, the aggregate amount of the Revolving Credit Lenders' Revolving Credit Commitments, as in effect at such time. "Transactions" shall have the meaning assigned to such term in Section 3.02. "U.K. Credit Facility" shall mean the credit facilities described in Schedule I hereto. "Upstream Payment" shall have the meaning assigned to such term in Section 6.06(b). "wholly owned subsidiary" of any person shall mean a subsidiary of such person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such person or one or more wholly owned subsidiaries of such person or by such person and one or more wholly owned subsidiaries of such person. The term "wholly owned", when used to modify the term "Subsidiary" or "Domestic Subsidiary", shall have a correlative meaning. "Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. 16 22 SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall apply equally to both 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." All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time, (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that for purposes of determining compliance with the covenants contained in Article VI or Section 2.11(d), all accounting terms herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP as in effect on the date of this Agreement and applied on a basis consistent with the application used in the financial statements referred to in Section 3.05(a) and (c) all references herein to the Borrower on an unconsolidated basis shall be deemed to exclude any investment by the Borrower in any of its subsidiaries. ARTICLE II The Credits SECTION 2.01 Commitments. Subject to the terms and conditions relying upon the representations and warranties herein set forth, each Bridge Lender agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on the Closing Date in a principal amount not to exceed its Term Loan Commitment and (b) to make Revolving Loans (which shall be deemed to include unpaid or unreimbursed Additional Credit Disbursements) to the Borrower, at any time and from time to time on or after the date hereof, and until the earlier of the Final Maturity Date and the termination of the Revolving Credit Commitment of such Bridge Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in (i) such Bridge Lender's Revolving Credit Exposure exceeding (ii) such Bridge Lender's Revolving Credit Commitment. Notwithstanding the foregoing, the aggregate principal amount of Revolving Loans outstanding at any time to the Borrower shall not exceed (1) the lesser of (A) the Total Revolving Credit Commitment (as such amount may be reduced pursuant to Section 2.08 hereto) and (B) an amount equal to up to eighty percent (80%) of the amount of Eligible Receivables, (this clause (1) (B) referred to herein as the "Borrowing Base"), minus (2) the Additional Credit Exposure at such time (excluding any unpaid or unreimbursed Additional Credit Disbursements). Within the limits set forth in the two immediately preceding sentences and subject to the terms, conditions and limitations set forth herein, including, without limitation, the requirement that no Revolving Loan shall be made hereunder if the amount thereof exceeds the Availability outstanding at such time, the Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed. 17 23 SECTION 2.02 Loans. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Bridge Lenders ratably in accordance with their respective Term Loan Commitments or Revolving Credit Commitments, as applicable; provided, however, that the failure of any Bridge Lender to make any Loan shall not in itself relieve any other Bridge Lender of its obligation to lend hereunder (it being understood, however, that no Bridge Lender shall be responsible for the failure of any other Bridge Lender to make any Loan required to be made by such other Bridge Lender). The Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) not less than $5,000,000 and, in each case, in an integral multiple of $1,000,000 or (ii) equal to the remaining available balance of the applicable Commitment. (b) Each Bridge Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 12:00 (noon), New York City time, and the Administrative Agent shall by 1:00 p.m., New York City time, credit the amounts so received to an account in the name of the Borrower, maintained with the Administrative Agent and designated in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Bridge Lenders. (c) If a Bridge Lender does not, prior to the date of any Borrowing, make available to the Administrative Agent such Bridge Lender's portion of such Borrowing, the Administrative Agent shall not be obligated to make available to the Borrower on such date a corresponding amount. SECTION 2.03 Borrowing Procedure. In order to request a Borrowing, the Borrower shall notify the Administrative Agent by telephone of its intent to request a Borrowing and shall hand deliver or telecopy to the Administrative Agent a duly completed Borrowing Request not later than 11:00 a.m., New York City time, five (5) Business Days before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on behalf of the Borrower and shall specify the following information: (i) whether the Borrowing then being requested is to be a Term Borrowing or a Revolving Credit Borrowing; (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed (which shall be an account that complies with the requirements of Section 2.02(b)); and (iv) the amount of such Borrowing; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. The Administrative Agent shall promptly advise the applicable Bridge Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Bridge Lender's portion of the requested Borrowing. 18 24 SECTION 2.04 Evidence of Debt, Repayment of Loans. (a) The Borrower unconditionally promises to pay to the Administrative Agent for the account of each Bridge Lender (i) the principal amount of each Term Loan of such Bridge Lender as provided in Section 2.11 and (ii) the then unpaid principal amount of each Revolving Loan on the Final Maturity Date. (b) On the date of any termination or reduction of the Revolving Credit Commitment pursuant to Section 2.08(b) hereof or elsewhere in this Agreement, the Borrower shall pay or prepay so much of the Revolving Loans as shall be necessary in order that the Availability equals or exceeds zero following such termination or reduction. (c) The Borrower shall make prepayments of the Revolving Credit Loans from time to time such that the Availability equals or exceeds zero at all times. (d) Each Bridge Lender shall maintain an account or accounts evidencing the Indebtedness of the Borrower to such Bridge Lender resulting from each Loan made by such Bridge Lender from time to time, including the amounts of principal and interest payable and paid such Bridge Lender from time to time under this Agreement. (e) The Administrative Agent shall maintain accounts in which it will 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 Borrower to each Bridge Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Subsidiary Guarantor and each Bridge Lender's share thereof. Notwithstanding any other provision of this Agreement, it is understood and agreed that each Loan made hereunder shall be deemed made for the account of the Borrower, and the Administrative Agent and the Bridge Lenders shall not have any obligation to maintain any accounts with respect to any Borrowing (or any portion thereof) made by the Borrower. (f) The entries made in the accounts maintained pursuant to paragraphs (b) and (e) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Bridge Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with their terms. (g) Notwithstanding any other provision of this Agreement, in the event any Bridge Lender shall request and receive a promissory note payable to such Bridge Lender and its permitted registered assigns, the interests represented by such note shall at all times be represented by one or more promissory notes payable to the payee named therein or its permitted registered assigns. 19 25 SECTION 2.05 Fees. (a) The Borrower agrees to pay to the Administrative Agent, for its own account, the administration fee, as agreed to by such parties, at the times and in the amounts specified therein (the "Administrative Agent Fees"). (b) The Borrower agrees to pay to each Bridge Lender on each Interest Payment Date a fee calculated on such Bridge Lender's Pro Rata Percentage of the average daily Additional Credit Exposure (excluding the portion thereof attributable to unpaid or unreimbursed Additional Credit Disbursements) during the preceding two quarters (or applicable shorter period) at a rate per annum equal to 1.25%, computed on the basis of actual number of days elapsed in a 360-day year. (c) All of the above fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent and Bridge Lenders, as applicable. Once paid, none of such fees shall be refundable under any circumstances. SECTION 2.06 Interest on Loans. (a) Subject to the provisions of Section 2.07, the Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Loan Rate in effect for such Borrowing. (b) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The Loan Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.07 Default Interest. If the Borrower shall default in the payment of the principal of, or interest on, any Loan or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document, the Borrower agrees to pay on demand from time to time interest, to the extent permitted by law, on such defaulted amount to but excluding the date of actual payment (after as well as before judgment) at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum. SECTION 2.08 Termination and Reduction of Commitments. (a) The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date. The Revolving Credit Commitments shall automatically terminate on the Final Maturity Date. (b) Upon at least three Business Days' prior irrevocable notice to the Administrative Agent given by telephone (promptly confirmed by written or telecopy notice), the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce the Revolving Credit Commitments; provided, however, that (i) each partial reduction of the Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and in a minimum 20 26 amount of $2,000,000 and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure at the time. (c) Each reduction in the Total Revolving Credit Commitment hereunder shall be made ratably among the Revolving Credit Lenders in accordance with their respective Revolving Credit Commitment. SECTION 2.09 Repayment of Term Borrowings. (a) The Borrower shall pay to the Administrative Agent, for the account of the Bridge Lenders, on the dates set forth below, or if any such date is not a Business Day, on the next succeeding Business Day (each such date being a "Term Loan Repayment Date"), a principal amount of the Term Loans equal to the amount set forth below for such date, as such amount may be adjusted from time to time pursuant to Sections 2.09(b), 2.10 and 2.11 (such amount, as adjusted, being called the "Term Loan Repayment Amount"), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment: Date Amount December 31, 1997 $5,000,000 December 31, 1998 5,000,000 December 31, 1999 6,000,000 December 31, 2000 7,000,000 December 31, 2001 8,000,000 December 31, 2002 9,000,000 (b) To the extent not previously paid, all Term Loans shall be due and payable on the Final Maturity Date, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment. (c) All repayments pursuant to this Section 2.09 shall be subject to Section 2.12, but shall otherwise be without premium or penalty. SECTION 2.10 Optional Prepayment. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days' prior notice to the Administrative Agent given by telephone (promptly confirmed by written or telecopy notice) before 11:00 a.m., New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $2,000,000. 21 27 (b) Optional prepayments of Term Loans shall be allocated pro rata between the then outstanding Term Loans and applied in the inverse order of the remaining scheduled installments of principal due in respect of the Term Loans under Section 2.09(a). (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowings by the amount stated therein on the date stated therein. All prepayments under this Section 2.10 shall be subject to Section 2.12 but otherwise without premium or penalty. SECTION 2.11 Mandatory Prepayments. (a) In the event of any termination of all the Revolving Credit Commitments, the Borrower shall repay or prepay all its outstanding Revolving Credit Borrowings on the date of such termination. In the event of any partial reduction of the Revolving Credit Commitments, then (i) at or prior to the effective date of such reduction, the Administrative Agent shall notify the Borrower and the Revolving Credit Lenders of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment after giving effect to such reduction or termination, then the Borrower shall, on the date of such reduction or termination, repay or prepay Revolving Credit Borrowings in an amount sufficient to eliminate such excess. (b) Not later than the third Business Day following the receipt of any Net Cash Proceeds from any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received with respect thereto to prepay outstanding Term Loans in accordance with Section 2.11(f). (c) In the event and on each occasion that an Equity Issuance occurs, the Borrower shall, substantially simultaneously with (and in any event not later than the third Business Day next following) the occurrence of such Equity Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay outstanding Term Loans in accordance with Section 2.11(f). (d) No later than the earlier of (i) 90 days after the end of each fiscal year of the Borrower commencing with the fiscal year ending on December 31, 1997, and (ii) the date on which the financial statements with respect to such fiscal year are delivered pursuant to Section 5.04(a), the Borrower shall prepay outstanding Term Loans in accordance with Section 2.11(f) in an aggregate principal amount equal to 75% of the Excess Cash Flow for such fiscal year. (e) In the event that the Borrower or any Subsidiary shall receive Net Cash Proceeds from the issuance of Indebtedness for money borrowed of the Borrower or any Subsidiary (other than Indebtedness for money borrowed permitted pursuant to Section 6.01), the Borrower shall, substantially simultaneously with (and in any event not later than the third Business Day next following) the receipt of such Net Cash Proceeds by such Loan Party or such Subsidiary, apply an 22 28 amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance with Section 2.11(f). (f) Subject to paragraph (h) below, mandatory prepayments of outstanding Term Loans under this Agreement shall be allocated pro rata between the then outstanding Term Loans, and applied in the inverse order of the remaining scheduled installments of principal due in respect of Term Loans under Section 2.09(a). (g) The Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.11, (i) a certificate signed by a Financial Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent reasonably practicable, at least three days prior written notice of such prepayment. Each notice of prepayment shall specify the prepayment date, the principal amount of each Loan (or portion thereof) to be prepaid and the amount, if any, to be deposited in the account or accounts designated by the Bridge Lenders from time to time. All prepayments of Borrowings under this Section 2.11 shall be subject to Section 2.11(h) and Section 2.12, but shall otherwise be without premium or penalty. (h) Amounts to be applied pursuant to this Section 2.11 to the prepayment of Term Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding Term Loans. Any amounts remaining after each such application shall, at the option of the Parent Borrower, be applied to repay Revolving Loans immediately. SECTION 2.12 Pro Rata Treatment. Each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, and each reduction of the Revolving Credit Commitments shall be allocated pro rata among the Bridge Lenders, in the case of principal and interest payments, in accordance with their respective applicable outstanding Loans