SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

Loan Agreement

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MILACRON INC | CIMCOOL INDUSTRIAL PRODUCTS INC | GE CAPITAL MARKETS, INC | MILACRON MARKETING COMPANY | MILACRON PLASTICS TECHNOLOGIES GROUP INC

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Title: SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Governing Law: New York Date: 3/17/2009
Industry: Misc. Capital Goods Law Firm: Dinsmore Shohl;Paul Hastings Sector: Capital Goods

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT, Parties: milacron inc , cimcool industrial products inc , ge capital markets inc , milacron marketing company , milacron plastics technologies group inc

Exhibit 10.03

Execution Copy

SENIOR SECURED, SUPER-PRIORITY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT

Dated as of March 11, 2009

by and among

MILACRON INC. AND EACH OF THE
OTHER BORROWERS SIGNATORY HERETO,

as Borrowers,

CERTAIN OTHER SUBSIDIARIES OF MILACRON INC. SIGNATORY HERETO,

as Credit Parties,

THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent,

and

GE CAPITAL MARKETS, INC.,

as Lead Arranger

LEGAL_US_E # 82813718.8

TABLE OF CONTENTS
[TO BE UPDATED]

Page

AMOUNT AND TERMS OF CREDIT

1.1

Credit Facilities

1.2

Letters of Credit

1.3

Prepayments

1.4

Use of Proceeds

1.5

Interest and Applicable Margins

1.6

Eligible Accounts

1.7

Eligible Inventory

1.8

Cash Management Systems

1.9

Fees

1.10

Receipt of Payments

1.11

Application and Allocation of Payments

1.12

Loan Account and Accounting

1.13

Indemnity

1.14

Intentionally Omitted

1.15

Taxes

1.16

Capital Adequacy; Increased Costs; Illegality

1.17

Single Loan

1.18

Super-Priority Nature of Obligations and Agent’s Liens

1.19

Payment of Obligations

1.20

No Discharge; Survival of Claims

1.21

Release

1.22

Waiver of any Priming Rights

1.23

Milacron Capital Forbearance

1.24

Milacron Canada

CONDITIONS PRECEDENT

2.1

Conditions to the Initial Loans

2.2

Further Conditions to Each Loan

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REPRESENTATIONS AND WARRANTIES

3.1

Organization, Good Standing, Etc

3.2

Authorization, Etc

3.3

Governmental Approvals

3.4

Enforceability of Loan Documents

3.5

Subsidiaries

3.6

Litigation; Commercial Tort Claims

3.7

Financial Condition

3.8

Compliance with Law, Etc

3.9

ERISA

3.10

Taxes, Etc

3.11

Regulations T, U and X

3.12

Nature of Business

3.13

Adverse Agreements, Etc

3.14

Permits, Etc

3.15

Properties

3.16

Full Disclosure

3.17

Operating Lease Obligations

3.18

Environmental Matters

3.19

Insurance

3.20

Use of Proceeds

3.21

Location of Bank Accounts

3.22

Intellectual Property

3.23

Material Contracts

3.24

Holding Company and Investment Company Acts

3.25

Employee and Labor Matters

3.26

Customers and Suppliers

3.27

Name; Jurisdiction of Organization; Organizational ID Number; Chief Place of Business; Chief Executive Office; FEIN 37

3.28

Tradenames

3.29

Locations of Collateral

3.30

Security Interests

3.31

[Intentionally Omitted]

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3.33

Canadian Pension and Benefit Plan Matters

3.34

Reorganization Matters

FINANCIAL STATEMENTS AND INFORMATION

4.1

Reports and Notices

4.2

Communication with Accountants

AFFIRMATIVE COVENANTS

5.1

Additional Guaranties and Collateral Security

5.2

Compliance with Laws, Etc

5.3

Preservation of Existence, Etc

5.4

Keeping of Records and Books of Account

5.5

Inspection Rights

5.6

Maintenance of Properties, Etc

5.7

Maintenance of Insurance

5.8

Obtaining of Permits, Etc

5.9

Environmental

5.10

Further Assurances

5.11

Change in Collateral; Collateral Records

5.12

Landlord Waivers; Collateral Access Agreements

5.13

Fiscal Year

5.14

Borrowing Base

5.15

Use of Proceeds

5.16

Conference Calls

5.17

Misplaced Notes

5.18

Canadian Pension and Benefit Plans

5.19

After Acquired Real Property

5.20

Senior Secured Priority Collateral

5.21

Intentionally Omitted

5.22

Accounts Documentation

5.23

Status of Accounts and Other Collateral

5.24

Collateral Custodian

5.25

Accounts Covenants

5.26

Inventory Covenants

5.27

Compliance with Milestones

iii

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5.28

Cooperation with Advisors

5.29

Restructuring Advisor; Financial Advisor

NEGATIVE COVENANTS

6.1

Liens, Etc

6.2

Indebtedness

6.3

Fundamental Changes; Dispositions

6.4

Change in Nature of Business

6.5

Loans, Advances, Investments, Etc

6.6

Intentionally Omitted

6.7

Restricted Payments

6.8

Federal Reserve Regulations

6.9

Transactions with Affiliates

6.10

Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries

6.11

Limitation on Issuance of Stock

6.12

Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc 56

6.13

Investment Company Act of 1940

6.14

Compromise of Accounts

6.15

ERISA

6.16

Environmental

6.17

Certain Agreements

6.18

Misplaced Notes

6.19

Wholly-Owned Subsidiaries

6.20

Restrictions in Organizational Documents

6.21

Financial Covenants

6.22

Chapter 11 Claims

6.23

Critical Vendor and Other Payments

6.24

Pre-Petition Indebtedness

TERM

7.1

Termination

7.2

Survival of Obligations Upon Termination of Financing Arrangements

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EVENTS OF DEFAULT; RIGHTS AND REMEDIES

8.1

Events of Default

8.2

Remedies

8.3

Waivers by Credit Parties

ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

9.1

Assignment and Participations

9.2

Appointment of Agent

9.3

Agent’s Reliance, Etc

9.4

GE Capital and Affiliates

9.5

Lender Credit Decision

9.6

Indemnification

9.7

Successor Agent

9.8

Setoff and Sharing of Payments

9.9

Advances; Payments; Non-Funding Lenders; Information; Actions in Concert

9.10

Quebec Security Documents

10.

SUCCESSORS AND ASSIGNS

10.1

Successors and Assigns

11.

MISCELLANEOUS

11.1

Complete Agreement; Modification of Agreement

11.2

Amendments and Waivers

11.3

Fees and Expenses

11.4

No Waiver

11.5

Remedies

11.6

Severability

11.7

Conflict of Terms

11.8

Confidentiality

11.9

GOVERNING LAW

11.10

Notices

11.11

Section Titles

11.12

Counterparts

11.13

WAIVER OF JURY TRIAL

11.14

Press Releases and Related Matters

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11.15

Reinstatement

11.16

Advice of Counsel

11.17

No Strict Construction

11.18

Obligations Absolute

11.19

Parties Including Trustees; Bankruptcy Court Proceedings

12.

CROSS-GUARANTY

12.1

Cross-Guaranty

12.2

Waivers by Borrowers

12.3

Benefit of Guaranty

12.4

Subrogation, Etc

12.5

Election of Remedies

12.6

Limitation

12.7

Contribution with Respect to Guaranty Obligations

12.8

Liability Cumulative

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INDEX OF APPENDICES

Annex A (Recitals)

Definitions

Annex B ( Section 1.2 )

Letters of Credit

Annex C ( Section 1.8 )

Cash Management System

Annex D ( Section 2.1(a) )

Closing Checklist

Annex E ( Section 4.1(a) )

Financial Statements and Projections -- Reporting

Annex F ( Section 4.1(b) )

Collateral Reports

Annex G ( Section 6.10 )

Financial Covenants

Annex H ( Section 9.9(a) )

Lenders’ Wire Transfer Information

Annex I ( Section 11.10 )

Notice Addresses

Annex J (from Annex A -

Commitments definition)

Commitments as of Closing Date

Exhibit 1.1(a)(i)

Form of Notice of Revolving Credit Advance

Exhibit 1.1(a)(ii)

Form of Revolving Note

Exhibit 1.1(c)(ii)

Form of Swing Line Note

Exhibit 1.5(e)

Form of Notice of Conversion/Continuation

Exhibit 1.6

Bill and Hold Policy

Exhibit 4.1(b)

Form of Borrowing Base Certificate

Exhibit 9.1(a)

Form of Assignment Agreement

Exhibit A-1

Form of Intercompany Subordination Agreement

Exhibit B-1

Application for Standby Letter of Credit

Exhibit I

Form of Interim Order

Exhibit M

Milestones

Schedule A-1

First Day Orders

Schedule 1.1

Agent’s Representatives

Schedule 1.2

Existing Letters of Credit

Schedule 2.1

Required Consents and Approvals

Schedule 3.2

Authorizations, Etc.