and, in the case of all other payments, the Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Bridge Lender agrees that in computing such Bridge Lender's portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Bridge Lender's percentage of such Borrowing to the next higher or lower whole dollar amount. SECTION 2.13 Sharing of Setoffs. Each Bridge Lender agrees that if it shall, through the exercise of a right of lien, setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Bridge Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans or Additional Credit Disbursement as a result of which the unpaid principal portion of its Term Loans and Revolving Loans and participations held by such Bridge Lender in Additional Credit Disbursements shall be proportionately less than the unpaid principal portion of the Term Loans and Revolving 23 29 Loans and participations held by any other Bridge Lender, it shall be deemed simultaneously to have purchased from such other Bridge Lender at face value, and shall promptly pay to such other Bridge Lender the purchase price for, a participation or interest in the Term Loans and Revolving Loans and participations in Additional Credit Disbursements, as the case may be, of such other Bridge Lender, so that the aggregate unpaid principal amount of the Term Loans and Revolving Loans and participations in Additional Credit Disbursements held by each Bridge Lender shall be in the same proportion to the aggregate unpaid principal amount of all Term Loans and Revolving Loans and participations in Additional Credit Disbursements then outstanding as the principal amount of its Term Loans and Revolving Loans and interests in Additional Credit Disbursements prior to such exercise of lien, setoff or counterclaim or other event was to the principal amount of all Term Loans and Revolving Loans and interests in Additional Credit Disbursements outstanding prior to such exercise of lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.13 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Borrower expressly consents to the foregoing arrangements and agrees that any Bridge Lender holding a participation or interest in a Term Loan or Revolving Loan or Additional Credit Disbursement deemed to have been so purchased, to the fullest extent provided by law, may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Bridge Lender by reason thereof as fully as if such Bridge Lender had made a Loan directly to the Borrower in the amount of such participation. SECTION 2.14 Payments. (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any Additional Credit Disbursement or any Fees or other amounts) hereunder and under any other Loan Document not later than 12:00 (noon), New York City time, on the date when due in immediately available dollars, without setoff or counterclaim. Each such payment shall be made to each of the Bridge Lenders, pro rata, or to the Administrative Agent, if any, at the offices or to the accounts indicated to the Borrower from time to time. (b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may 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, if applicable. SECTION 2.15 Additional Credit Exposure. (a) Facility. Masco Tech has prior to the Closing Date, issued Guarantees and incurred Indebtedness in respect to (i) Designated Guarantee Obligations and (ii) Designated Letters of Credit identified in Schedule 2.15 hereto, and subject to the terms and conditions and relying upon the representations and warranties herein set forth, MascoTech may, in its sole discretion, from time 24 30 to time issue Guarantees or incur Indebtedness in respect of (x) Designated Guarantee Obligations and (y) Designated Letters of Credit at any time and from time to time on and after the Closing Date and until the earlier of the Final Maturity Date and the termination of the Revolving Credit Commitments in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in the Aggregate Revolving Credit Exposure, after giving effect to any Additional Credit Exposure, exceeding the Total Revolving Credit Commitment. (b) Participations. MascoTech shall give prompt written notice to the Administrative Agent and each other Revolving Credit Lender of the occurrence of (a) any Additional Credit Event and (b) any Additional Credit Disbursement. Such notice shall specify the aggregate principal or face amount of the Additional Credit Event in which each such other Revolving Credit Lender will participate. On the Closing Date, each other Revolving Credit Lender will acquire a Pro Rata Percentage participation in all Additional Credit Exposures identified on Schedule 2.15 hereto. Automatically and contemporaneously with each Additional Credit Event occurring on or after the Closing Date, each such other Revolving Credit Lender will acquire a Pro Rata Percentage participation in all of the Additional Credit Exposure represented by each Additional Credit Event. In furtherance of the foregoing, each such other Revolving Credit Lender will hereby absolutely and unconditionally agree, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of MascoTech, such other Revolving Credit Lender's Pro Rata Percentage of each Additional Credit Disbursement. Each such other Revolving Credit Lender acknowledges and agrees that its obligation to acquire a participation in each Additional Credit Exposure pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each payment made in respect of each Additional Credit Disbursement shall be made without any offset, abatement, withholding or reduction whatsoever. Each such other Revolving Credit Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(b) with respect to Loans made by such other Revolving Credit Lender (and Section 2.02(b) shall apply, mutatis mutandis, to the payment obligations of such other Revolving Credit Lender) and the Administrative Agent shall promptly pay to MascoTech the amounts so received by it from such other Revolving Credit Lender. Any amounts received by MascoTech from the Borrower (or other party on behalf of the Borrower) in respect of an Additional Credit Disbursement after receipt by MascoTech of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to such other Revolving Credit Lenders that shall have made their payments pursuant to this paragraph and to MascoTech, as their interests may appear. In furtherance of the foregoing, each such other Revolving Credit Lender agrees that (i) the Administrative Agent may (y) set off against the fees payable to such Revolving Credit Lender under Section 2.05(b) such Revolving Credit Lender's Pro Rata Percentage of the fees paid, and out-of-pocket costs incurred, by MascoTech pursuant to its Guarantees in respect of Designated Letters of Credit, and (z) pay such set off amount to MascoTech and (ii) it shall participate in and be obligated to pay, in accordance with its Pro Rata Percentage, all such fees and costs to the extent such Revolving Credit lender does not fully pay its Pro Rata Percentage of such fees and costs pursuant to clause (i) above. 25 31 ARTICLE III Representations and Warranties The Borrower represents and warrants to the Bridge Lenders that: SECTION 3.01 Organization; Powers. Each of the Borrower and the Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where the nature of its business so requires and (d) has the corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated hereby to which it is or will be a party and, in the case of the Borrower, to borrow hereunder, except in each case where the failure to satisfy any of the above could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.02 Authorization. The execution, delivery and performance by each Loan Party of each of the Loan Documents to which such Loan Party is a party, and in the case of the Borrower, the borrowings hereunder and the Acquisition and the other transactions contemplated hereby and by the Acquisition Agreement (collectively, the "Transactions") (a) have been duly authorized by all requisite corporate and, if required, stockholder action on the part of such Loan Party and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C) any provision of any indenture, agreement or other instrument to which the Borrower or any Subsidiary is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument, except where any such conflict, violation, breach, default or right referred to in clause (i) or (ii), individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary (other than any Lien created hereunder or under the Security Documents). SECTION 3.03 Enforceability. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its respective terms, subject (a) as to enforcement of remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and 26 32 other similar laws affecting the enforcement of creditors' rights generally, from time to time in effect and (b) to general principles of equity (whether enforcement is sought by a proceeding in equity or at law) . SECTION 3.04 Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions or the other transactions contemplated hereby, except for (a) the filing of appropriate Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) such as have been made or obtained and are in full force and effect, (c) filings by the Borrower pursuant to the Small Business Investment Act of 1958, as amended, and (d) such actions, consents, approvals and filings the failure of which to obtain or make could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.05 No Material Adverse Change. There has been no material adverse change in the business, assets, operations, properties, financial condition, contingent liabilities or material agreements of MSX and/or the Limited Companies, taken as a whole, since the December 31 Balance Sheet (as such terms are defined in the Acquisition Agreement). SECTION 3.06 Title to Properties; Possession Under Leases. (a) Each of the Borrower and the Subsidiaries has good title to (and with respect to real property good and marketable title to), or valid leasehold interests in, all its material properties and assets (including all properties listed on Schedule 3.16(b)), except where lack of such title or valid leasehold interest does not materially interfere with its ability to conduct its business as currently conducted. All interests of such persons in such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02. (b) Except as set forth on Schedule 3.06(b), each of the Borrower and the Subsidiaries has complied with all material obligations under all material leases to which it is a party and all such leases are in full force and effect. Each of the Borrower and the Subsidiaries enjoys peaceful and undisturbed possession under all such material leases, except where failure to enjoy such possession does not materially interfere with its ability to conduct its business as currently conducted. SECTION 3.07 Subsidiaries. (a) Schedule 3.07 sets forth as of the Closing Date (after giving effect to the Transactions) a list of all Subsidiaries and the percentage ownership interest of the Borrower and any other person therein. The shares of Capital Stock or other ownership interests so indicated on Schedule 3.07 are fully paid and nonassessable and are owned, as of the Closing Date, by the Borrower or a subsidiary of the Borrower, as applicable, directly or indirectly, free and clear of all Liens (other than Liens permitted under the Loan Documents). The Borrower owns directly or 27 33 indirectly 100% of the issued and outstanding shares of Capital Stock of each Subsidiary Guarantor. (b) As of the Closing Date, except as set forth in Schedule 3.07, none of the Subsidiaries is subject to a consensual encumbrance or restriction that limits such Subsidiary's ability to make an Upstream Payment. SECTION 3.08 Litigation; Compliance with Laws. (a) Except as set forth on Schedule 3.08, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or any business, property or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) as to which there is a reasonable likelihood of an adverse determination and that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. (b) None of the Borrower or any of the Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits), or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect. SECTION 3.09 Use of Proceeds. The Borrower will use the proceeds of the Loans only for the purposes specified in the preamble to this Agreement. No part of the proceeds of the Loans will be used directly or indirectly for any purpose which would violate or be inconsistent with Regulations G, T or X of the Board of Governors of the Federal System of the United States of America. SECTION 3.10 Tax Returns. Each of the Borrower and the Subsidiaries has filed or caused to be filed all Federal, state or other material tax returns required to have been filed by it and has paid or caused to be paid all taxes due and payable by it and all assessments received by it to the extent that such failure to file or nonpayment could reasonably be expected to result in a Material Adverse Effect. SECTION 3.11 No Material Misstatements. None of the information, reports, financial statements, exhibits or schedules, taken as a whole, furnished by or on behalf of the Borrower to the Administrative Agent or any Bridge Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading, provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, 28 34 the Borrower represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule. SECTION 3.12 Employee Benefit Plans. Except to the extent failure to comply could not reasonably be expected to result in a Material Adverse Effect, each of the Borrower and the Subsidiaries is in compliance with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. The Borrower is not aware of any circumstances or event with respect to any employee benefit plan maintained or contributed to by an ERISA Affiliate that could result in a liability that could reasonably be expected to have a Material Adverse Effect. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.13 Environmental Matters. Except as set forth on Schedule 3.13: (a) The properties owned or operated by the Borrower and the Subsidiaries (the "Properties") do not contain any Hazardous Materials in amounts or concentrations that (i) constitute, or constituted a violation of, (ii) require Remedial Action under, or (iii) could reasonably be expected to give rise to liability under, Environmental Laws, which violations, Remedial Actions and liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; (b) The Properties and all operations of the Borrower and the Subsidiaries are in compliance, and in the last three years have been in compliance, with all Environmental Laws and all necessary Environmental Permits have been obtained and are in effect, except to the extent that such non-compliance or failure to obtain any necessary permits, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect. (c) There have been no Releases or threatened Releases at, from, under or proximate to the Properties or otherwise in connection with the operations of the Borrower or the Subsidiaries, which Releases or threatened Releases, in the aggregate, could reasonably be expected to result in a Material Adverse Effect. (d) None of the Borrower or any of the Subsidiaries has received any notice of an Environmental Claim in connection with the Properties or the operations of the Borrower or the Subsidiaries or with regard to any person whose liabilities for environmental matters the Borrower or the Subsidiaries has retained or assumed, in whole or in part, contractually, by operation of law or otherwise, which, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; and (e) Hazardous Materials have not been transported from the Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Properties in a manner that could reasonably be expected to give rise to liability under any Environmental Law, nor have the Borrower or the Subsidiaries retained or assumed any liability, 29 35 contractually, by operation of law or otherwise, with respect to the generation, treatment, storage or disposal of Hazardous Materials, in each case, which transportation, generation, treatment, storage or disposal, or retained or assumed liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.14 Insurance. As of the date hereof and the Closing Date, all insurance maintained by the Borrower and the Subsidiaries is in full force and effect and all premiums that have become due and payable have been duly paid. The Borrower and the Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice. SECTION 3.15 Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Pledge Agreement) and, when such Collateral is delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgors thereunder in such Collateral, in each case prior and superior in right to any other person. (b) The Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule 3 to the Perfection Certificate (as defined in the Security Agreement), the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, as defined in the Security Agreement) that may be perfected by filing, recording or registering a financing statement under the Uniform Commercial Code as in effect in the United States (or any political subdivision thereof) and its territories and possessions, in each case prior and superior in right to any other Lien on any Collateral other than Liens expressly permitted by Section 6.02. SECTION 3.16 Location of Real Property and Leased Premises. (a) As of the Closing Date, none of the Borrower or any Subsidiary owns any real property. (b) Schedule 3.16(b) lists completely and correctly in all material respects as of the Closing Date the address of all real property leased by the Borrower and the Subsidiaries. SECTION 3.17 Labor Matters. As of the date hereof and the Closing Date, there are no organizational efforts, representation campaigns, elections or proceedings, demands for recognition or collective bargaining, strikes, lock-outs, work stoppages or slowdowns presently 30 36 being made, undertaken or, to the knowledge of the Borrower or any Subsidiary, threatened involving any employees of the Borrower or any Subsidiary. The hours worked by and payments made to employees of the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters in any case where a Material Adverse Effect could reasonably be expected to occur as a result of such violations. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound. ARTICLE IV Conditions of Lending The obligations of the Bridge Lenders to make Loans hereunder are subject to the satisfaction of the following conditions: SECTION 4.01 All Credit Events. On the date of each Borrowing (each such event being called a "Credit Event"): (a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03). (b) The representations and warranties set forth in Article III hereof (other than these set forth in Sections 3.05 and 3.08 (a)) shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects on such earlier date). (c) Each Loan Party shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Credit Event, no Event of Default or Default shall have occurred and be continuing. Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower on the date of such Credit Event as to the matters specified in paragraphs (b) (except as aforesaid) and (c) of this Section 4.01. 31 37 SECTION 4.02 First Credit Event. On the Closing Date: (a) All legal matters incident to this Agreement, the Borrowings and extensions of credit hereunder and the other Loan Documents shall be reasonably satisfactory to the Bridge Lenders. (b) The Bridge Lenders shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection therewith on behalf of such Loan Party; and (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (ii) above. (c) The Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document. (d) The Pledge Agreement shall have been duly executed by the Loan Parties party thereto and delivered to the Bridge Lenders, and all the outstanding Capital Stock of the Subsidiaries shall have been duly and validly pledged thereunder to the Collateral Agent for the ratable benefit of the Secured Parties and certificates representing such shares, accompanied by instruments of transfer or stock powers endorsed in blank, shall be in the actual possession of the Collateral Agent, provided that (i) neither the Borrower nor any Domestic Subsidiary shall be required to pledge more than 65% of the Capital Stock of any Foreign Subsidiary and (ii) no Foreign Subsidiary shall be required to pledge the Capital Stock of any of its Subsidiaries. (e) The Security Agreement shall have been duly executed by the Loan Parties party thereto and shall have been delivered to the Bridge Lenders and each document (including each Uniform Commercial Code financing statement) required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Collateral 32 38 Agent for the benefit of the Secured Parties a valid, legal and perfected first-priority security interest in and lien on the Collateral described in such agreement, subject to Liens permitted by Section 6.02, shall have been delivered to the Collateral Agent. (f) The Bridge Lenders shall have received the results of a search of the Uniform Commercial Code (or equivalent filings) filings made with respect to the Loan Parties in the states (or other jurisdictions) in which the chief executive office of each such person is located, any offices of such persons in which records have been kept relating to Accounts (as defined in the Security Agreement) and the other jurisdictions in which Uniform Commercial Code filings (or equivalent filings) are to be made pursuant to the preceding paragraph, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Bridge Lenders that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.02 or have been released. (g) The Bridge Lenders shall have received a Perfection Certificate with respect to the Loan Parties dated the Closing Date and duly executed by a Responsible Officer of the Borrower. (h) The Subsidiary Guarantee Agreement shall have been duly executed by the Loan Parties party thereto and shall have been delivered to the Bridge Lenders. (i) The Collateral Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement (in the case of each property or boiler policy) and to name the Collateral Agent as additional insured, in form and substance reasonably satisfactory to the Collateral Agent. (j) The Acquisition shall have been consummated or shall be consummated simultaneously with the first Credit Event in accordance with applicable law, in accordance with the Acquisition Agreement. (k) The Equity Contribution shall have been made prior to or simultaneously with the first Credit Event. (l) The Senior Subordinated Note and related documents shall be duly executed and delivered by all parties in the form substantially as set forth on Exhibit E attached hereto. (m) All governmental consents and approvals and all material third party consents shall have been obtained with respect to the Transactions and the other transactions contemplated hereby to the extent required, all applicable appeal periods shall have expired and there shall be no governmental or judicial action, actual or threatened, that has or could have a reasonable likelihood 33 39 ARTICLE V Affirmative Covenants of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby. The Borrower covenants and agrees with each Bridge Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full, unless the Required Bridge Lenders shall otherwise consent in writing, the Borrower will, and will cause each of the Subsidiaries to: SECTION 5.01 Existence; Business and Properties; Compliance with Laws. (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05. (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; comply in all material respects with all applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted except where noncompliance could not reasonably be expected to result in a Material Adverse Effect; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition (reasonable wear and tear excepted) and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted in all material respects at all times. SECTION 5.02 Insurance. (a) Keep its insurable properties adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including commercial general liability insurance against claims for bodily injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and maintain such other insurance as may be required by law. (b) In connection with the covenants set forth in this Section 5.02, it is understood and agreed that: 34 40 (i) none of the Collateral Agent or any Bridge Lender, or their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.02, it being understood that (A) the Borrower and the other Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) the Borrower shall use reasonable efforts to cause such insurance policies to waive the insurer's rights of subrogation against the Collateral Agent and the Bridge Lenders or their agents or employees. If, however, any such insurance policy does not provide waiver of subrogation rights against such parties, as required above, then the Borrower hereby agrees, to the extent permitted by law, to waive its right of recovery, if any, against the Collateral Agent and the Bridge Lenders and their agents and employees in respect of any such loss or damage; and (ii) the designation of any form, type or amount of insurance coverage by the Collateral Agent under this Section 5.02 shall in no event be deemed a representation, warranty or advice by the Collateral Agent that such insurance is adequate for the purposes of the business of the Borrower and the Subsidiaries or the protection of their properties. SECTION 5.03 Obligations and Taxes. Pay its Indebtedness and other monetary obligations promptly and in accordance with their terms and pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before such taxes, assessments and governmental charges shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to (i) any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien and (ii) any Indebtedness or other obligation or any tax, assessment, charge, levy or claims, the failure to pay and discharge when due which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. SECTION 5.04 Financial Statements, Reports, etc. Furnish to each Bridge Lender: (a) within 90 days after the end of each fiscal year, its consolidated balance sheet and related statements of income, stockholders' equity and cash flows showing the consolidated financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal year and the consolidated results of its operations and the operations of such subsidiaries during such year (and showing, on a comparative basis, the figures for the previous year), all audited by Coopers & Lybrand or other independent public accountants of recognized national standing acceptable to the Required Bridge Lenders and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such consolidated financial statements fairly 35 41 present in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, its unaudited consolidated balance sheet and related statements of income, stockholders' equity and cash flows showing the consolidated financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal quarter and the consolidated results of its operations and the operations of such subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year (and showing, on a comparative basis, such information as of and for the corresponding dates and periods of the preceding fiscal year), all certified by a Financial Officer of the Borrower as fairly presenting in all material respects the consolidated financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP (except for the absence of footnote disclosure) consistently applied, subject to year-end audit adjustments; (c) within 30 days after the end of each month (other than the last month of any fiscal quarter), its unaudited consolidated balance sheet and related statements of income, stockholders' equity and cash flows, showing the consolidated financial condition of the Borrower and its consolidated subsidiaries as of the close of such month and the consolidated results of its operations and the operations of such subsidiaries during such month and the then-elapsed portion of the fiscal year; (d) concurrently with any delivery of financial statements under sub-paragraph (a) or (b) above, a certificate of the Financial Officer certifying such statements and (i) certifying that no Event of Default or Default has occurred or, if an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, and (ii) setting forth computations in reasonable detail satisfactory to the Bridge Lenders demonstrating compliance (A) with the covenants contained in Sections 6.09, 6.10 and 6.11 and (B) with the maximum limitation amounts contained in the several clauses in Sections 6.01, 6.04, 6.05 and 6.06; and (e) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, in each case as any Bridge Lender may reasonably request. SECTION 5.05 Litigation and Other Notices. Furnish to each Bridge Lender written notice of the following promptly after (and, in any event, no later than five days after) any Responsible Officer of the Borrower obtains knowledge thereof: (a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; and 36 42 (b) the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect. SECTION 5.06 Employee Benefits. (a) Comply in all material respects with the applicable provisions of ERISA and the Code to the extent failure to comply could reasonably be expected to result in a Material Adverse Effect and (b) furnish to the Administrative Agent promptly, and in any event within 10 days after any Responsible Officer of the Borrower knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any Subsidiary in an aggregate amount exceeding $5,000,000, a statement of a Financial Officer of the Borrower setting forth details as to such ERISA Event and the action, if any, that the Borrower has taken or proposes to take with respect thereto. SECTION 5.07 Maintaining Records; Access to Properties and Inspections. Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law are made in relation to its business and activities. Each Loan Party and each Subsidiary (a) will permit any representatives designated by the Required Bridge Lenders to visit and inspect the financial records and the properties of the Borrower or any Subsidiary at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and (b) will permit any representatives designated by the Required Bridge Lenders to discuss the affairs, finances and condition of the Borrower or any Subsidiary with the officers thereof and independent accountants therefor; provided, however, that the number of visits pursuant to clause (a) above in any year shall not exceed two, unless (i) a Default or Event of Default shall have occurred and be continuing or (ii) the Collateral Agent, or any Bridge Lender, determines in good faith that any material event or material change has occurred with respect to the Borrower and the Subsidiaries and that as a result of such event or change more frequent visits are necessary or prudent. SECTION 5.08 Use of Proceeds. Use the proceeds of the Loans only for the purposes set forth in the preamble to this Agreement. SECTION 5.09 Compliance with Environmental Laws. Comply, and cause all lessees and other persons occupying its Properties to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its operations and Properties and the operations conducted thereon; obtain and renew all material Environmental Permits necessary for its Properties; and conduct any Remedial Action in accordance with Environmental Laws, except where noncompliance with Environmental Laws and Environmental Permits or the failure to obtain or renew such Environmental Permits or conduct such Remedial Action, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect. 37 43 SECTION 5.10 Further Assurances. Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing Uniform Commercial Code and other financing statements) that may be required under applicable law, or that the Required Bridge Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority of the security interests created or intended to be created by the Security Documents (subject to Liens permitted by Section 6.02). The Borrower will cause any subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary Guarantee Agreement and each applicable Security Document in favor of the Collateral Agent. In addition, from time to time, the Borrower will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as the Collateral Agent or the Required Bridge Lenders shall designate (it being understood that it is the intent of the parties that the Obligations shall be secured by, among other things, substantially all the assets of the Borrower and the Domestic Subsidiaries, including real and other properties acquired subsequent to the Closing Date). Such security interests and Liens will be created under the Security Documents and other security agreements, and other instruments and documents in form and substance satisfactory to the Bridge Lenders, and the Borrower shall deliver or cause to be delivered to the Bridge Lenders all such instruments and documents (including legal opinions, title insurance policies, lien searches and surveys) as the Bridge Lenders shall reasonably request to evidence compliance with this Section. The Borrower agrees to provide such evidence as the Bridge Lenders shall reasonably request as to the perfection and priority status of each such security interest and Lien. Each Loan Party agrees promptly to notify the Bridge Lender if any material portion of the Collateral owned or held by such Loan Party is damaged or destroyed. ARTICLE VI Negative Covenants The Borrower covenants and agrees with each Bridge Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, any Fee and any other expense or amount payable under any Loan Document have been paid in full, unless the Required Bridge Lenders shall otherwise consent in writing, the Borrower will not, and will neither cause nor permit any of the Subsidiaries to: SECTION 6.01 Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except: (a) Indebtedness in respect of NBD Revolving Loans and other Indebtedness existing on the date hereof and set forth on Schedule 6.01; (b) Indebtedness created hereunder and under the other Loan Documents; 38 44 (c) (i) in the case of the Borrower, the Senior Subordinated Note and the Debentures and (ii) in the case of the Subsidiary Guarantors, the Guarantees guaranteeing the Senior Subordinated Note; (d) Permitted Foreign Indebtedness and the aggregate outstanding amount of Permitted Foreign Investments made pursuant to Section 6.04(i); (e) intercompany loans and letters of credit and guarantees in support of Indebtedness and advances permitted by Section 6.04(b), (h), (i) and (k). (f) Indebtedness consisting of purchase money Indebtedness (including purchase money Indebtedness that is in existence with respect to any asset or other property at the time such asset or other property is acquired), industrial revenue bonds or Capital Lease Obligations incurred in the ordinary course of business after the Closing Date to finance Capital Expenditures, provided that (i) the Indebtedness incurred shall not exceed the purchase price of the assets financed thereby and (ii) the aggregate principal amount of any Indebtedness or Capital Lease Obligations incurred during each fiscal year pursuant to this paragraph (g) shall not exceed $10,000,000; (g) Indebtedness of the Borrower and the Subsidiaries owed to (including obligations in respect of letters of credit for the benefit of) any person (i) providing worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance to any Loan Party or (ii) supporting real estate lease payments of any Loan Party, or pursuant to reimbursement or indemnification obligations to such person, in each case incurred in the ordinary course of business; (h) Indebtedness of the Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations and trade related letters of credit, in each case provided in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business; (i) Indebtedness issued by the Borrower, in lieu of the payment of cash, in connection with the purchase or redemption of Capital Stock held by officers, directors or employees (or Permitted Transferees (as such term is defined in the Stockholders' Agreement) of any such person) of the Borrower or any Subsidiary, subject to the proviso in Section 6.06(a)(iv); (j) Indebtedness incurred pursuant to any sale and lease-back transaction made in accordance with Section 4.12; (k) unsecured Indebtedness in addition to that permitted by clauses (a) through (j) above in an aggregate principal amount not to exceed $1,000,000 at any time outstanding; and (l) extensions, renewals or refinancings of Indebtedness under paragraphs (a) and (g) (subject to the proviso contained in such clause (g)) so long as (A) such Indebtedness 39 45 ("Refinancing Indebtedness") is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being extended, renewed or refinanced plus the amount of any premiums required to be paid thereon and fees and expenses associated therewith, (B) such Refinancing Indebtedness has a later or equal final maturity and a longer or equal weighted average life than the Indebtedness being extended, renewed or refinanced, (C) the interest rate applicable to such Refinancing Indebtedness is a market interest rate (as determined in good faith by the Board of Directors of the Borrower) as of the time of such extension, renewal or refinancing, (D) if the Indebtedness being extended, renewed or refinanced is subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations to the same extent as the Indebtedness being extended, renewed or refinanced and (E) at the time and after giving effect to such extension, renewal or refinancing, no Default or Event of Default shall have occurred and be continuing. SECTION 6.02 Liens. Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except: (a) Liens on property or assets of the Borrower and the Subsidiaries existing on the date hereof and set forth on Schedule 6.02(a), provided that such Liens shall secure only those obligations which they secure on the date hereof (and extensions, renewals and refinancings of such obligations permitted by Section 6.01); (b) any Lien created under the Loan Documents; (c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary, provided that (i) such Lien is not created in contemplation of or in connection with such acquisition and (ii) such Lien does not apply to any other property or assets of the Borrower or any Subsidiary; (d) Liens for taxes, assessments, governmental charges and levies not yet due or which are being contested or are unpaid in compliance with Section 5.03; (e) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens arising in the ordinary course of business and securing obligations that are not due and payable or which are being contested in compliance with Section 5.03; (f) Liens of landlords or of mortgagees of landlords arising by operation of law, provided that the rental payments secured thereby are not yet due and payable; (g) pledges and deposits made in the ordinary course of business in compliance with workmen's compensation, unemployment insurance and other social security or similar laws or regulations; 40 46 (h) pledges and deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (i) zoning restrictions, easements, rights-of-way, minor defects or irregularities in title, restrictions on use of real property and other similar encumbrances which, in the aggregate, do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or the Subsidiaries; (j) purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Borrower or any Subsidiary, provided that (i) such security interests secure Indebtedness permitted by Section 6.01(f), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 120 days after such acquisition (or construction) or are incurred to extend, renew or refinance such security interests and Indebtedness incurred within such 120- day period, (iii) the Indebtedness secured thereby does not exceed the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and (iv) such security interests do not apply to any other property or assets of the Borrower or any Subsidiary; (k) attachment or judgment Liens securing judgments, unless the aggregate amount of such judgments shall (A) exceed $500,000 (except to the extent the Administrative Agent shall have received satisfactory evidence that such judgments are covered by insurance) and (B) remain undischarged for a period of more than 30 consecutive days during which execution shall not be effectively stayed; (l) Liens to secure Capital Lease Obligations, industrial revenue bonds or Indebtedness permitted by Section 6.01(f), provided that such Liens do not extend to any property or assets of the Borrower or any Subsidiary other than the property or assets financed thereby; (m) UCC filings that relate to the preservation of claims in respect of interests in property subject to operating leases (it being agreed that the permissiveness of such filing hereunder shall not be considered a waiver of any claim that the Bridge Lenders or the Collateral Agent may have on the property to which such interest relates); (n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods in the ordinary course of business; and (o) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower or any of the Subsidiaries in the ordinary course of business. 41 47 SECTION 6.03 Intentionally Omitted. SECTION 6.04 Investments, Loans and Advances. Purchase, hold or acquire any Capital Stock, evidences of Indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other person, except: (a) investments by the Borrower or any Subsidiary existing on the Closing Date in the Capital Stock of any Subsidiary; (b) investments, loans or advances made by (i) any Subsidiary in or to the Borrower or (ii) the Borrower or any Subsidiary in or to the Borrower or any other Subsidiary; (c) Permitted Investments, and purchases and repurchases of Capital Stock pursuant to Article IV, Section 2.5 or Section 2.6 of the Stockholders' Agreement; (d) investments consisting of non-cash consideration received in connection with a sale of assets permitted by Section 6.05; (e) investments arising from transactions by any Loan Party or any of the Subsidiaries with customers or suppliers (including Affiliates to the extent permitted by Section 6.07) in the ordinary course of business, including endorsements of negotiable instruments and debt obligations and other investments received in connection with the bankruptcy or reorganization of customers and suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers, arising in the ordinary course of business, and in the exercise of the reasonable business judgment of such Borrower or such Subsidiary; (f) advances not exceeding $250,000 in the aggregate outstanding at any time to employees made to cover payroll, travel and similar expenses that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP and that are made in the ordinary course of business; (g) loans or advances to employees made in the ordinary course of business not exceeding $250,000 in the aggregate outstanding at any time; (h) investments, loans or advances made by any Foreign Subsidiary in or to any other Foreign Subsidiary; (i) Permitted Foreign Investments in APX-Brazil (as such term is defined in the Acquisition Agreement) not to exceed $3,000,000 in any fiscal year of the Borrower; (j) Capital Expenditures and other purchases permitted hereunder; 42 48 (k) investments, loans and advances existing on the date hereof and as set forth on Schedule 6.04(k) and renewals, replacements and extensions thereof, provided that the amount of any such renewed, replaced or extended investment, loan or advance shall be for an amount no greater than the amount of the investment, loan or advance being renewed or extended; (l) investments, loans and advances in or to Joint Ventures not exceeding in the aggregate $1,000,000 at any time outstanding; and (m) investments, loans or advances in addition to those permitted by clauses (a) through (l) above not exceeding in the aggregate $1,000,000 at any time outstanding. SECTION 6.05 Mergers, Consolidations and Sales of Assets. Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any of its assets (whether now owned or hereafter acquired) or any Capital Stock of any Subsidiary, except that: (a) the Borrower and any Subsidiary may sell inventory and Permitted Investments and sell obsolete or worn-out assets in the ordinary course of business; (b) if at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing, (i) any wholly owned subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any wholly owned subsidiary may merge into or consolidate with any other wholly owned Domestic Subsidiary in a transaction in which the surviving entity is a wholly owned Domestic Subsidiary; (iii) any 90%-Owned Foreign Subsidiary may merge into any other 90%-Owned Foreign Subsidiary in a transaction in which the surviving entity is a 90%-Owned Foreign Subsidiary and no person other than the Borrower, a wholly owned Domestic Subsidiary or a 90%-Owned Foreign Subsidiary receives any consideration other than interests in the surviving entity to any applicable minority interest holder not exceeding the proportionate interests of such minority interest holder in the applicable Subsidiary and (iv) any direct wholly owned subsidiary of any Foreign Subsidiary may merge into such Foreign Subsidiary or into another direct wholly owned subsidiary of such Foreign Subsidiary so long as no person other than such Foreign Subsidiary receives any consideration; (c) (i) any Subsidiary Guarantor or any Subsidiary may sell, transfer, lease or otherwise dispose of any of its assets to any Loan Party, (ii) any 90%-Owned Foreign Subsidiary may sell, transfer, lease or otherwise dispose of any of its assets to any 90%-Owned Foreign Subsidiary and (iii) any direct wholly owned subsidiary of any Foreign Subsidiary may sell, transfer, lease or otherwise dispose of any of its assets to such Foreign Subsidiary or another wholly owned subsidiary of such Foreign Subsidiary; (d) any sale and lease-back transaction may be effected; 43 49 (e) any Loan Party or any Subsidiary may sell any assets, provided that (i) the aggregate fair market value of all such assets sold pursuant to this clause (e) shall not exceed $1,000,000 in any fiscal year and (ii) within 60 days after any such asset sale, such Loan Party or Subsidiary shall apply the Net Cash Proceeds thereof to purchase assets used in the business of such Loan Party or Subsidiary or to make an investment in another Loan Party that within such 60-day period uses the proceeds of such investment to purchase assets used in the business of such other Loan Party; (f) any Loan Party or any Subsidiary may lease or sublease properties in which it has interests or lease any other property in the ordinary course of business; and (g) a Foreign Subsidiary may issue (i) any director qualifying shares and (ii) its Capital Stock (A) to the extent it is required to do so pursuant to local ownership laws in the applicable foreign country and (B) to the management of such Foreign Subsidiary under any employee stock option, stock purchase, stock grant or other similar incentive or employee benefit plan in existence from time to time. provided, however, that any sale, transfer or other disposition of assets or stock otherwise permitted by this Section 6.05 (other than pursuant to clauses (a), (b) and (c) above) shall not be permitted unless (A) such sale, transfer or other disposition is for consideration at least 80% (or 100% in the case of lease payments) of which is cash and (B) such consideration is at least equal to the fair market value of the assets sold, transferred or disposed of (as determined in good faith by the board of directors of the Borrower) and provided, further that for purposes of the immediately preceding proviso, (i) any proceeds from such sale used to pay the outstanding principal amount of, premium or penalty, if any, interest and other amounts on any Indebtedness required to be repaid under the terms thereof or by applicable law as a result of such sale, transfer or other disposition and (ii) in the case of a sale of a distinct business unit that is structured as a sale of assets, the assumption of liabilities (other than Indebtedness) of such business unit by the purchaser thereof shall, in each case, be deemed cash. SECTION 6.06 Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its Capital Stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire for value) any shares of any class of its Capital Stock or set aside any amount for any such purpose; provided, however, that: (i) any Subsidiary may declare and pay dividends to, repurchase its Capital Stock from, or make other distributions to, the Borrower or any of its wholly owned Subsidiary (or, in the case of non-wholly owned Subsidiaries, to or from the Borrower or any Subsidiary and each other owner of Capital Stock of such Subsidiary on a pro rata basis (or more favorable 44 50 basis from the perspective of the Borrower or such Subsidiary) based on their relative ownership interests); (ii) the Borrower may declare and pay dividends solely in shares of Capital Stock (other than Disqualified Stock) of the Borrower and may exchange any shares of its Capital Stock for other shares of its Capital Stock; (iii) (A) the Borrower or a Subsidiary may purchase or redeem, and the Borrower may make payments of principal and interest on Indebtedness issued pursuant to Section 6.01(i) to purchase or redeem, shares of Capital Stock (or options or warrants in respect of such shares) of the Borrower or any Subsidiary (including related stock appreciation rights or similar securities) pursuant to Article IV, Section 2.5 or Section 2.6 of the Stockholders' Agreement and (B) any Subsidiary may declare and pay dividends or make other distributions to the Borrower the proceeds of which are to be used by the Borrower pursuant to clause (A); (iv) the Borrower shall be permitted to issue Debentures to any person in exchange for shares of Series A Preferred Stock of Holdings in accordance with the articles of incorporation of Holdings if no Default or Event of Default shall have occurred and be continuing. (b) Permit its subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such subsidiary to (i) pay any dividends or make any other distributions on its Capital Stock or any other equity interest or (ii) make or repay any loans or advances to the Borrower or the parent of such subsidiary (subclauses (i) and (ii) are collectively referred to as an "Upstream Payment") other than encumbrances and restrictions: (A) pursuant to the Loan Documents or the Senior Subordinated Note documents; (B) existing under, or by reason of, applicable law; (C) contained in any debt instrument relating to a person acquired after the date hereof, provided that (x) such instrument was in existence at the time of such acquisition and was not created in contemplation of or in connection with such acquisition, (y) the officers of the Borrower reasonably believe at the time of such acquisition that the terms of such instrument will not encumber or restrict the ability of such acquired person to make an Upstream Payment and (z) such instrument contains no express encumbrances or restrictions on the ability of such acquired person to make an Upstream Payment, provided that such instrument contains no express encumbrances or restrictions on the ability of the applicable obligor thereon to make an Upstream Payment; 45 51 (D) contained in or required by Permitted Foreign Indebtedness; and (E) contained in agreements for Asset Sales permitted under Section 6.05. SECTION 6.07 Transactions with Affiliates. Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except that the Borrower or any Subsidiary may engage in any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties; provided, however, that the foregoing restriction shall not apply to (i) any transactions expressly permitted by this Agreement, including those permitted by Section 6.06, (ii) transactions among Foreign Subsidiaries, (iii) transactions pursuant to agreements entered into or in effect on the Closing Date and set forth on Schedule 6.07, including amendments thereto entered into after the Closing Date, provided that the terms of any such amendment are not, in the aggregate, less favorable to the Bridge Lenders than the terms of such agreement prior to such amendment or (iv) any transactions among the Loan Parties. SECTION 6.08 Other Indebtedness and Agreements. (a) (i) Make any distribution, whether in cash, property, securities or a combination thereof, other than scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or offer or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any of the Senior Subordinated Note, the Debentures or any other Indebtedness for borrowed money (other than Indebtedness under the Loan Documents and Indebtedness incurred pursuant to Section 6.01(a), (d), (e), (f), (g), (h), (j) or (k) or any Refinancing Indebtedness in respect thereof) of any Loan Party or any Subsidiary, (ii) make any payment or prepayment of any such Indebtedness that would violate the terms of this Agreement or of such Indebtedness, any agreement or document evidencing, related to or securing the payment or performance of such Indebtedness or any subordination agreement or provision applicable to such Indebtedness or (iii) pay in cash any amount in respect of such Indebtedness that may at the applicable Loan Party's or Subsidiary's option be paid in kind thereunder. (b) Notwithstanding anything contained in this Section 6.08 to the contrary, (i) the Borrower and the Subsidiaries shall be permitted to refinance any Indebtedness to the extent permitted by Section 6.01; and (ii) the Borrower shall be permitted to make payments in respect of any Senior Subordinated Note in accordance with the terms thereof and to pay interest on the Debentures solely in the form of additional Debentures in accordance with the terms thereof. 46 52 (c) Permit any waiver, supplement, modification, amendment, termination or release of any indenture, instrument or agreement governing the Debentures, the Senior Subordinated Note (or any Indebtedness issued to refinance such Indebtedness in accordance with this Agreement), to the extent that any such waiver, supplement, modification, amendment, termination or release would be adverse to the Bridge Lenders in any material respect. SECTION 6.09 Minimum EBITDA. Permit Consolidated EBITDA on the last day of each applicable period indicated below for the applicable period indicated below to be less than the corresponding cumulative amount indicated below: Period Amount Quarter ending March 31, 1997 $ 5,100,000 Six months ending June 30, 1997 $12,600,000 Nine months ending September 30, 1997 $20,800,000 SECTION 6.10 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio of the Borrower and its Subsidiaries to be less than the respective ratios indicated below on the last day of each period indicated below: Period Ratio January 1, 1997 through December 31, 1997 1.00 : 1.00 January 1, 1998 through December 31, 1998 1.10 : 1.00 January 1, 1999 through December 31, 1999 1.15 : 1.00 January 1, 2000 through December 31, 2000 and each December 31, thereafter 1.20 : 1.00 SECTION 6.11 Net Worth. Permit Consolidated Net Worth at any time to be less than the respective amounts indicated below for the respective periods indicated below (taken as a single accounting period): Period Amount Closing Date through December 31, 1997 Closing Date Net Worth less $1,000,000 47 53 January 1, 1998 through December 31, 1998 Closing Date Net Worth plus $4,000,000 January 1, 1999 through December 31, 1999 Closing Date Net Worth plus $11,500,000 January 1, 2000 through December 31, 2000 and thereafter Closing Date Net Worth plus $16,500,000 SECTION 6.12 Capital Expenditures. Incur Capital Expenditures in excess of $10,000,000 in any fiscal year commencing with the fiscal year ending December 31, 1997. SECTION 6.13 Business of the Borrower and Subsidiaries. Engage at any time in any business or business activity other than the business currently conducted by it and business activities reasonably incidental thereto. ARTICLE VII Events of Default In case of the happening of any of the following events ("Events of Default"): (a) any representation or warranty made or deemed made by a Loan Party in or in connection with any Loan Document or the borrowings hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any Additional Credit Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Loan or any Fee or any Additional Credit Disbursement or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days; (d) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a) or 5.08 or in Article VI; 48 54 (e) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or any Bridge Lender to the Borrower; (f) the Borrower or any Subsidiary shall (A) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness in a principal amount in excess of $1,000,000 when and as the same shall become due and payable, or (B) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (B) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any Subsidiary, or of a substantial part of the property or assets of the Borrower or any Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of the property or assets of the Borrower or any Subsidiary or (iii) the winding-up or liquidation of the Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of the property or assets of the Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing; (i) one or more judgments for the payment of money in an aggregate amount in excess of $1,000,000, which amount is not covered by insurance (provided that in the event such a judgment is covered by insurance, the Bridge Lenders are provided with satisfactory evidence that the insurance provider will provide the coverage relating thereto) shall be rendered against the Borrower and/or any Subsidiary and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be 49 55 legally taken by a judgment creditor to levy upon assets or properties of the Borrower or any Subsidiary to enforce any such judgment; (j) an ERISA Event shall have occurred that, in the reasonable opinion of the Required Bridge Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of the Borrower or any Subsidiary in an aggregate amount exceeding $1,000,000; (k) any security interest purported to be created by any Security Document and to extend to assets that are not immaterial to the Borrower and the Subsidiaries shall cease to be, or shall be asserted by any Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Pledge Agreement and except to the extent that such loss is covered by a lender's title insurance policy and the Collateral Agent is provided with satisfactory evidence that related insurance provider will provide the coverage relating thereto; or (l) any Loan Document shall not be for any reason, or shall be asserted by any Loan Party not to be, in full force and effect and enforceable in accordance with its terms; then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent shall, only at the request of the Required Bridge Lenders, by written notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid Fees and all other liabilities of any Loan Party accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to the Borrower or any Subsidiary described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document to the contrary notwithstanding. 50 56 ARTICLE VIII The Administrative Agent and the Collateral Agent In order to expedite the transactions contemplated by this Agreement, a Bridge Lender or a bank or other financial institution, in each case designated by the Bridge Lenders and made a party hereto, shall be appointed to act as Administrative Agent and Collateral Agent on behalf of the Bridge Lenders (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the "Agents"). Each of the Bridge Lenders and each assignee of any such Bridge Lender, hereby irrevocably authorizes the Agents to take such actions on behalf of such Bridge Lender or assignee and to exercise such powers as are specifically delegated to the Agents by the terms and provisions hereof and of the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent is hereby expressly authorized by the Bridge Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Bridge Lenders payments of principal of and interest on the Loans and all other amounts due to the Bridge Lenders hereunder (other than payments that are specifically required to be paid directly to a Bridge Lender), and promptly to distribute to each Bridge Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Bridge Lenders to the Borrower of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Bridge Lender copies of all notices, financial statements and other materials delivered by any Loan Party pursuant to this Agreement or the other Loan Documents as received by the Administrative Agent. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents. Neither the Agents nor any of their respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by any Loan Party of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Agents shall not be responsible to the Bridge Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents, instruments or agreements. The Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Bridge Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Bridge Lenders. Each Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper person or persons. Neither the Agents nor any of their respective directors, officers, employees or agents shall have any responsibility to any Loan Party on account of the failure of or delay in performance or breach by any Bridge Lender of any of its 51 57 obligations hereunder or to any Bridge Lender on account of the failure of or delay in performance or breach by any other Bridge Lender or the Borrower or any other Loan Party of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. Each of the Agents may execute any and all duties hereunder by or through agents or employees and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. If any Administrative Agent and Collateral Agent is appointed after the date of this Agreement, it shall, as a condition to its appointment, enter into a joinder agreement with, upon such terms as are acceptable to, the parties hereto and become a party to this Agreement and the Loan Documents. The Bridge Lenders hereby acknowledge that neither Agent shall be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Bridge Lenders. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Bridge Lenders and the Borrower. Upon any such resignation, the Required Bridge Lenders shall have the right to appoint a successor, provided that such appointment shall require the consent of the Borrower (which consent shall not be unreasonably withheld), so long as no Default or Event of Default shall have occurred and be continuing. If no successor shall have been so appointed by the Required Bridge Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Bridge Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, or Detroit, Michigan, having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor bank, such successor shall 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 hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Bridge Lender and may exercise the same as though it were not an Agent, and the Agents and their Affiliates may accept deposits from, lend money to and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent. Each Bridge Lender agrees (a) to reimburse the Agents, on demand, in the amount of its pro rata share (based on its Commitments hereunder, or if such Commitments have expired or been terminated, based on its outstanding Loans) of any expenses incurred for the benefit of the Bridge Lenders by the Agents, including counsel fees and compensation of agents and employees 52 58 paid for services rendered on behalf of the Bridge Lenders, that are required to be but shall not have been reimbursed by the Borrower and (b) to indemnify and hold harmless each Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against it in its capacity as Agent or any of them in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same are required to be but shall not have been reimbursed by the Borrower or any other Loan Party, provided that no Bridge Lender shall be liable to an Agent or any such other indemnified person for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that resulted from the gross negligence or wilful misconduct of such Agent or any of its directors, officers, employees or agents. Each Bridge Lender acknowledges that it has, independently and without reliance upon the Agents or any other Bridge 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 Bridge Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Bridge 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. ARTICLE IX Miscellaneous SECTION 9.01 Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower or any Subsidiary Guarantor, to it at 275 Rex Boulevard, Auburn Hills, MI 48326, Attention of President (Telecopy No. 810-299-1008) with a copy to the Attention of General Counsel, (Telecopy No. 810-299-1008). (b) if to a Bridge Lender, to it at its address (or telecopy number) set forth on Schedule 2.01. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or when receipt is acknowledged if sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case 53 59 delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. SECTION 9.02 Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Bridge Lenders shall survive the making by the Bridge Lenders of the Loans, regardless of any investigation made by the Bridge Lenders on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not been terminated. The provisions of Sections 9.05 and 9.15 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 Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Bridge Lender. SECTION 9.03 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. SECTION 9.04 Successors and Assigns. (a) Whenever in this Agreement any of the parties 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 Borrower, the Administrative Agent or the Bridge Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. (b) Each Bridge 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 and the Loans at the time owing to it); provided, however, that except in the case of an assignment to a Bridge Lender or, in the case of CVC, to 399 Venture Partners Inc., the other Bridge Lenders must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), and the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance in the form attached hereto as Exhibit F (the "Assignment and Acceptance"). 54 60 (c) The Administrative Agent 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 Bridge Lenders, and the Commitments of, and principal amount of the Loans owing to, each Bridge Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive and the Loan Parties, the Administrative Agent, the Collateral Agent and the Bridge Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Bridge Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Loan Parties, the Collateral Agent and any Bridge Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Any Bridge Lender may, in connection with any assignment or proposed assignment pursuant to this Section 9.04, disclose to the assignee or proposed assignee any information relating to the Borrower furnished to such Bridge Lender by or on behalf of the Borrower provided that, prior to any such disclosure of information, each such assignee or proposed assignee shall execute an agreement in the form of Exhibit G. (e) Neither the Borrower nor any other Loan Party shall assign or delegate any of its rights or duties hereunder without the prior written consent of each Bridge Lender, and any attempted assignment without such consent shall be null and void. SECTION 9.05 Expenses; Indemnity. (a) The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and the Bridge Lenders in connection with 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 or incurred by the Administrative Agent, the Collateral Agent or any Bridge Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made hereunder, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement or protection, the reasonable fees, charges and disbursements of any other counsel for the Administrative Agent, the Collateral Agent or any Bridge Lender. (b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent and each Bridge Lender, each Affiliate of any of the foregoing persons and each of their respective directors, trustees, officers, employees and agents (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any lndemnitee arising out of, in any way connected with, or as a result of (i) any claim, litigation, investigation or proceeding, whether or not any Indemnitee is a party thereto, relating to the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the 55 61 parties thereto of their respective obligations thereunder, the consummation of the Transactions and the other transactions contemplated thereby or the use of the proceeds of the Loans or (ii) any actual or alleged presence or Release of Hazardous Materials on any property owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Claim related in any way to the Borrower or the Subsidiaries; 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 wilful misconduct of such Indemnitee. (c) The provisions of this Section 9.05 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 Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Bridge Lender. All amounts due under this Section 9.05 shall be payable on written demand therefor. SECTION 9.06 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 9.07 Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the Collateral Agent or any Bridge Lender in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent or the Collateral Agent and the Bridge Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Bridge Lenders. 56 62 SECTION 9.8 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any Additional Credit Disbursement, together with all fees, charges and other amounts which are treated as interest or loan charges on such Loan under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Bridge Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Bridge Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Prime Rate to the date of repayment, shall have been received by such Bridge Lender. SECTION 9.09 Entire Agreement. This Agreement, the other Loan Documents and the confidentiality agreements previously signed by the Bridge Lenders constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents. SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10. SECTION 9.11 Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in 57 63 good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.12 Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. SECTION 9.13 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 9.14 Consent to Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.15 Confidentiality. The Administrative Agent, the Collateral Agent and each of the Bridge Lenders agrees to keep confidential and not to publish, disclose or otherwise divulge (and to cause its respective officers, directors, employees, agents and representatives to keep confidential and not publish, disclose or otherwise divulge) the Information (as defined below), except that the Administrative Agent, the Collateral Agent or any Bridge Lender shall be permitted to disclose Information (a) to such of its respective officers, directors, employees, agents, affiliates and representatives (including counsel) as need to know such Information (who will be informed of the confidential nature of the Information), (b) to the extent otherwise required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any regulatory authority (in any which event notice thereof will be provided to the Borrower and the applicable party to the extent not prohibited by applicable law), (c) in connection with any suit, action or proceeding relating to the enforcement of its rights hereunder or under the other Loan Documents or (d) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 9.15 or (ii) becomes available, or was available, to the Administrative Agent, any Bridge Lender or the Collateral Agent on a nonconfidential basis from a source other than the Borrower or any of its affiliates and such source is not bound by a confidentiality agreement to the Borrower and is not otherwise prohibited from transmitting the information to a third party. For the purposes of this Section, the term "Information" shall mean all financial statements, certificates, reports, agreements and information (including all analyses, compilations and studies prepared by the Administrative Agent, the Collateral Agent or any Bridge Lender based on any of the foregoing) that are received from the Borrower or any of its affiliates or representatives and related to the Borrower or any of its affiliates, any shareholder of the Borrower or any employee, 58 64 customer or supplier of the Borrower or any of its affiliates, other than any of the foregoing that were available to the Administrative Agent, the Collateral Agent or any Bridge Lender on a nonconfidential basis prior to its disclosure thereto by the Borrower. The provisions of this Section 9.15 shall remain operative and in full force and effect regardless of the expiration and term of this Agreement. 59 65 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MSX INTERNATIONAL, INC. as Borrower By: /s/ Frederick K. Minturn -------------------------------- Name: Frederick K. Minturn Title: President CITICORP VENTURE CAPITAL, LTD., as Bridge Lender By: /s/ Michael A. Delaney -------------------------------- Name: Michael A. Delaney Title: Vice President MASCOTECH, INC., as Bridge Lender By: /s/ Timothy Wadhams -------------------------------- Name: Timothy Wadhams Title: Vice President [Signature Page to Bridge Credit Agreement] 66 SCHEDULE I 67 Schedule I to the Bridge Credit Agreement U.K. Credit Facilities National Westminster Bank PLC Pound 2 million NBD Bank Pound 2 million 68 SCHEDULE 2.01 69 Schedule 2.01 to the Bridge Credit Agreement Commitments Term Loan Revolving Credit Bridge Lender Commitment Commitment Citicorp Venture Capital, Ltd. $20,000,000.00 $30,000,000.00 399 Park Avenue - 14th Floor New York, NY 10043 Telecopy No. 212-559-1000 Att: Michael A. Delaney MascoTech, Inc. $20,000,000.00 $30,000,000.00 21001 Van Born Road Taylor, MI 48180 Telecopy No. 313-374-6430 Attention: President with a copy to Attention: General Counsel 70 SCHEDULE 2.15 71 Schedule 2.15 to the Bridge Credit Agreement Designated Guarantee Obligations and Letters of Credit 1. Obligations under Continuing Guaranty and Indemnity for International Credits dated December 22, 1994 and Letter Amendment, dated March 22, 1996 and January 2, 1997, to the First National Bank of Chicago with respect to MSX International in the amount of Pound 2 million. 2. Guarantee of National Westminster Bank Plc credit facility Pound 1.6 million. 72 SCHEDULE 3.06 73 Schedule 3.06 to the Bridge Credit Agreement Exceptions to Performance None. 74 SCHEDULE 3.07 75 Schedule 3.07 to the Bridge Credit Agreement Ownership of Subsidiaries Subsidiary Shareholder Ownership Interest (%) MSX International (Holdings), MSX International, Inc. 100% Inc. ("MSX (Holdings)") MSX International Business MSX (Holdings) 100% Services, Inc. MSX International Engineering MSX(Holdings) 100% Services, Inc. MSX International (USA), Inc. MSX (Holdings) 100% ("MSX (USA)") MSX International Holdings MSX (Holdings) 100% Limited ("Limited") MSX International Limited ("MSX Limited 100% Limited") MascoTech Engineering GmbH MSX (Limited) 100% MascoTech Ingenierie MSX (Limited) 100%* SARL Canewdon Consultants Limited MSX (Limited) 100%** Canewdon Consultants (USA) Inc. MSX (Limited) 100% * 1/100 part registered in the name of John Bignall. ** One share registered collectively in the names of MSX (Limited) and Messrs. Cushing and Hawes. 76 SCHEDULE 3.08 77 Schedule 3.08 to the Bridge Credit Agreement Litigation None 78 SCHEDULE 3.13 79 Schedule 3.13 to the Bridge Credit Agreement Environmental Matters None 80 SCHEDULE 3.16 81 Schedule 3.16 to the Bridge Credit Agreement Leased Real Property 1. See Section 1.01(a)(i) of the Disclosure Schedule to the Business Services Acquisition Agreement, dated January 3, 1997 by and between MSX International, Inc., a Michigan corporation, and MSX International Business Services, Inc., a Delaware corporation. 2. See Section 1.01(a)(i) of the Disclosure Schedule to the Engineering Services Acquisition Agreement, dated January 3, 1997 by and between MSX International, Inc., a Michigan corporation, and MSX International Engineering Services, Inc., a Delaware corporation. 3. Foreign leases: A. See Section 6.10 of the Disclosure Schedule to the Acquisition Agreement ("Acquisition Agreement") by and among MascoTech, Inc., MSX International, Inc., a Michigan corporation, and ASG Holdings Inc., a Delaware corporation (now known as MSX International, Inc.) Dated as of November 12, 1996, as amended by Amendment No. 1 dated as of January 3, 1997. B. See Schedule 1.1(a) of the Disclosure Schedule to the APX Business Purchase Agreement (the "APX Business Purchase Agreement"), dated as of November 6, 1996, among MSX International, Inc., a Michigan Corporation, Pioneer Acquisition Corporation, a Michigan corporation, Landmark Holdings, Inc., a Michigan corporation, Aero-Detroit, Inc., a Michigan corporation, TAD Technical Services Ltd., an English limited company, APX International (Europe), Ltd., an English limited company and TAD Resources International, Inc., a Massachusetts corporation. 82 SCHEDULE 6.01 83 Schedule 6.01 to the Bridge Credit Agreement Indebtedness 1. Promissory Note for $20,516,241.35, dated January 3, 1997, issued to MSX International (Holdings), Inc. by MSX International Limited. 2. Indebtedness arising under the Bridge Credit Agreement and Loan Documents. 3. Promissory Note for $30,000,000.00, dated January 3, 1997, issued to MascoTech by the Borrower. 4. Indebtedness arising under the Senior Subordinated Note Purchase Agreement, dated January 3, 1997, by and between the Borrower and MascoTech. 5. Loan in the amount of FF 200,000, dated August 17,1994, from MSX International Limited to MascoTech Engineering SARL. 6. Schedule I to the Bridge Credit Agreement is incorporated herein. 7. Indebtedness arising out of the Letter Agreement, dated January 3, 1997, by and between Borrower and NBD Bank. 8. Interest payments of approximately $1,952,000 owed to MascoTech GmbH. 84 SCHEDULE 6.02 85 Schedule 6.02 to the Bridge Credit Agreement Liens 1.
DEBTOR CREDITOR COLLATERAL DATE UCC NO. MICHIGAN - SECRETARY OF STATE MascoTech Automotive AT&T Credit computer equipment 6/6/96 72301B Systems Group, Inc. Corporation (leased) MascoTech Automotive General Electric computer equipment 8/15/96 75533B Systems Group, Inc. Capital Computer Leasing Corporation MascoTech Automotive General Motors automotive parts 5/26/94 C846421 Systems Group, Inc. Corporation Service bearing any "GM" (d/b/a MascoTech Special Parts Operations trademark Vehicles) MascoTech Auto Systems Sanwa Leasing 5 Dell pentium 1/4/96 D048939 Group Corporation computers MascoTech Auto Systems Sanwa Leasing computer equipment 7/10/96 D115859 Group Corporation MascoTech Auto Systems Sanwa Leasing computer equipment 8/13/96 D127714 Group Corporation MascoTech Automotive Sharp Electronic 2 copier systems 4/7/95 54553B Systems Group, Inc. Credit Co. (leased) MascoTech Automotive USL Capital computer equipment 12/28/93 38441B Systems Corporation MascoTech Marketing XEROX Corporation 1 Xerox machine 7/7/93 58119B MascoTech Marketing Pitney Bowes Credit equipment subject to 9/7/94 C881536 Services Corporation lease #5181680-301 dated 6/24/94 MascoTech Technical AT&T Capital Services Computers and related 8/2/95 and 5892B; Services Corporation equipment subject to amended amended lease dated 7/25/95. 12/18/95 64813B Amendment added additional equipment
86
DEBTOR CREDITOR COLLATERAL DATE UCC NO. MascoTech Technical AT&T Capital Services 1 computer (located at 11/27/95 63635B Services Corporation 12220 E. 13 Mile Rd) subject to lease dated 11/10/95 MascoTech Training & AT&T Capital Services 4 IBM computers 6/2/95 56780B Visual Services Corporation subject to lease dated 5/19/59 MICHIGAN - OAKLAND COUNTY MascoTech Technical AT&T Capital Services computers and related 8/2/95 95-05881 Services Corporation equipment subject to lease dated 7/25/95 MISSOURI - SECRETARY OF STATE MascoTech Special Hawkeye Leasing 3 forklifts 3/18/96 2643395 Vehicles Corporation VIRGINIA - CORPORATIONS COMMISSION [MascoTech Automotive Homestead Materials Boom lift 10/23/95 7205] Systems Group, Inc. Handling Co.