Schedule 3.5

Subsidiaries

Schedule 3.6

Litigation; Commercial Tort Claims

Schedule 3.9

ERISA

Schedule 3.15

Real Property

Schedule 3.17

Operating Lease Obligations

Schedule 3.18

Environmental Matters

Schedule 3.19

Insurance

Schedule 3.21

Bank Accounts

Schedule 3.22

Intellectual Property

Schedule 3.23

Material Contracts

Schedule 3.26

Customers and Suppliers

Schedule 3.27

Name; Jurisdiction of Organization; Organizational

ID Number; Chief Place of Business; Chief

Executive Office; FEIN

vii

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Schedule 3.28

Tradenames

Schedule 3.29

Collateral Locations

Schedule 5.3

Preservation of Existence

Schedule 6.1

Existing Liens

Schedule 6.2

Existing Indebtedness

Schedule 6.5

Existing Investments

Schedule 6.10

Limitations on Dividends and Other Payment

Restrictions

viii

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This SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “ Agreement ”), dated as of March 11, 2009, by and among MILACRON INC., a Delaware corporation (“ Parent ”), CIMCOOL INDUSTRIAL PRODUCTS INC., a Delaware corporation (“ Cimcool ”), MILACRON MARKETING COMPANY, an Ohio corporation (“ Marketing ”), MILACRON PLASTICS TECHNOLOGIES GROUP INC., a Delaware corporation (“ Plastics ”), and D-M-E COMPANY, a Delaware corporation (“ D-M-E Company ”) (Parent, Cimcool, Marketing, Plastics and D-M-E Company are collectively referred to herein as the “ Borrowers ” and individually as a “ Borrower ”); the other Credit Parties signatory hereto as Guarantors; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “ GE Capital ”), for itself, as Lender, and as administrative agent for Lenders (“ Agent ”), and the other Lenders signatory hereto from time to time.

RECITALS

WHEREAS, on March 10, 2009 (the “ Petition Date ”), Borrowers and certain of their Subsidiaries (collectively, the “ Debtors ”) commenced Chapter 11 Case Nos. 09-11235 through 09-11239, Case No. 09-11241 and Case No. 0911244, as administratively consolidated at Chapter 11 Case No. 09-11235 (collectively, the “ Chapter 11 Case ”) by filing a voluntary petition for reorganization under Chapter 11, 11 U.S.C. §§101 et seq. (the “ Bankruptcy Code ”), with the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the “ Bankruptcy Court ”), and on March 10, 2009 an application was filed with the Canadian Court (as defined herein) to recognize the Chapter 11 Case and commence Canadian Proceedings (as defined herein) pursuant to Section 18.6 of the CCAA (as defined herein);

WHEREAS, from and after the Petition Date, each of Borrowers and the Guarantors continue to operate their business and manage their properties as a debtor and a debtor-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code;

WHEREAS, prior to the Petition Date, the Prior Lenders (as defined below) provided financing to Borrowers pursuant to that certain Credit Agreement, dated as of December 19, 2006, among Borrowers, certain Subsidiaries of Parent party thereto, the lenders party thereto from time to time (the “ Prior Lenders ”), and GE Capital as administrative agent for the Prior Lenders (as amended, restated, supplemented or otherwise modified through the Petition Date, the “ Pre-Petition Credit Agreement ”);

WHEREAS, Borrowers have requested that the Lenders provide a senior secured, super-priority debtor-in-possession credit facility to Borrowers of up to $55,000,000 in the aggregate to fund the working capital requirements and other financial needs of the Debtors during the pendency of their Chapter 11 Case and the Canadian Proceedings and to be used in accordance with Section 5.15 herein; and

WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes, Schedules, Exhibits and other attachments (collectively, “ Appendices ”) hereto, or expressly identified to this

LEGAL_US_E # 82813718.8

Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:

AMOUNT AND TERMS OF CREDIT

1.1

Credit Facilities .

(a)

Revolving Credit Facility .

(i)

Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrowers at any time and from time to time on and after the Closing Date until the Commitment Termination Date its Pro Rata Share of advances (each, a “ Revolving Credit Advance ”); provided , that until the entry of the Final Order, Revolving Credit Advances shall be limited as set forth in the Interim Order. The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(a) ; provided ; however , the amount of any Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability at such time. Borrowing Availability may be reduced by Reserves imposed by Agent in its Permitted Discretion. Each Revolving Credit Advance shall be made on notice by Borrower Representative on behalf of the applicable Borrower to one of the representatives of Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (1) noon (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2) noon (New York time) on the date which is three (3) Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a “ Notice of Revolving Credit Advance ”) must be given in writing (by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i) , and shall include the information required in such Exhibit. If any Borrower desires to have the Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower Representative must comply with Section 1.5(e) .

(ii)

Each Borrower shall, if requested by a Revolving Lender, jointly execute and deliver to such Revolving Lender a note to evidence the Revolving Loan Commitment of that Revolving Lender. Each note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender, dated the Closing Date (or such “effective date” as set forth under any Assignment Agreement) and substantially in the form of Exhibit 1.1(a)(ii) (each a “ Revolving Note ” and, collectively, the “ Revolving Notes ”). Each Revolving Note shall represent the obligation of the applicable Borrower to pay the amount of the applicable Revolving Lender’s Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to such Borrower together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the aggregate Revolving Loan and all other non-contingent Obligations

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shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date.

(b)

Intentionally Omitted .

(c)

Swing Line Facility .

(i)

Agent shall notify the Swing Line Lender promptly upon Agent’s receipt of any Notice of Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing Line Lender may, in its discretion, make available from time to time on and after the Closing Date until the Commitment Termination Date advances (each, a “ Swing Line Advance ”) in accordance with any such notice; provided , that until the entry of the Final Order, Swing Line Advances shall be limited as set forth in the Interim Order. The provisions of this Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make Revolving Credit Advances under Section 1.1(a) ; provided that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by Revolving Credit Lenders pursuant to such notice. The aggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesser of (A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and the Borrowing Base, in each case, less the outstanding balance of the Revolving Loan at such time (“ Swing Line Availability ”). Until the Commitment Termination Date, Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(c) . Each Swing Line Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered to Agent by Borrower Representative on behalf of the applicable Borrower in accordance with Section 1.1(a) . Any such notice must be given no later than noon (New York time) on the Business Day of the proposed Swing Line Advance. Unless the Swing Line Lender has received at least one Business Day’s prior written notice from Requisite Revolving Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Swing Line Advance, and to have each Revolving Lender make Revolving Credit Advances in accordance with Section 1.1(c)(iii) . Notwithstanding any other provision of this Agreement or the other Loan Documents, the Swing Line Loan shall constitute an Index Rate Loan. As provided in Section 1.1(c)(iii), Agent may cause the aggregate outstanding principal amount of the Swing Line Loan to be repaid from the proceeds of a Revolving Credit Advance.

(ii)

Each Borrower shall, if requested by the Swing Line Lender, jointly execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line Commitment. Such note shall be in the principal amount of the Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the “ Swing Line Note ”). The Swing Line Note shall represent the obligation of each Borrower to pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid principal amount of all Swing Line Advances made to such Borrower together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the Swing Line Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date if not sooner paid in full.

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(iii)

The Swing Line Lender, at any time and from time to time no less frequently than once weekly shall on behalf of any Borrower (and each Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to each Borrower (which shall be an Index Rate Loan) in an amount equal to that Revolving Lender’s Pro Rata Share of the principal amount of the applicable Borrower’s Swing Line Loan (the “ Refunded Swing Line Loan ”) outstanding on the date such notice is given. Regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds on the Business Day next succeeding the date that notice is given. The proceeds of those Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Swing Line Loan of the applicable Borrower.

(iv)

[intentionally omitted].

(v)

Each Revolving Lender’s obligation to make Revolving Credit Advances in accordance with Section 1.1(c)(iii) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender may have against the Swing Line Lender, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or Event of Default; (C) any inability of any Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement at any time or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Revolving Lender does not make available to Agent or the Swing Line Lender, as applicable, the amount required pursuant to Section 1.1(c)(iii) , as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Revolving Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full at the Federal Funds Rate for the first two (2) Business Days and at the Index Rate thereafter.

(d)

Reliance on Notices; Appointment of Borrower Representative . Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for Agent has actual knowledge to the contrary. Each Borrower hereby designates Parent as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower

LEGAL_US_E # 82813718.8

Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

1.2

Letters of Credit . Subject to and in accordance with the terms and conditions contained herein and in Annex B , Borrower Representative, on behalf of the applicable Borrower, shall have the right to request, and Revolving Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of each Borrower. The Existing Letters of Credit shall be deemed to have been issued hereunder on the Closing Date (and shall not be deemed Indebtedness under the Pre-Petition Credit Agreement for purposes of this Agreement), and no request for issuance thereof need be made.

1.2A

Swap Related Reimbursement Obligations .

(a)

Borrowers agree to reimburse GE Capital in immediately available funds in the amount of any payment made by GE Capital under a Swap Related L/C (such reimbursement obligation, whether contingent upon payment by GE Capital under the Swap Related L/C or otherwise, being herein called a “ Swap Related Reimbursement Obligation” ). No Swap Related Reimbursement Obligation for any Swap Related L/C may exceed the amount of the payment obligations owed by Borrowers under the interest rate protection or hedging agreement or transaction supported by the Swap Related L/C.

(b)

A Swap Related Reimbursement Obligation shall be due and payable by Borrowers within one (1) Business Day after the date on which a related payment was made by GE Capital under the Swap Related L/C.

(c)

Any Swap Related Reimbursement Obligation shall, during the period in which it is unpaid, bear interest at the rate per annum equal to the LIBOR Rate plus one percent (1%), as if the unpaid amount of the Swap Related Reimbursement Obligation were a LIBOR Loan, and not at any otherwise applicable Default Rate. Such interest shall be payable upon demand. The following additional provisions apply to the calculation and charging of interest by reference to the LIBOR Rate:

(i)

The LIBOR Rate shall be determined for each successive one-month LIBOR Period during which the Swap Related Reimbursement Obligation is unpaid, notwithstanding the occurrence of any Event of Default and even if the LIBOR Period were to extend beyond the Commitment Termination Date.

(ii)

If a Swap Related Reimbursement Obligation is paid during a monthly period for which the LIBOR Rate is determined, interest shall be pro-rated and charged for the portion of the monthly period during which the Swap Related Reimbursement Obligation was unpaid. Section 1.13(b) shall not apply to any payment of a Swap Related Reimbursement Obligation during the monthly period.

(iii)

Notwithstanding the last paragraph of the definition of “LIBOR Rate”, if the LIBOR Rate is no longer available from Telerate News Service, the LIBOR Rate

LEGAL_US_E # 82813718.8

shall be determined by GE Capital from such financial reporting service or other information available to GE Capital as in GE Capital’s reasonable discretion indicates GE Capital’s cost of funds.

(d)

Except as provided in the foregoing provisions of this Section 1.2A and in Section 11.3 , Borrowers shall not be obligated to pay to GE Capital or any of its Affiliates any Letter of Credit Fee, or any other fees, charges or expenses, in respect of a Swap Related L/C or arranging for any interest rate protection or hedging agreement or transaction supported by the Swap Related L/C. GE Capital and its Affiliates shall look to the beneficiary of a Swap Related L/C for payment of any such letter of credit fees or other fees, charges or expenses and such beneficiary may factor such fees, charges, or expenses into the pricing of any interest rate protection or hedging arrangement or transaction supported by the Swap Related L/C.

(e)

If any Swap Related L/C is revocable prior to its scheduled expiry date, GE Capital agrees not to revoke the Swap Related L/C unless the Commitment Termination Date or an Event of Default has occurred.

(f)

GE Capital or any of its Affiliates shall be permitted to (i) provide confidential or other information furnished to it by any of the Credit Parties (including, without limitation, copies of any documents and information in or referred to in the Closing Checklist, Financial Statements and Compliance Certificates) to a beneficiary or potential beneficiary of a Swap Related L/C and (ii) receive confidential or other information from the beneficiary or potential beneficiary relating to any agreement or transaction supported or to be supported by the Swap Related L/C. However, no confidential information shall be provided to any Person under this paragraph unless the Person has agreed to comply with the covenant substantially as contained in Section 11.8 .

1.3

Prepayments .

(a)

Voluntary Prepayments; Reductions in Revolving Loan Commitments . Borrowers may at any time pursuant to written notice (or telephonic notice promptly confirmed in writing by telecopy or overnight delivery) by Borrower Representative to Agent (i) voluntarily prepay, without penalty or premium, all or part of the Revolving Loans and/or (ii) permanently reduce (but not terminate) the Revolving Loan Commitment; provided that (A) any such prepayments or reductions shall be in a minimum amount of $500,000 and integral multiples of $100,000 in excess of such amount (unless the outstanding principal balance of the Revolving Loans immediately prior to such reduction is less than $500,000 or any such integral multiple, in which case the prepayment shall be in the entire amount of such outstanding principal balance), (B) the Revolving Loan Commitment shall not be reduced to an amount less than the sum of (i) the amount of the Revolving Loan then outstanding plus (ii) all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) then outstanding (if any), (C) after giving effect to such reductions, Borrowers shall comply with Section 1.3(b)(i) and (D) any such payments shall be applied in accordance with Section 1.3(c) . Notwithstanding any of the foregoing, Borrowers may, without penalty or premium except as set forth in the GE Capital Fee Letter, at any time on at least five (5) Business Days’ prior

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written notice by Borrower Representative to Agent terminate the Revolving Loan Commitment; provided that upon such termination, all Loans and other non-contingent Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B . Any voluntary prepayment and any reduction or termination of the Revolving Loan Commitment must be accompanied by payment of the Fees required by the GE Capital Fee Letter, if any, plus the payment of any LIBOR funding breakage costs in accordance with Section 1.13(b) . Upon any such reduction or termination of the Revolving Loan Commitment, each Borrower’s right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances, shall simultaneously be permanently reduced or terminated, as the case may be; provided that a permanent reduction of the Revolving Loan Commitment shall not require a corresponding pro rata reduction in the L/C Sublimit. Each notice of partial prepayment shall designate the Loans or other Obligations to which such prepayment is to be applied.

(b)

Mandatory Prepayments .

(i)

If at any time the aggregate outstanding balances of the Revolving Loan plus all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) then outstanding exceed the lesser of (A) the Maximum Amount and (B) the Borrowing Base, Borrowers shall immediately repay the aggregate outstanding Revolving Credit Advances and amounts owing by any Credit Party under the Pre-Petition Credit Agreement then outstanding to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Revolving Credit Advances and all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) then outstanding, Borrowers shall provide cash collateral for the Letter of Credit Obligations in the manner set forth in Annex B to the extent required to eliminate such excess. If no Event of Default shall have occurred and be continuing, all or a portion of such cash collateral shall be returned to Borrowers at such time as the aggregate outstanding balances of the Revolving Loan plus all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) then outstanding no longer exceed the lesser of (A) the Maximum Amount and (B) the Borrowing Base.

(ii)

Subject to the terms of the Intercreditor Agreement, the Senior Secured Notes Indenture and the DIP Term Loan Agreement (as in effect on the Closing Date or as amended in accordance with the terms hereof), upon receipt by any Credit Party of any Net Cash Proceeds of any asset Disposition, Borrowers shall promptly (and, in no event, later than one (1) Business Day after any such Disposition) prepay the Loans in an amount equal to all such Net Cash Proceeds; provided , however , this clause (ii) shall not apply to Net Cash Proceeds from asset Dispositions of less than $500,000 in the aggregate during the term of this Agreement. Any such prepayment shall be applied in accordance with Section 1.3(c) .

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(iii)

If Parent issues Stock, or if any Credit Party issues any Indebtedness that is not otherwise permitted hereunder, no later than the Business Day following the date of receipt of the Net Cash Proceeds thereof, Parent shall prepay the Loans in an amount equal to all such Net Cash Proceeds. Any such prepayment shall be applied in accordance with Section 1.3(c) .

(c)

Application of Certain Prepayments . Subject to Section 1.11, any prepayments made by any Borrower pursuant to Section 1.3(a), 1.3(b)(i), (b)(ii) or (b)(iii) above shall be applied as follows: first , to Fees and reimbursable expenses of Agent then due and payable pursuant to any of the Loan Documents, until the same has been paid in full; second , to all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit); third , to interest then due and payable on Swing Line Loans, until the same has been paid in full; fourth , to the principal balance of the Swing Line Loan outstanding, until the same has been repaid in full; fifth , to interest then due and payable on Revolving Credit Advances, until the same has been paid in full; and sixth , to the principal balance of Revolving Credit Advances outstanding, until the same has been repaid in full. None of the Revolving Loan Commitment or the Swing Line Commitment shall be permanently reduced by the amount of any such payments.

(d)

Application of Prepayments from Insurance and Condemnation Proceeds . Prepayments from Net Cash Proceeds of insurance or condemnation events in accordance with Section 5.7 and the Mortgage(s), respectively, shall be applied, first , to all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit), second , to the Swing Line Loans, and third , to the Revolving Credit Advances; provided, that prior to the Discharge of Term Obligations, proceeds of Senior Secured Priority Collateral to the extent payable to the holders of the Senior Secured Notes or the DIP Term Loan Lenders or to be held as Senior Secured Priority Collateral or otherwise shall be applied, in each case, in accordance with the terms of the Senior Secured Notes Indenture, the DIP Term Loan Agreement and the Intercreditor Agreement, provided further that (1) the Borrower Representative shall certify to Agent that all such proceeds of Senior Secured Priority Collateral have been deposited into a Senior Secured Priority Account in accordance with Section 5.20 and otherwise as required by the Senior Secured Notes Indenture, the DIP Term Loan Agreement, the Intercreditor Agreement or the Loan Documents, as applicable, and (2) the Borrower Representative shall notify Agent in accordance with Section 5.20 prior to any withdrawal from or deposits to any such account. None of the Revolving Loan Commitment or the Swing Line Loan Commitment shall be permanently reduced by the amount of any such prepayments.

(e)

No Implied Consent . Nothing in this Section 1.3 shall be construed to constitute Agent’s or any Lender’s consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan Documents.

1.4

Use of Proceeds . Borrowers will use the proceeds of the Loans and the Letters of Credit in accordance with Section 3.20 .

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1.5

Interest and Applicable Margins .

(a)

Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; and (ii) with respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.

The Applicable Margins are as follows:


Applicable Revolver Index Margin	6.00%
Applicable Revolver LIBOR Margin	6.00%
Applicable L/C Margin	6.00%
Applicable Unused Line Fee Margin	1.00%

(b)

If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

(c)

All computations of Fees calculated on a per annum basis and interest shall be made by Agent on the basis of a 360-day year (except that Loans that bear interest based on the Index Rate shall be calculated on the basis of a 365-day year), in each case for the actual number of days occurring in the period for which such interest and Fees are payable. The Index Rate is a floating rate determined for each day. Each determination by Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees.

(d)

So long as an Event of Default has occurred and is continuing under Section 8.1(a ) with respect to any payment of principal or interest, or so long as any other Event of Default has occurred and is continuing and at the election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice from Agent to Borrower Representative, to the fullest extent permitted by applicable law, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2.00%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder unless Agent or Requisite Lenders elect to impose a smaller increase (the “ Default Rate ”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived (or such notice is rescinded) and shall be payable upon demand.