2. Liens listed on Schedule 3.1(a)(ii) to the APX Business Purchase Agreement and the additional liens listed below: Michigan filings in favor of Bay Bank: D137112 D138429 D138430 Michigan filings in favor of Citizens: D147157 Massachusetts filings in favor of Citizens: 421826 3. Liens in favor of NBD and its assignees established pursuant to the Letter Agreement dated as of January 3, 1997. 87 SCHEDULE 6.04 88 Schedule 6.04 to the Bridge Credit Agreement Intercompany Indebtedness 1. Schedule 6.01 hereto is incorporated herein. 2. Intercompany Indebtedness MEEL loans to employees:
Capital Sum Balance as at Employee Name (Pounds) Start Date Term 7/30/96 - ------------- ----------- ---------- --------- ------------- Claine R 300.00 1-31-96 12 months 125.00 Clifton C 3,000.00 3-31-95 20 months 450.00 Huff M 300.00 6-27-95 No repayment details notes. Initial period 35 days Leaver J 1,500.00 1-31-96 12 months 625.00 Mackintosh D 260.00 2-29-96 13 months 140.00 Palmer L 2,000.00 1-31-95 24 months 416.73 Palmer L 300.00 11-15-94 No repayment details noted. Initial period 78 days. Parrott M 260.00 2-29-96 13 months 140.00 Rix J 500.00 10-31-95 12 months 83.33 Saxby S 260.00 2-29-96 13 months 140.00 Whiting O 260.00 2-29-96 13 months 140.00 Overy J 3,200.00 9-30-96 17 months 3,200.00 Morris A 200.00 8-31-96 4 months 200.00
89 MascoTech Limited - MascoTech Limited loan to Collin Cushing in the original amount of 85,000 (Pounds.). GmbH GmbH loan to employee:
Employee Name Amount Start Date Term Balance ------------- ------ ---------- ---- ------- Milica Mehovic DM 2,000.00 6-3-96 4 months DM 1,500.00
90 SCHEDULE 6.07 91 Schedule 6.07 to the Bridge Credit Agreement 1. Schedule 6.01 Indebtedness is incorporated herein, excluding the indebtedness to bank section. 92 - - Borrower leases motor vehicles under a confidential lease agreement between ARI Leasing and MascoTech, Inc. Schedule of leases previously provided to Buyer. - - Tranpsortation Program Contracts coordinated and/or provided by MascoTech, Inc. or Masco Corporation are used by the business during the calendar year 1995. - - National Purchasing Agreements coordinated and/or provided by MascoTech, Inc. or Masco Corporation are used for the following vendors: Alro Steel Corporation American International, Inc. AT&T AV Systems Cellular One Contract Interiors/Steelcase CDP Imaging Systems/Panasonic Governor Computer Supply Grainger Graybar Electric Hewlett Packard Inecamp IBM Marvel Group, Inc. Safety Supply America Sharp Electronics Corp. Staples Business Advantage Stream International Sun Microsystems Ultramax/SKJ - - Borrower subleases a portion of its 255 Rex Boulevard to Saturn and also has an occupancy arrangement with Titan Wheel. - - Part of 275 Rex Boulevard, Auburn Hills, is used by non-business employees and Borrower allocates cost to MascoTech, Inc. - - Part of 255 Rex Boulevard rent is paid for by MascoTech, Inc. 93 Intercompany Indebtedness MEEL loans to employees:
Capital Sum Balance as at Employee Name (Pounds) Start Date Term 7/30/96 - ------------- ----------- ---------- --------- ------------- Claine R 300.00 1-31-96 12 months 125.00 Clifton C 3,000.00 3-31-95 20 months 450.00 Huff M 300.00 6-27-95 No repayment details notes. Initial period 35 days Leaver J 1,500.00 1-31-96 12 months 625.00 Mackintosh D 260.00 2-29-96 13 months 140.00 Palmer L 2,000.00 1-31-95 24 months 416.73 Palmer L 300.00 11-15-94 No repayment details noted. Initial period 78 days. Parrott M 260.00 2-29-96 13 months 140.00 Rix J 500.00 10-31-95 12 months 83.33 Saxby S 260.00 2-29-96 13 months 140.00 Whiting O 260.00 2-29-96 13 months 140.00 Overy J 3,200.00 9-30-96 17 months 3,200.00 Morris A 200.00 8-31-96 4 months 200.00
MascoTech Limited - MascoTech Limited loan to Collin Cushing in the original amount of 85,000 (Pounds). GmbH loan to employee: 94
Employee Name Amount Start Date Term Balance Milica Mehovic DM 2,000.00 6-3-96 4 months DM 1,500.00
95 EXHIBIT A 96 EXHIBIT A to the Bridge Credit Agreement FORM OF BORROWING REQUEST Citicorp Venture Capital, Ltd. 399 Park Avenue - 14th Floor New York, New York 10043 Attention: MascoTech, Inc. 21001 Van Born Road Taylor, Michigan 48180 Attention: Gentlemen: Reference is hereby made to the Bridge Credit Agreement dated as of January __, 1997 (the "Bridge Credit Agreement"), among MSX INTERNATIONAL, INC., (the "Borrower") and the lenders from time to time party thereto (the "Bridge Lenders"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Bridge Credit Agreement. The undersigned Borrower hereby gives you notice pursuant to Section 2.02 of the Bridge Credit Agreement that it requests a Borrowing under the Bridge Credit Agreement, and in that connection sets forth below the terms on which such Borrowing is requested to be made: (A) Type of Borrowing: Revolving Credit Borrowing (B) Date of Borrowing (which is a Business Day) ___________________ 97 (D) Principal Amount of Borrowing (1) _______________________ (E) Funds are requested to be disbursed to the account in the name of Borrower, NBD Bank, Detroit, MI (Account No. ), ABA 072000326. Upon acceptance of any or all of the Loans offered by the Bridge Lenders in response to this request, the Borrower shall be deemed to have represented and warranted that the conditions to lending specified in Sections 4.01(b) and (c) of the Bridge Credit Agreement have been satisfied. MSX INTERNATIONAL, INC. By:_________________________________ Name: Title: __________________________________ (1) Not less than $5,000,000 and, in each case, in an integral multiple of $1,000,000, but in any event not exceeding the aggregate amount of the Revolving Credit Commitment available at such time. 98 EXHIBIT B INTENTIONALLY OMITTED 99 EXHIBIT C INTENTIONALLY OMITTED 100 EXHIBIT D INTENTIONALLY OMITTED 101 EXHIBIT E INTENTIONALLY OMITTED 102 EXHIBIT F 103 EXHIBIT F to the Bridge Credit Agreement FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Bridge Credit Agreement dated as of January __, 1997 (the "Bridge Credit Agreement"), among MSX INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), and the lenders from time to time party thereto (the "Bridge Lenders"). Terms defined in the Bridge Credit Agreement are used herein with the same meanings. 1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 9.04(c) of the Bridge Credit Agreement), the interest set forth below in the Assignor's interest, rights and obligations under the Bridge Credit Agreement and the other Loan Documents. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Bridge Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Bridge Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Bridge Credit Agreement. 2. This Assignment and Acceptance is being delivered to each of the Borrower and the Bridge Lenders, together with, if the Assignee is not already a Bridge Lender under the Bridge Credit Agreement, an Administrative Questionnaire in the form of Exhibit G to the Bridge Credit Agreement. 3. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York. Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee's Address and Telecopy Number for Notices: 104 Effective Date of Assignment (may not be fewer than 5 Business Days after the date of execution of this Assignment and Acceptance): (1) (2) (3) (4) Facility Principal Amount of Principal Amount Percentage Assigned Commitment**/ of Commitment of Commitment (in or outstanding Loans***/ (in the case of the the case of the Revolving Credit Revolving Credit Commitments) or Commitments) or outstanding Loans outstanding Loans (in the case of (in the case of Term Loans) Term Loans) Assigned****/ on the Effective Date*** Term Loan $ $ % Revolving Credit $ $ %
__________________________________ **/With respect to the Revolving Credit Commitments and calculated after giving effect to all assignments of the Revolving Credit Commitments that will be effective prior to the Effective Date. ***/With respect to the Term Loans and calculated after giving effect to all assignments of the Term Loans that will be effective prior to the Effective Date. ****/If the Revolving Credit Commitments or outstanding Term Loans are reduced prior to the Effective Date, [(a) the amount set forth in column (3) with respect thereto to shall remain unchanged and (b) the percentage set forth in column (4) with respect thereto shall be increased to the fraction (represented by a percentage) equal to (x) the amount set forth in column (3) with respect thereto over (y) the principal amount of such Commitments or such outstanding Term Loans as are in effect on the Effective Date] [(a) the percentage set forth in column (4) with respect to such Commitments or such outstanding Term Loans shall remain unchanged and (b) the amount set forth in column (3) with respect to such Commitments or such outstanding Term Loans shall be reduced to the product of (x) the percentage set forth in column (4) with respect to Commitments or such outstanding Term Loans as are in effect on the Effective Date]. 105 [[Amount][Percentage] Assigned of Fees Accrued (from and including the date hereof to but not including the Effective Date)(optional):] 106 The terms set forth above are hereby agreed to Consented to by: by _______________________, as Assignor MSX INTERNATIONAL, INC., Borrower By:_______________________________ By:___________________________ Name: Name: Title: Title: ______________________, as Assignee. CITICORP VENTURE CAPITAL, LTD., Bridge Lender By:______________________________ By:__________________________ Name: Name: Title: Title: MASCOTECH, INC. Bridge Lender By:___________________________ Name: Title:
107 EXHIBIT G 108 EXHIBIT G to the Bridge Credit Agreement FORM OF ADMINISTRATIVE QUESTIONNAIRE Please accurately complete the following information and return via Telecopy to the attention of ______________ at _______________ as soon as possible, at Telecopy No. ____________. ______________________________________________________________________________ LENDER'S LEGAL NAME TO APPEAR IN DOCUMENTATION: ______________________________________________________________________________ GENERAL INFORMATION - DOMESTIC LENDING OFFICE: Institution Name:____________________________________________________________ Street Address: ____________________________________________________________ City, State, Zip Code:_______________________________________________________ POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS: CREDIT CONTACTS: Primary Contact:____________________________________________________________ Street Address: ____________________________________________________________ City, State, Zip Code:______________________________________________________ Phone Number: ____________________________________________________________ Telecopy Number: ____________________________________________________________ Backup Contact:: ____________________________________________________________ 109 Street Address: ____________________________________________________________ City, State, Zip Code:_______________________________________________________ Phone Number: ____________________________________________________________ Telecopy Number: ____________________________________________________________ TAX WITHHOLDING: Nonresident Alien _______Y* ______N *Form 4224, 1001 or W-8 (with the certificate required by 2.20(e)) Enclosed Tax ID Number ___________________ POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS: ADMINISTRATIVE CONTACTS - BORROWING, PAYDOWNS, ETC. Contact: ____________________________________________________________________ Street Address: ____________________________________________________________ City, State, Zip Code:_______________________________________________________ Phone Number: ____________________________________________________________ Telecopy Number: ____________________________________________________________ PAYMENT INSTRUCTIONS: Name of Bank to which funds are to be transferred: ______________________________________________________________________________ Routing Transit/ABA number of Bank to which funds are to be transferred: _______________________________________________________________________________ 110 Name of Account, if applicable: ______________________________________________________________________________ Account Number: ____________________________________________________________ Additional Information:______________________________________________________ MAILINGS: Please specify the person to whom the Borrower should send financial information and compliance information received subsequent to the closing (if different from primary credit contact): Name:________________________________________________________________________ Street Address: ____________________________________________________________ City, State, Zip Code:_______________________________________________________ It is very important that all the above information be accurately completed and that this questionnaire be returned to the person specified in the introductory paragraph of this questionnaire as soon as possible. If there is someone other than yourself who should receive this questionnaire, please notify us of that person's name and telecopy number and we will telecopy a copy of the questionnaire. If you have any questions about this form, please call ___________________. EX-11 8 EXHIBIT 11 1 EXHIBIT 11 MASCOTECH, INC. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE PRIMARY AND FULLY DILUTED (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31 ----------------------------------- 1996 1995 1994 ------- ------- --------- PRIMARY: Income (loss) from continuing operations before extraordinary item and cumulative effect of accounting change, net............................................... $39,920 $59,190 $(234,420) Preferred stock dividends................................... 12,960 12,960 12,960 ------- ------- --------- Earnings (loss) for computing primary earnings (loss) from continuing operations per common share before extraordinary item and cumulative effect of accounting change, net............................................... 26,960 46,230 (247,380) Gain on disposition of discontinued operations.............. -- -- 11,700 ------- ------- --------- Earnings (loss) for computing primary earnings (loss) per common share before extraordinary item and cumulative effect of accounting change, net.......................... 26,960 46,230 (235,680) Extraordinary item.......................................... -- -- 2,600 Cumulative effect of accounting change, net................. 11,700 -- -- ------- ------- --------- Earnings (loss) attributable to common stock................ $38,660 $46,230 $(233,080) ======= ======= ========= Weighted average number of common shares outstanding during each period............................................... 52,360 56,190 58,910 Addition from assumed exercise of stock options and warrants (1)....................................................... 1,430 860 -- Addition from assumed conversion of preferred stock (2)..... -- -- -- ------- ------- --------- Weighted average number of common shares and equivalents outstanding during each period -- without dilution........ 53,790 57,050 58,910 ======= ======= ========= Primary earnings (loss) per common share: Continuing operations..................................... $ .50 $ .81 $ (4.20) Gain on disposition of discontinued operations............ -- -- .20 ------- ------- --------- Income (loss) before extraordinary item and cumulative effect of accounting change, net........................ .50 .81 (4.00) Extraordinary item........................................ -- -- .04 Cumulative effect of accounting change, net............... .22 -- -- ------- ------- --------- Net income (loss)......................................... $ .72 $ .81 $ (3.96) ======= ======= ========= FULLY DILUTED: Income (loss) from continuing operations before extraordinary item and cumulative effect of accounting change, net............................................... $39,920 $59,190 $(234,420) Preferred stock dividends................................... 12,960 12,960 12,960 Add after-tax convertible debenture related expenses........ 9,530 9,530 9,520 ------- ------- --------- Earnings (loss) for computing fully diluted earnings (loss) from continuing operations per common share before extraordinary item and cumulative effect of accounting change, net............................................... 36,490 55,760 (237,860) Gain on disposition of discontinued operations.............. -- -- 11,700 ------- ------- --------- Earnings (loss) for computing fully diluted earnings (loss) per common share before extraordinary item and cumulative effect of accounting change, net.......................... 36,490 55,760 (226,160) Extraordinary item.......................................... -- -- 2,600 Cumulative effect of accounting change, net................. 11,700 -- -- ------- ------- --------- Earnings (loss) attributable to common stock, as adjusted... $48,190 $55,760 $(223,560) ======= ======= ========= Weighted average number of common shares outstanding during each period............................................... 52,360 56,190 58,910 Addition from assumed conversion of convertible debentures................................................ 10,000 10,000 10,090 Addition from assumed exercise of stock options and warrants.................................................. 2,770 880 3,340 Addition from assumed conversion of preferred stock......... 10,800 10,800 10,800 ------- ------- --------- Weighted average number of common shares and equivalents outstanding during each period -- fully diluted basis..... 75,930 77,870 83,140 ======= ======= ========= Fully diluted earnings (loss) per common share (3): Continuing operations..................................... $ .49 $ .81 $ (4.20) Gain on disposition of discontinued operations............ -- -- .20 ------- ------- --------- Income (loss) before extraordinary item and cumulative effect of accounting change, net........................ .49 .81 (4.00) Extraordinary item........................................ -- -- .04 Cumulative effect of accounting change, net............... .21 -- -- ------- ------- --------- Net income (loss)......................................... $ .70 $ .81 $ (3.96) ======= ======= =========
(1) The effect of options and warrants conversions in 1994 would be anti-dilutive. (2) The effect of preferred stock conversions in 1996, 1995 and 1994 would be anti-dilutive. (3) The results of assumed conversion of convertible debentures and preferred stock in 1996 are anti-dilutive and therefore are excluded. Amounts for 1995 and 1994 agree to primary earnings (loss) per common share amounts since the results of assumed conversion of securities are anti-dilutive. EX-12 9 EXHIBIT 12 1 EXHIBIT 12 MASCOTECH, INC. COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31 -------------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- --------- -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES AND FIXED CHARGES: Income (loss) from continuing operations before income taxes (credit), extraordinary item and cumulative effect of accounting change, net........................ $ 77,220 $100,280 $(264,490) $121,180 $ 68,250 Deduct equity in undistributed earnings of less-than-fifty-percent owned companies.................... (31,650) (29,590) (23,350) (19,930) (21,760) Add interest on indebtedness, net..... 30,350 51,500 51,290 83,000 87,830 Add amortization of debt expense...... 1,490 1,670 3,450 4,390 1,930 Estimated interest factor for rentals............................ 6,350 7,070 6,220 5,550 5,740 -------- -------- --------- -------- -------- Earnings (loss) before income taxes and fixed charges.................. $ 83,760 $130,930 $(226,880) $194,190 $141,990 ======== ======== ========= ======== ======== FIXED CHARGES: Interest on indebtedness, net......... $ 30,590 $ 51,690 $ 51,540 $ 83,110 $ 87,980 Amortization of debt expense.......... 1,490 1,670 3,450 4,390 1,930 Estimated interest factor for rentals............................ 6,350 7,070 6,220 5,550 5,740 -------- -------- --------- -------- -------- Total fixed charges................ 38,430 60,430 61,210 93,050 95,650 -------- -------- --------- -------- -------- Preferred stock dividend requirement (a)................................ 21,570 21,970 14,630 25,860 17,140 -------- -------- --------- -------- -------- Combined fixed charges and preferred stock dividends.................... $ 60,000 $ 82,400 $ 75,840 $118,910 $112,790 ======== ======== ========= ======== ======== RATIO OF EARNINGS TO FIXED CHARGES...... 2.2 2.2 --(b) 2.1 1.5 ======== ======== ========= ======== ======== RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS............................. 1.4 1.6 --(c) 1.6 1.3 ======== ======== ========= ======== ========
(a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company and its 50% owned companies. (b) 1994 results of operations are inadequate to cover fixed charges by $288,090. (c) 1994 results of operations are inadequate to cover combined fixed charges and preferred stock dividends by $302,720. EX-21 10 EXHIBIT 21 1 Exhibit 21 MASCOTECH, INC. (A DELAWARE CORPORATION) Subsidiaries as of March 15, 1997
NAME JURISDICTION OF INCORPORATION OR ORGANIZATION ---- --------------------------------------------- Arrow Specialty Company Delaware BLD Products, Ltd. Michigan Novo Products, Inc. Florida Hebco Products, Inc. Ohio International Brake Industries, Inc. Delaware Kendallville Foundry, Inc. Delaware Longman Enterprises, Inc. Florida Pylon Manufacturing Corp. Delaware W.C. McCurdy Co. Michigan Masco Industries International Sales, Inc. Barbados MASG Disposition, Inc. Michigan McGuane Industries, Inc. Delaware MascoTech Coatings, Inc. Michigan MascoTech Edison, Inc. New Jersey MascoTech Europe, Inc. Delaware MascoTech European Holdings, Inc. Delaware Glo SpA Italy MascoTech GmbH Germany H&B Hyprotec Technology OHG Germany Huber & Bauer GmbH 20% Germany Holzer GmbH & Co. Germany
2
NAME JURISDICTION OF INCORPORATION OR ORGANIZATION ---- --------------------------------------------- Holzer Limited United Kingdom Holzer Verwaltungs GmbH Germany Neumeyer Fliesspressen GmbH Germany MascoTech Forming Technologies - Fort Wayne, Inc. Delaware MascoTech Holding Company Delaware MascoTech Industrial Components, Inc. Delaware Huron/St. Clair Manufacturing Company Delaware MascoTech Services, Inc. Delaware MascoTech Sintered Components, Inc. Delaware MascoTech Tubular Products, Inc. Michigan MASX Energy Services Group, Inc. Delaware Mr. Bracket, Inc. Delaware NI Industries, Inc. Delaware NI Foreign Military Sales, Inc. Delaware NI West, Inc. California NI Wheel, Inc. Ontario Norris Industries, Inc. California Plastic Form, Inc. Delaware
Directly owned subsidiaries appear at the left hand margin, first tier and second tier subsidiaries are indicated by single and double indentation, respectively, and are listed under the names of their respective parent companies. Unless otherwise indicated, all subsidiaries are wholly-owned. Certain of these companies may also use trade names or other assumed names in the conduct of their business. 3 TRIMAS CORPORATION (A DELAWARE CORPORATION) Subsidiaries as of March 15, 1997
Jurisdiction of Incorporation or Name Organization ---- ------------ Beaumont Bolt & Gasket, Inc. Texas Industrial Bolt & Gasket, Inc. Louisiana Louisiana Bolt and Gasket, Inc. Louisiana Compac Corporation Delaware Netcong Investments, Inc. New Jersey Di-Rite Company Ohio Draw-Tite, Inc. Delaware Mongo Electronics, Inc. Delaware Draw-Tite (Canada) Ltd. Ontario Eskay Screw Corporation Delaware Fulton Performance Products, Inc. Delaware Spar Marine Manufacturing Ltd. British Columbia Heinrich Stolz GmbH & Co. KG Germany Stolz USA, Inc. Texas Hitch 'N Post, Inc. Delaware Kee Services, Inc. Michigan Keo Cutters, Inc. Delaware Lake Erie Screw Corporation Ohio Lamons Metal Gasket Co. Delaware Canadian Gasket & Supply Inc. Canada Louisiana Hose & Rubber Co. Louisiana Monogram Aerospace Fasteners, Inc. Delaware Norris Cylinder Company Delaware
4
Jurisdiction of Incorporation or Name Organization ---- ------------ Punchcraft Company Michigan Reese Products, Inc. Indiana TriMas Corporation Pty. Ltd. Australia Reese Products of Canada Ltd. Ontario Reska Spline Products, Inc. Michigan Richards Micro-Tool, Inc. Delaware Rieke Corporation Indiana Rieke Canada Limited Canada Rieke of Mexico, Inc. Delaware Rieke de Mexico, S.A. de C.V. Mexico Rieke Leasing Co., Incorporated Delaware TriMas Corporation Nevada TriMas Corporation Limited United Kingdom Englass Group Limited United Kingdom Top Emballage France TriMas Export, Inc. Barbados TriMas Fasteners, Inc. Delaware TriMas Services Corp. Delaware
EX-23.A 11 EXHIBIT 23A 1 EXHIBIT 23.A CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the prospectuses included in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos. 33-59222 and 33-55837) and Form S-8 (Registration Nos. 33-30735 and 33-42230) of our report dated February 28, 1997, on our audits of the consolidated financial statements and financial statement schedule of MascoTech, Inc. and subsidiaries as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report is included in this Annual Report on Form 10-K. We also consent to the reference to our Firm under the caption "Experts" in such prospectuses. COOPERS & LYBRAND L.L.P. Detroit, Michigan March 26, 1997 EX-23.B 12 EXHIBIT 23B 1 EXHIBIT 23.B CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the prospectuses included in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos. 33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and 33-42230) of our report dated February 11, 1997, on our audits of the consolidated financial statements and financial statement schedule of TriMas Corporation and subsidiaries as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report is included in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Detroit, Michigan March 20, 1997 EX-27 13 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM [identify specific financial statements] AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1996 DEC-31-1996 19,400 37,760 129,530 (2,000) 69,640 393,970 640,270 (251,810) 1,228,980 158,450 752,400 0 10,800 37,250 116,910 1,228,980 1,281,220 1,281,220 1,048,110 1,048,110 31,520 0 29,970 77,220 37,300 39,920 0 0 11,700 51,620 .72 .70
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