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(e)

Borrower Representative shall have the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period, and the succeeding LIBOR Period of that continued Loan shall commence on the first day after the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $1,000,000 and integral multiples of $100,000 in excess of such amount. Any such election must be made by noon (New York time) on the third Business Day prior to (1) the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by noon (New York time) on the third Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. Any election to convert any LIBOR Loan or portion thereof into an Index Rate Loan must be made by noon (New York time) on the day of the proposed conversion. Borrower Representative must make all such elections by notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to a written notice (a “ Notice of Conversion/Continuation ”) substantially in the form of Exhibit 1.5(e) .

(f)

Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Interest Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or intentionally omitted by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Interest Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Interest Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Interest Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.

1.6

Eligible Accounts .

All of the Accounts owned by each Borrower Party and reflected in the most recent Borrowing Base Certificate delivered by Borrower Representative, on behalf of itself and each other Borrower Party, to Agent shall be “ Eligible Accounts ” for purposes of this Agreement, except any Account to which any of the exclusionary criteria set forth below applies. Agent (i) shall have the right to establish, modify or eliminate Reserves against Eligible Accounts from time to time in its Permitted Discretion and (ii) reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set

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forth below and to establish new criteria under this clause (ii) in its Permitted Discretion, reflecting changes in the collectibility or realization values of such Accounts arising or discovered by Agent after the Closing Date subject to the approval of Requisite Lenders in the case of adjustments or new criteria under this clause (ii) which have the effect of making more credit available (unless such adjustment restores the amount of credit available to a previously obtained amount). Eligible Accounts shall not include any Account of any Borrower Party:

(a)

that does not arise from the sale of goods or the performance of services by such Borrower Party in the ordinary course of its business;

(b)

(i) upon which such Borrower Party’s right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever or (ii) that is the obligation of an Account Debtor located in a state or jurisdiction (e.g., New Jersey, Minnesota and West Virginia) that requires, as a condition to access to the courts of such jurisdiction, that a creditor qualify to transact business, file a business activities report or other report or form, or take one or more other actions, unless the applicable Borrower Party has so qualified, filed such reports or forms, or taken such actions (and, in each case, paid any required fees or other charges), except to the extent that such Borrower Party may qualify subsequently as a foreign entity authorized to transact business in such state or jurisdiction and gain access to such courts, without incurring any cost or penalty reasonably viewed by Agent to be material in amount, and such later qualification cures any access to such courts to enforce payment of such Account or (iii) if the Account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to such Borrower Party’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer;

(c)

in the event that any defense, counterclaim, setoff or dispute is asserted as to such Account; provided that the portion of such Account not subject to such defense, counterclaim, setoff or dispute will not be excluded solely because of this clause (c);

(d)

that is not a true and correct statement of a bona fide obligation incurred in the amount of the Account for merchandise sold to or services rendered and accepted by the applicable Account Debtor;

(e)

with respect to which an invoice (in form and substance consistent with current practices or in such other form and with such other terms as are reasonably acceptable to Agent) has not been sent to the applicable Account Debtor;

(f)

that (i) is not owned by such Borrower Party or (ii) is subject to any Lien of any other Person, other than Liens in favor of Agent, on behalf of itself and Lenders, and Liens permitted under the Loan Documents;

(g)

that arises from a sale to any director (other than in the case of a director that serves on the board of the applicable Borrower Party and the applicable Account Debtor), officer, other employee or controlled affiliate of any Credit Party;

(h)

that is the obligation of an Account Debtor that is the United States government or a political subdivision thereof, or department, agency or instrumentality thereof

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unless such Borrower Party has complied with the steps reasonably requested by Agent, including notice to the United States government under the Federal Assignment of Claims Act of 1940 or any action under any state statute comparable to the Federal Assignment of Claims Act of 1940; provided , however , the aggregate amount of all such governmental Accounts included in Eligible Accounts shall not exceed $5,000,000;

(i)

that is the obligation of an Account Debtor located in a country other than the United States or Canada (a “ Foreign Account Debtor ”) unless payment thereof is assured by a letter of credit , export insurance or other similar coverage on terms and conditions reasonably satisfactory to Agent; provided , however , the aggregate amount of all Accounts owing from Foreign Account Debtors supported by letters of credit, export insurance or other similar coverage included in Eligible Accounts shall not exceed $5,000,000 at any time (such Dollar amount may be increased after the Closing Date by Agent, but any such increase shall be in Agent’s sole discretion); provided , further , no Accounts of any Blocked Person as determined by Agent in its sole discretion shall be included in Eligible Accounts;

(j)

to the extent such Borrower Party or any Subsidiary thereof is liable for goods sold or services rendered by the applicable Account Debtor to such Borrower Party or any Subsidiary thereof (unless such Account Debtor has executed a no-offset letter satisfactory to Agent in its Permitted Discretion) but only to the extent of the potential offset;

(k)

that arises with respect to goods that are delivered on a bill and hold, cash on delivery basis or placed on consignment, guaranteed sale or other terms by reason of which the payment by the Account Debtor is or may be conditional, except as to bill and hold invoices with respect to the sale of finished goods in the ordinary course of business, if (i) Agent shall have received an agreement in writing from the Account Debtor, in form and substance reasonably satisfactory to Agent, confirming the unconditional obligation of the Account Debtor to take the goods related thereto and pay such invoice, (ii) the finished goods that are the subject of such bill and hold invoices are not included in the Borrowing Base as Eligible Inventory, (iii) such bill and hold Accounts were originated in compliance with the Borrower Parties’ “bill and hold policy” dated as of July 31, 2006 (in the form attached hereto as Exhibit 1.6 ), as may be subsequently amended on terms that would provide no more availability under the Borrowing Base than in existence immediately prior to such amendment and as approved by Agent in its Permitted Discretion, (iv) the duration of the bill and hold period for such invoice shall not exceed forty-five (45) days, (v) the amount of any such bill and hold invoice included in Eligible Accounts shall be net of any customer deposit received by the applicable Borrower Party in connection with such bill and hold arrangement and (vi) the aggregate amount of all bill and hold invoices included in Eligible Accounts shall not exceed $3,000,000;

(l)

(i) that is not paid within the earlier of: sixty (60) days following its due date or one hundred and fifty (150) days following its original invoice date; (ii) that is the obligation of an Account Debtor that suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due; or (iii) that is the obligation of an Account Debtor that has filed or had filed against it a petition under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of Debtors , except with respect to post-

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petition Accounts owing by creditworthy Account Debtors which have filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code, as Agent may approve in writing from time to time in its Permitted Discretion;

(m)

that is the obligation of an Account Debtor if more than fifty percent (50%) of the Dollar amount of all Accounts owing by that Account Debtor are ineligible under the other criteria set forth herein;

(n)

as to which Agent’s lien thereon, on behalf of itself and Lenders, is not a first priority perfected Lien;

(o)

that fails to conform in all material respects (to the extent such representation or warranty does not contain a materiality qualifier) with any of the representations or warranties pertaining to Accounts in the Loan Documents;

(p)

to the extent such Account is evidenced by a judgment, instrument or chattel paper;

(q)

to the extent that such Account, together with all other Accounts owing by such Account Debtor and its controlled Affiliates as of any date of determination exceed ten percent (10%) of all Eligible Accounts; or

(r)

that is payable in any currency other than U.S. Dollars, Canadian Dollars or Japanese Yen (provided that (i) Eligible Accounts attributable to Accounts payable in Canadian Dollars shall not exceed the U.S. Dollar equivalent of $10,000,000 and (ii) Eligible Accounts attributable to Accounts payable in Japanese Yen shall be included up to the U.S.-Dollar equivalent of $5,000,000 subject to documentation and operational mechanics reasonably acceptable to Agent).

1.7

Eligible Inventory . All of the Inventory owned by the Borrower Parties (other than Eligible Machinery-in-Process) and reflected in the most recent Borrowing Base Certificate delivered by Borrower Representative, on behalf of itself and each other Borrower Party, to Agent shall be “ Eligible Inventory ” for purposes of this Agreement, except any Inventory to which any of the exclusionary criteria set forth below applies. Agent (i) shall have the right to establish, modify or eliminate Reserves against Eligible Inventory from time to time in its Permitted Discretion and (ii) reserves the right, at any time and from time to time after the Closing Date, to adjust the criteria set forth below and to establish new criteria under this clause (ii) with respect to Eligible Inventory in its Permitted Discretion reflecting changes in the salability or realization values of Inventory arising or discovered by Agent after the Closing Date, subject to the approval of Requisite Lenders in the case of adjustments or new criteria under this clause (ii) which have the effect of making more credit available (unless such adjustment restores the amount of credit available to a previously obtained amount). Eligible Inventory shall not include any Inventory of any Borrower Party that:

(a)

is not owned by such Borrower Party free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure such Borrower Party’s performance with respect to that Inventory), except the Liens in favor

LEGAL_US_E # 82813718.8

of Agent, on behalf of itself and Lenders, and permitted encumbrances in favor of landlords and bailees to the extent permitted hereunder (subject to Reserves established by Agent) and other Liens permitted hereunder;

(b)

(i) is not located on premises owned, leased or rented by such Borrower Party and set forth in Schedule 3.29 , or (ii) is stored at a leased location, unless Agent has given its prior consent thereto (such consent not to be unreasonably withheld by Agent in its Permitted Discretion) and unless either (x) a reasonably satisfactory landlord waiver has been delivered to Agent, (y) either the Interim Order, the DIP Recognition Order, the Final Order or the Final DIP Recognition Order provides for collateral access to the reasonable satisfaction of Agent, or (z) Reserves reasonably satisfactory to Agent have been established with respect thereto or (iii) is stored with a bailee or warehouseman unless either (x) a reasonably satisfactory, acknowledged bailee letter has been received by Agent, (y) either the Interim Order, the DIP Recognition Order, the Final Order or the Final DIP Recognition Order provides for collateral access to the reasonable satisfaction of Agent or (z) Reserves reasonably satisfactory to Agent have been established with respect thereto, or (iv) is located at an owned location subject to a mortgage in favor of a lender other than Agent unless either (x) a reasonably satisfactory mortgagee waiver has been delivered to Agent or (y) either the Interim Order, the DIP Recognition Order, the Final Order or the Final DIP Recognition Order provides for collateral access to the reasonable satisfaction of Agent; provided , however , clauses (i) through (iv) above shall not apply to Inventory located at (a) the Rite-Tech location in Quebec, Canada and (b) the Progress Precision location in Mississuaga, Ontario, Canada; provided , further , Inventory located at any site where the aggregate Book Value of all Inventory at such location is less than $100,000 shall not be Eligible Inventory hereunder (except with respect to Inventory located at (a) the Rite Tech location in Quebec, Canada and (b) the Progress Precision location in Mississuaga, Ontario, Canada);

(c)

is placed on consignment with the applicable Borrower Party from its supplier or is in transit, except for Inventory in transit between domestic locations of the Credit Parties as to which Agent’s Liens have been perfected at origin and destination;

(d)

is covered by a negotiable document of title, unless such document has been delivered to Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent and Lenders and other Liens permitted hereunder;

(e)

consists of display items or packing or shipping materials, manufacturing supplies, work-in-process Inventory or machines-in-process Inventory, provided , however , that the amount of machines-in-process more than ninety-five percent (95%) complete (in terms of time or dollars) will be adjusted to reflect their value as if such machines-in-process were converted to finished goods and such value shall be Eligible Inventory to the extent that the amount is reduced by expenses required to complete such machines-in-process into finished goods;

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(f)

consists of goods which have been returned by the buyer (other than goods that are undamaged and resalable in the normal course of business);

(g)

is not of a type held for sale in the ordinary course of such Borrower Party’s business;

(h)

is not subject to a first priority Lien in favor of Agent on behalf of itself and Lenders;

(i)

(j)

consists of any costs associated with “freight in” charges that are not specifically ascribed to an individual item of Inventory;

(k)

consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available and for which licensed third-party transporters are not readily available;

(l)

is not covered by property insurance that is commercially reasonable insurance protection for the Borrower Parties’ industry, size and risk and Agent’s collateral protection as in effect on the Closing Date provided that any changes to such insurance protection that are material and adverse to the Lenders shall be reasonably acceptable to Agent in its Permitted Discretion;

(m)

is subject to any patent or trademark license requiring the payment of royalties or fees (other than with respect royalties or fees that are (i) payable solely after the sale of such Inventory and (ii) constitute unsecured claims against the applicable Borrower Party) or requiring the consent of the licensor for a sale thereof by Agent, unless Agent shall have entered into a waiver of such licensing requirement pursuant to a written agreement in form and substance reasonably satisfactory to Agent; or

(n)

has been consigned to a Borrower Party’s customer, unless (i) such consigned Inventory with such customer at a particular location has an aggregate Book Value in excess of $100,000, (ii) such consigned Inventory has been delivered to a customer location in respect of which a satisfactory access agreement has been executed in favor of and received by Agent, (iii) such consigned Inventory is segregated or otherwise separately identifiable from any goods of any other person at the applicable customer location, (iv) a UCC-1 or Personal Property Security Act (as applicable) financing statement has been filed in the jurisdiction of the applicable customer’s organization, which names such customer as debtor, the applicable Borrower Party as secured party and Agent as assignee of secured party and which identifies such consigned Inventory in the possession of such customer as the collateral; (v) a notice that complies with the terms of Section 9-324 of the Code (or Section 33 of the Personal Property Security Act, as applicable) has been delivered to the secured creditors, if any, of the applicable customer that have a perfected Lien in the Inventory

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of such customer; and (vi) the aggregate amount of all such consigned Inventory included in Eligible Inventory shall not exceed $3,000,000.

1.7A

Eligible Machinery-in-Process . All of the Machinery-in-Process of the Borrower Parties reflected in the most recent Borrowing Base Certificate delivered by Borrower Representative, on behalf of itself and each other Borrower Party, to Agent shall be “ Eligible Machinery-in-Process ” for purposes of this Agreement, except any excluded Machinery-in-Process referred to in the last sentence of this Section 1.7A . Agent (i) shall have the right to establish, modify or eliminate Reserves against Eligible Machinery-in-Process from time to time in its Permitted Discretion and (ii) reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below and to establish new criteria under this clause (ii) in its Permitted Discretion, reflecting changes in the collectibility or realization values of such Machinery-in-Process arising or discovered by Agent after the Closing Date subject to the approval of Requisite Lenders in the case of adjustments or new criteria under this clause (ii) which have the effect of making more credit available (unless such adjustment restores the amount of credit available to a previously obtained amount). Eligible Machinery-in-Process shall not include any Machinery-in-Process of any Borrower Party (i) the value of which is not supported by the most recent appraisal delivered in accordance with paragraph (h) of Annex F , in form and substance reasonably satisfactory to Agent, and (ii) that does not satisfy the criteria set forth in the definition of Eligible Inventory in all respects except for the fact that such Eligible Machinery-in-Process consists of work-in-progress or machinery-in-progress.

1.8

Cash Management Systems . Borrowers will establish and will maintain until the Termination Date, the cash management systems described in Annex C (the “ Cash Management Systems ”) on the terms and subject to the limitations set forth therein.

1.9

Fees .

(a)

Borrowers shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee Letter.

(b)

As additional compensation for the Revolving Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non-use of available funds in an amount equal to the Applicable Unused Line Fee Margin per annum (calculated on the basis of a 360-day year for actual days elapsed) multiplied by the difference between (x) the Maximum Amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Revolving Loan and the Swing Line Loan outstanding during the period for which such Fee is due.

(c)

Borrowers shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of Credit Fee as provided in Annex B .

1.10

Receipt of Payments . Borrowers shall make each payment under this Agreement not later than 2:00 p.m. (New York time) on the day when due in immediately available funds in Dollars to the Collection Account. For purposes of computing interest and

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Fees and determining Borrowing Availability as of any date, all payments shall be deemed received on the Business Day on which immediately available funds therefor are received in the Collection Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York time on any Business Day or on a day that is not a Business Day shall be deemed to have been received on the following Business Day.

1.11

Application and Allocation of Payments .

(a)

So long as no Event of Default has occurred and is continuing, (i) payments consisting of proceeds of Accounts received in the ordinary course of business shall be applied, first , to all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit), second , to the Swing Line Loan, and third , to the Revolving Loan, (ii) payments matching specific scheduled payments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shall be applied in accordance with the provisions of Section 1.3(a) ; and (iv) mandatory prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d) . All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. Any other payment shall be applied as directed by the Borrower Representative. As to all payments made when an Event of Default has occurred and is continuing or following the Commitment Termination Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Agent shall have the continuing exclusive right to apply any and all such payments against the Obligations of Borrowers and all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) as Agent may deem advisable notwithstanding any previous entry by Agent in the Loan Account or any other books and records; provided , that (i) Agent shall apply payments first to amounts that are then due and payable and (ii) to the extent any payment received by Agent following an Event of Default is applied (x) to interest on the Loans (other than the Swing Line Loan), a pro rata portion of such payment shall be applied to interest on Swap Related Reimbursement Obligations based upon the aggregate unpaid amounts owing to each holder thereof, and (y) to principal on the Loans (other than the Swing Line Loan), a pro rata portion of such payment shall be applied to unpaid Swap Related Reimbursement Obligations based upon the aggregate unpaid amounts owing to each holder thereof. In all circumstances, after acceleration or maturity of the Obligations, all payments and proceeds of Collateral shall be applied to amounts then due and payable in the following order: (1) all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) (2) to reimburse the L/C Issuer for all unreimbursed draws or payments made by it under Letters of Credit, (3) to Fees and Agent’s expenses reimbursable hereunder; (4) to interest on the Swing Line Loan; (5) to principal payments on the Swing Line Loan; (6) to interest on the other Loans and unpaid Swap Related Reimbursement Obligations, ratably in proportion to the interest accrued as to each Loan and unpaid Swap Related Reimbursement Obligation, as applicable; (7) to principal payments on the other Loans and unpaid Swap Related

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Reimbursement Obligations and to provide cash collateral for contingent Letter of Credit Obligations in the manner described in Annex B , ratably to the aggregate, combined principal balance of the other Loans, unpaid Swap Related Reimbursement Obligations and outstanding Letter of Credit Obligations; (8) to all other Obligations, including expenses of Lenders to the extent reimbursable under Section 11.3 ; and (9) any remainder shall be remitted to Borrowers or any other Person legally entitled thereto.

(b)

Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with Section 5.7 ) and interest and principal, other than principal of the Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay promptly any such amounts as and when due, even if the amount of such charges would exceed the Borrowing Availability at such time. At Agent’s option and to the extent permitted by law, any charges so made shall constitute part of the Revolving Loan hereunder. Agent will give Borrower Representative notice of any such charge promptly after such charge is made.

1.12

Loan Account and Accounting . Agent shall maintain a loan account (the “ Loan Account ”) on its books to record: all Advances, all payments made by Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with Agent’s customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded on Agent’s most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to Agent and Lenders by each Borrower; provided that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay the Obligations. Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Loans setting forth the balance of the Loan Account as to each Borrower for the immediately preceding month. Unless Borrower Representative notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within thirty (30) days after the date thereof, each and every such accounting shall be presumptive evidence of all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers.

1.13

Indemnity .

(a)

Each Credit Party that is a signatory hereto shall jointly and severally indemnify and hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s respective officers, directors, employees, attorneys, advisors (financial or otherwise), agents and representatives (each, an “ Indemnified Person ”), from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and related reasonable out-of-pocket expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection

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therewith, including any and all Environmental Liabilities (collectively, “ Indemnified Liabilities ”); provided , that no such Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense, including any and all Environmental Liabilities, results from that Indemnified Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

(b)

To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) any Borrower shall refuse to accept any borrowing of, or shall request a termination of, any borrowing of, conversion into or continuation of, LIBOR Loans after Borrower Representative has given notice requesting the same in accordance herewith; or (iii) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith, then Borrowers shall jointly and severally indemnify and hold harmless each Lender from and against all losses, costs and expenses (excluding loss of margin) resulting from or arising from any of the foregoing. Such indemnification shall include any loss (excluding loss of margin) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; provided , that each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 1.13(b) , and such calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection in detail.

1.14

Intentionally Omitted .

1.15

Taxes .

(a)

Any and all payments by each Borrower hereunder (including any payments made pursuant to Section 12 ) or under the Notes shall be made, in accordance with this Section 1.15 , free and clear of and without deduction for any and all present or future Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder (including any sum payable pursuant to Section 12 ) or under the Notes,

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(i) the sum payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 1.15 ) Agent or Lenders, as applicable, receive an amount equal to the sum they would have received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii) such Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, Borrower Representative shall furnish to Agent the original or a certified copy of a receipt evidencing payment thereof.

(b)

Each Credit Party that is a signatory hereto shall jointly and severally indemnify and, within ten (10) days of demand therefore, pay Agent and each Lender for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this Section 1.15 ) paid by Agent or such Lender, as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted.

(c)

Each Lender organized under the laws of a jurisdiction outside the United States (a “ Foreign Lender ”) as to which payments to be made under this Agreement or under the Notes are exempt from United States withholding tax under an applicable statute or tax treaty shall provide to Borrower Representative and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form, certificate or document prescribed by the IRS or the United States certifying as to such Foreign Lender’s entitlement to such exemption (a “ Certificate of Exemption ”). Any foreign Person that seeks to become a Lender under this Agreement shall provide a Certificate of Exemption to Borrower Representative and Agent prior to becoming a Lender hereunder. No foreign Person may become a Lender hereunder if such Person fails to deliver a Certificate of Exemption in advance of becoming a Lender.

(d)

If Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes as to which it has been indemnified by Borrowers or with respect to which any Borrower has paid additional amounts pursuant to this Section 1.15 , so long as no Default or Event of Default has occurred and is continuing, it shall pay over such refund to Borrowers (but only to the extent of payments made, or additional amounts paid, by Borrowers under this Section 1.15 with respect to Taxes giving rise to such a refund), net of all reasonable out-of-pocket expenses of Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such a refund); provided , that Borrowers, upon the request of Agent or such Lender, agree to repay the amount paid over to Borrowers (plus any penalties, interest or other charges, imposed by the relevant Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful misconduct or gross negligence of Agent hereunder) to Agent or Lender in the event Agent or Lender is required to repay such refund to such Governmental Authority. Except as expressly provided for in this Section 1.15 , this Section shall not be construed to require Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to Borrowers or any other Person.

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1.16

Capital Adequacy; Increased Costs; Illegality .

(a)

If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the Closing Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a copy of such demand to Agent) pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. Any such demand shall be accompanied by a certificate as to the amount of that reduction, showing the basis of the computation thereof, submitted by such Lender to Borrower Representative and to Agent, and shall be presumptive evidence of the matters set forth therein.

(b)

If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. Any such demand shall be accompanied by a certificate as to the amount of such increased cost, submitted to Borrower Representative and to Agent by such Lender, and shall be presumptive evidence of the matters set forth therein. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b) .

(c)

Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s reasonable opinion, materially adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative on behalf of such Borrower, within five (5) Business Days after the delivery of such notice and demand, converts all LIBOR Loans into Index Rate Loans.

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(d)

Within thirty (30) days after receipt by Borrower Representative of written notice and demand from any Lender (an “ Affected Lender ”) for payment of additional amounts or increased costs as provided in Section 1.15(a), 1.16(a) or 1.16(b) , Borrower Representative may, at its option, notify Agent and such Affected Lender of its intention to replace the Affected Lender. Borrower Representative, with the consent of Agent (such consent not to be unreasonably withheld), may obtain, at Borrowers’ expense, a replacement Lender (“ Replacement Lender ”) for the Affected Lender, which Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain a Replacement Lender, the Affected Lender must sell and assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale and such assignment shall not require the payment of an assignment fee to Agent; provided , that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment.

(e)

Notwithstanding anything to the contrary contained in Section 1.15(a), 1.16(a) or 1.16(b) , no Borrower shall be required to compensate a Lender or L/C Issuer pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or L/C Issuer, as the case may be, notifies such Borrower of the change in law or regulation giving rise to such increased costs or reductions and of such Lender’s or L/C Issuer’s intention to claim compensation therefore; provided , however , that if the change in law or regulation (or any interpretation thereof) giving rise to such increased costs or reductions is retroactive, then such 180-day period shall be extended to include the period of such retroactive effect.

1.17

Single Loan . All Loans to each Borrower and all of the other Obligations of each Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of that Borrower secured, until the Termination Date, by all of the Collateral.

1.18

Super-Priority Nature of Obligations and Agent’s Liens . Each Credit Party represents, warrants, covenants and agrees that:

(a)

the priority of Agent’s and Lenders’ Liens on the Collateral owned by Borrowers shall be set forth in the Financing Orders;

(b)

the priority of the superpriority administrative claims granted to Agent and the Lenders shall be as set forth in the Financing Orders; and.

(c)

Agent’s and Lenders’ Liens on the Collateral owned by the Credit Parties and Agent’s and Lenders’ respective administrative claims under Sections 364(c)(l) and 364(d) of the Bankruptcy Code afforded the Obligations shall also have priority over any claims, including, upon entry of the Final Order and the Final DIP Recognition Order, those arising under Section 506(c) of the Bankruptcy Code subject and subordinate only to the sum of the following: (i) allowed, accrued, but unpaid professional fees and expenses of Borrowers and Guarantors for the Committee (to the extent consistent with the 13-Week Budget) and the fees and expense claimed on the Administration Charge, and which, in each case, has accrued

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and been incurred prior to the occurrence of an Event of Default (but after the later of (A) 50 days prior to the date of the occurrence of the Event of Default and (B) the date of filing of the last fee application (of the applicable professional) which may and shall be paid after any such Event of Default to the extent allowed by the Bankruptcy Court or the Canadian Court, as applicable (the “ Pre-Event of Default Carve-Out Expenses ”), (ii) Canadian Priority Payables, if any, (iii) allowed, accrued but unpaid professional fees and expenses incurred by Borrowers and Guarantors for the Committee (to the extent consistent with the 13-Week Budget) incurred in the Chapter 11 Case or the Canadian Proceedings after an Event of Default (that is not cured or waived) in an aggregate amount not to exceed $1,500,000 (which will be inclusive of the amount of the Administration Charge and for payment of approved professional fees for any Bankruptcy Court appointed Chapter 7 trustee or Canadian Liquidator) (collectively, the “ Post-Event of Default Carve-Out Expenses ” and collectively, with the Pre-Event of Default Carve-Out Expenses, the “ Carve-Out Expenses ”), and (iv) fees payable to the Office of the United States Trustee pursuant to 28 U.S.C. § 1930 and to the clerk of the Bankruptcy Court (collectively, with the Carve-Out Expenses, the “ Carve-Out Amount ”), provided that the Carve-Out Expenses shall not include any other claims that are or may be senior to or pari passu with any of the Carve-Out Expenses or any professional fees and expenses of a Chapter 7 trustee or Canadian Liquidator; and, provided , further , that Carve-Out Expenses shall not include any fees or disbursements (A) arising after the conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code or (B) of the type described in Section 3.20 hereof or otherwise related to the investigation of, preparation for, or commencement or prosecution of, any claims or proceedings against (1) Agent or the Lenders or their claims or security interests in or Liens on, the Collateral whether under this Agreement or any other Loan Document and (2) any agent or lender under the Pre-Petition Credit Agreement or their claims or security interests in connection with the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith. Except as set forth herein or in the Final Order or the Final DIP Recognition Order, as applicable, no other claim having a priority superior or pari passu to that granted to Agent and Lenders by the Final Order or the Final DIP Recognition Order, as applicable, shall be granted or approved while any Obligations under this Agreement remain outstanding. Except for the Carve-Out Amount, no costs or expenses of administration shall be imposed against Agent, Lenders or any of the Collateral or any of the Prior Agent and Prior Lenders under the Pre-Petition Credit Agreement or the collateral (as defined in the Pre-Petition Credit Agreement) under Sections 105, 506(c) or 552 of the Bankruptcy Code, or otherwise, and the Credit Parties hereby waive for themselves and on behalf of each of their estates in bankruptcy, any and all rights under sections 105, 506(c) (upon entry of the Final Order) or 552, or otherwise, to assert or impose or seek to assert or impose, any such costs or expenses of administration against Agent or the Lenders or the Prior Agent or the Prior Lenders under the Pre-Petition Credit Agreement.

1.19

Payment of Obligations . Upon the maturity (whether by acceleration or otherwise) of any of the Obligations under this Agreement or any of the other Loan Documents, Lenders shall be entitled to immediate payment of such Obligations without further application to or order of the Bankruptcy Court or the Canadian Court.

1.20

No Discharge; Survival of Claims . Each Credit Party agrees that (a) the Obligations hereunder shall not be discharged by the entry of an order confirming a plan of reorganization in any case commenced under Chapter 11 of the Bankruptcy Code or an order

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sanctioning a plan of arrangement or compromise under the CCAA (and Borrowers pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waive any such discharge) and (b) the super priority administrative claim granted to Agent and Lenders pursuant to the Financing Orders and described in Section 1.18 and the Liens granted to Agent pursuant to the Financing Orders and described in Section 1.18 shall not be affected in any manner by the entry of an order confirming a plan of reorganization in any case commenced under Chapter 11 of the Bankruptcy Code or an order sanctioning a plan of arrangement or compromise under the CCAA.

1.21

Release . The Credit Parties hereby acknowledge effective upon entry of the Final Order (or, with respect to the Canadian Borrowing Base Guarantors only, the Final DIP Recognition Order) and to the extent permitted by the Financing Orders, that Credit Parties have no defense, counterclaim, offset, recoupment, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all of any part of the Credit Parties’ liability to repay Agent or any Lender as provided in this Agreement or to seek affirmative relief or damages of any kind or nature from Agent or any Lender. The Credit Parties, in their own right, on behalf of each of their bankruptcy estates and on behalf of all their successors, assigns, Subsidiaries, Guarantors and any Affiliates and any Person acting for and on behalf of, or claiming through them, (collectively, the “ Releasing Parties ”), hereby fully, finally and forever release and discharge Agent, Lenders, Prior Agent and Prior Lenders and all of Agent’s, Lenders’, Prior Agent’s and Prior Lenders’ past and present officers, directors, agents, attorneys, assigns, heirs, parents, subsidiaries, and each person acting for or on behalf of any of them (collectively, the “ Released Parties ”) of and from any and all past and present actions, causes of action, demands, suits, claims, liabilities, Liens, lawsuits, adverse consequences, amounts paid in settlement, costs, damages, debts, deficiencies, diminution in value, disbursements, expenses, losses and other obligations of any kind or nature whatsoever, whether in law, equity or otherwise (including, without limitation, those arising under Sections 541 through 550 of the Bankruptcy Code and interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses, and incidental, consequential and punitive damages payable to third parties), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore accrue against any of the Released Parties, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof in any way, directly or indirectly arising out of, connected with or relating to this Agreement, the Financing Orders and the transactions contemplated hereby, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing; provided that nothing herein shall be deemed to be a release of any Secured Party from its obligations under the Loan Documents, provided further, that nothing contained herein shall be deemed to limit or modify the rights granted to third parties under the Financing Orders.

1.22

Waiver of any Priming Rights . Upon the Closing Date, and to the extent permitted by the Financing Orders, and on behalf of itself and its estate, and for so long as any Obligations shall be outstanding, Borrowers hereby irrevocably waive any right, pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code or otherwise, to grant any Lien of equal or greater priority than the Liens securing the Obligations, or to approve a claim of equal or

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greater priority than the Obligations. Notwithstanding the foregoing, this section does not impact or change in any way the lien priority of the DIP Term Loan Agent and the Senior Secured Noteholders with respect to the Senior Secured Priority Collateral.

1.23

Milacron Capital Forbearance . Agent and Lenders hereby agree to forbear and refrain from exercising any enforcement right or remedy they may have against Milacron Capital under this Agreement or the Loan Documents, including without limitation any right to (i) enforce payment under any promissory note or guarantee, (ii) enforce any lien or security interest against any assets of Milacron Capital, or (iii) institute any proceeding or provide a claim to support any proceeding under the bankruptcy or insolvency laws, or laws having similar effect, of any jurisdiction (domestic or foreign) against Milacron Capital, in each case, so long as the DIP Term Loan Agent, DIP Term Loan Lenders, the Senior Secured Notes Trustee and the Senior Secured Noteholders shall also forbear and refrain from taking any such actions.

1.24

Milacron Canada . Notwithstanding anything to the contrary set forth in this Agreement, prior to the entry of the DIP Recognition Order, (i) no proceeds of the Advances hereunder shall directly, or indirectly, be made available to, or used on behalf of, the Canadian Borrowing Base Guarantors and (ii) no assets of the Canadian Borrowing Base Guarantors shall be included in the calculation of the Borrowing Base. .

CONDITIONS PRECEDENT

2.1

Conditions to the Initial Loans . No Lender shall be obligated to make any Loan or incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill, or perform any other action hereunder, until the following conditions have been satisfied or provided for in a manner reasonably satisfactory to Agent, or waived in writing by Agent:

(a)

Credit Agreement; Loan Documents . This Agreement or counterparts hereof shall have been duly executed by Borrowers, each other Credit Party, Agent and Lenders, and delivered to Agent; and Agent shall have received the documents, instruments, agreements and legal opinions as listed in the Closing Checklist attached hereto as Annex D , each in form and substance reasonably satisfactory to Agent.

(b)

Approvals . Agent shall have received (i) reasonably satisfactory evidence that the Credit Parties have obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation of the Related Transactions (other than those set forth on Schedule 2.1 attached hereto) or (ii) an officer’s certificate in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required.

(c)

[Intentionally Omitted. ]

(d)

Payment of Fees . Borrowers shall have paid the Fees required to be paid on the Closing Date in the respective amounts specified in Section 1.9 (including the Fees

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specified in the GE Capital Fee Letter), and shall have reimbursed Agent for all fees, costs and expenses of closing required to be reimbursed in accordance with the Loan Documents and presented prior to the Closing Date.

(e)

Chapter 11 Case Administration . Entry by the Bankruptcy Court of the Interim Order, by no later than five (5) days after the Petition Date.

(f)

First Day Orders and Motions . All first day motions described on Schedule A-1 that are filed in the Chapter 11 Case and all related orders entered by the Bankruptcy Court shall be in form and substance satisfactory to Agent and its counsel and the Lenders.

(g)

No PBGC Liens . No Liens shall exist on the Collateral in favor of the PGBC.

2.2

Further Conditions to Each Loan . Except as otherwise expressly provided herein, the obligation of any Lender to fund any Advance or incur any Letter of Credit Obligation is subject to the fulfillment, in a manner satisfactory to Agent, of each of the following conditions precedent:

(a)

(i) the representations or warranties by any Credit Party contained herein or in any other Loan Document are true and correct as of such date, except to the extent that such representation or warranty expressly relates to an earlier date and except for changes therein expressly permitted or expressly contemplated by this Agreement and (ii) Agent or Requisite Revolving Lenders have not determined not to make such Advance or incur such Letter of Credit Obligation as a result of the fact that such warranty or representation is untrue or incorrect;

(b)

(i) no Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and (ii) Agent or Requisite Revolving Lenders shall not have determined not to make any Advance or incur any Letter of Credit Obligation as a result of any Default or Event of Default;

(c)

at the time of any such Advance (or the incurrence of any Letter of Credit Obligation), (i) if such Advance (or the issuance of such Letter of Credit) is prior to the entry and effectiveness of the Final Order, the Interim Order or the DIP Recognition Order shall not have terminated or expired, and the date of such Advance (or the issuance of such Letter of Credit) shall not be more than thirty (30) days from the Petition Date, (ii) if such Advance (or the issuance of such Letter of Credit) is after the entry and effectiveness of the Final Order, the Final Order or the Final DIP Recognition Order shall be effective, and shall not have terminated or expired, (iii) no Financing Order shall have been vacated, reversed, stayed, amended, supplemented or otherwise modified, (iv) no motion for reconsideration of any Financing Order shall be pending, and (v) no appeal of any Financing Order shall be pending and no Financing Order shall be subject of a stay pending appeal or a motion for a stay pending appeal;

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(d)

at the time of such Advance (or the issuance of such Letter of Credit), the proposed use of proceeds of such Advance (or the issuance of such Letter of Credit) is consistent with the most recently delivered and approved 13-Week Budget together with any variance permitted under Annex G in effect at such time;

(e)

Agent has received a certificate from Parent certifying that not less than $15,000,000 of the commitments under the DIP Term Loan Agreement are outstanding and Borrowers have utilized such proceeds (net of fees and expenses required to be paid under the DIP Term Loan Agreement on the Closing Date) to repay amounts owing by Credit Parties under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) to the extent outstanding;

(f)

after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), the outstanding principal amount of the aggregate Revolving Loan plus all amounts owing by any Credit Party under the Pre-Petition Credit Agreement or any of the loan documents or instruments entered into in connection therewith (other than for purposes of providing cash collateral with respect to the Existing Letters of Credit) then outstanding (if any) would not exceed the lesser of (A) the Borrowing Base, and (B) the Maximum Amount; and

(g)

within two (2) Business Days of the Petition Date, the Canadian Court shall have issued and entered the Chapter 11 Recognition Order in form and substance satisfactory to Agent and its counsel and the Lenders.

The request and acceptance by any Borrower of the proceeds of any Advance or the incurrence of any Letter of Credit Obligations shall be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrowers that the conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section 12 and of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.

REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit Parties executing this Agreement, jointly and severally, make the following representations and warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall survive the execution and delivery of this Agreement.

3.1

Organization, Good Standing, Etc . Each Credit Party (i) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the state, province or other applicable jurisdiction of its organization, (ii) upon entry of the Financing Orders by the Bankruptcy Court or the Canadian Court, as applicable, has all requisite corporate power and authority to conduct its business as now conducted and as presently contemplated and, in the case of Borrowers, to make the borrowings hereunder, and to execute and deliver each Loan Document to which it is a party, and

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to consummate the transactions contemplated thereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the absence of any such qualification could not reasonably be expected to result in a Material Adverse Effect.

3.2

Authorization, Etc . Subject to the entry of the Financing Orders by the Bankruptcy Court or the Canadian Court, as applicable, and except as set forth on Schedule 3.2 , the execution, delivery and performance by each Credit Party of each Loan Document to which it is or will be a party, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene its (x) charter or by-laws, its limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or (y) any material applicable law, rule or regulation, any applicable order, judgment or decree of any Governmental Authority or any material contractual restriction binding on or otherwise affecting it or any of its properties (including, without limitation, the Senior Secured Notes Documents), (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, other than Liens securing obligations in an aggregate amount not exceeding $100,000, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to its operations or any of its properties.

3.3

Governmental Approvals .

Upon entry of the Financing Orders by the Bankruptcy Court or the Canadian Court, as applicable, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Credit Party of any Loan Document to which it is or will be a party, other than (i) those that have been obtained or made and are in full force and effect and (ii) filings necessary to perfect Liens on the Collateral.

3.4

Enforceability of Loan Documents . Subject to the entry of the Financing Orders by the Bankruptcy Court or the Canadian Court, as applicable, this Agreement is, and each other Loan Document to which any Credit Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

3.5

Subsidiaries . Schedule 3.5 is a complete and correct description of the name, jurisdiction of organization and ownership of the outstanding Stock of the Subsidiaries of Parent in existence on the date of this Agreement. Except as described in Schedule 3.5 , all of the issued and outstanding shares of Stock of such Subsidiaries have been validly issued and are fully paid and nonassessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. Except as indicated on such Schedule, all such Stock is owned by Parent or one or more of its wholly-owned Subsidiaries, free and clear of all Liens and there are no outstanding debt or equity securities of Parent or any of its Subsidiaries and no outstanding obligations of Parent or any of its Subsidiaries convertible into or exchangeable for, or warrants, options or other rights for the purchase or acquisition from Parent or any of its Subsidiaries, or

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other obligations of any Subsidiary to issue, directly or indirectly, any shares of Stock of any Subsidiary of Parent.

3.6

Litigation; Commercial Tort Claims . Except with respect to the Chapter 11 Case, the Canadian Proceedings and litigation that is stayed by the commencement of the Chapter 11 Case or the Canadian Proceedings and as otherwise set forth in Schedule 3.6, (i) there is no pending or, to the best knowledge of any Credit Party, threatened action, suit or proceeding affecting any Credit Party or its properties before any court or other Governmental Authority or any arbitrator (except with respect to any action, suit or proceeding expressly addressed in Section 3.18 ) that (A) could reasonably be expected to have a Material Adverse Effect or (B) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby and (ii) as of the Closing Date, none of the Credit Parties holds any commercial tort claims, with a claim exceeding $100,000, in respect of which a claim has been filed in a court of law or a written notice by an attorney has been given to a potential defendant.

3.7

Financial Condition .

(a)

The Financial Statements for the Fiscal Quarter ended December 31, 2008, copies of which have been delivered to each of Agent and each Lender, fairly present, in all material respects, the consolidated financial condition of Parent and its Subsidiaries as at the date thereof and the consolidated results of operations of Parent and its Subsidiaries for the fiscal period ended on such date, all in accordance with GAAP, and since December 31, 2008, no event or development has occurred that has had or could reasonably be expected to have a Material Adverse Effect other than the commencement of the Chapter 11 Case and the Canadian Proceedings and the continuation of the circumstances giving rise to the filing thereof.

(b)

Parent has heretofore furnished to each Agent and each Lender the DIP Budget. Such projections in the DIP Budget were believed by the Credit Parties at the time furnished to be reasonable, were prepared in good faith by the Credit Parties, and were based on assumptions, methods and tests stated therein which were believed by the Credit Parties to be reasonable at the time prepared and upon information believed by the Credit Parties to have been accurate based upon the information available to the Credit Parties at the time such projections were prepared, and Parent is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect.

3.8

Compliance with Law, Etc . No Credit Party is in violation of its organizational documents, any law, rule, regulation, judgment or order of any Governmental Authority applicable to it or any of its property or assets, or any material term of any material agreement or instrument (excluding any agreement or instrument in respect of Indebtedness but including any agreement or instrument in respect of Indebtedness in excess of $4,000,000 and any other Material Contract) binding on or otherwise affecting it or any of its properties, and no Default or Event of Default has occurred and is continuing. Notwithstanding the foregoing, this Section shall not be deemed to address any matters expressly addressed in Sections 3.9, 3.10, 3.11, 3.14 or 3.18 , such matters being subject solely to such Sections.

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3.9

ERISA . Except as set forth on Schedule 3.9 , (i) each Employee Plan is in substantial compliance in all substantial respects with ERISA and the IRC, (ii) no Termination Event has occurred nor is reasonably expected to occur with respect to any Employee Plan, (iii) since the date of the most recent annual report (Form 5500 Series) with respect to each Employee Plan, including any required Schedule B (Actuarial Information) thereto, copies of which have been filed with the Internal Revenue Service and delivered or made available upon request to Agent, there has been no material adverse change in such funding status, (iv) copies of each agreement entered into with the PBGC, the U.S. Department of Labor or the Internal Revenue Service with respect to any Employee Plan have been delivered to Agent, (v) no Employee Plan had an accumulated funding deficiency (whether or not waived) or has applied for an extension of any amortization period within the meaning of Section 412 of the IRC at any time during the previous 60 months, and (vi) no Lien imposed under Section 412(n) of the IRC or Section 4068 of ERISA exists or is reasonably expected to arise on account of any Employee Plan. Except as set forth on Schedule 3.9 , no Credit Party or any of its ERISA Affiliates has incurred any withdrawal liability under ERISA with respect to any Multiemployer Plan, or is reasonably expected in the future to incur any such withdrawal liability. No Credit Party or any of its ERISA Affiliates or any fiduciary of any Employee Plan has (i) engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the IRC, (ii) failed to pay any required installment or other payment required under Section 412 of the IRC on or before the due date for such required installment or payment, (iii) engaged in a transaction within the meaning of Section 4069 of ERISA or (iv) incurred any material liability to the PBGC which remains outstanding other than the payment of premiums, and there are no such premium payments which have become due which are unpaid. There are no pending or, to the best knowledge of any Credit Party, threatened material claims, actions, proceedings or lawsuits (other than claims for benefits in the normal course) asserted or instituted against (i) any Employee Plan or its assets, (ii) any fiduciary with respect to any Employee Plan, or (iii) any Credit Party or any of its ERISA Affiliates with respect to any Employee Plan. Except as set forth on Schedule 3.9 and except as required by Section 4980B of the IRC, no Credit Party or any of its ERISA Affiliates maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Credit Party or any of its ERISA Affiliates or coverage after a participant’s termination of employment. Notwithstanding the preceding provisions of this Section 3.9 , if approved in advance in writing by Agent and the Requisite Lenders in accordance with Section 6.15 , the minimum funding waiver application described in Section 6.15 shall not be considered a Termination Event, nor result in a Lien, nor constitute a material adverse change in funding status, nor considered the failure to pay a required installment or other payment, nor considered a violation of any other plan funding requirement, for purposes of this Section 3.9 . Notwithstanding any of the above, after the filing of the Chapter 11 Case, it shall not be deemed a breach of the representations and warranties contained in this Section 3.9 if a Credit Party or any ERISA Affiliate fails to make any contribution required under Section 412 of the IRC or Section 302 of ERISA to the Milacron Retirement Plan, if the Milacron Retirement Plan is terminated in a distress termination pursuant to section 4041 of ERISA, or if the PBGC institutes and/or completes a proceeding to terminate the Milacron Retirement Plan pursuant to section 4042 of ERISA.

3.10

Taxes, Etc . All Federal and material foreign, state, provincial and local tax returns and other reports required by applicable law to be filed by any Credit Party have been

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filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon any Credit Party or any property of any Credit Party and which have become due and payable have been paid, except such taxes, assessments and governmental charges in an aggregate amount not exceeding $100,000 or to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves, if any, have been set aside for the payment thereof on the most recently available consolidated financial statements of Parent to the extent required by and in accordance with GAAP; provided that Borrowers shall not be required to pay any taxes, fees or other charges, the nonpayment of which is permitted by the Bankruptcy Code.

3.11

Regulations T, U and X . No Credit Party is or will be engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

3.12

Nature of Business .

(a)

As of the Closing Date, no Credit Party is engaged in any business other than as described in Parent’s Form 10-K for the period ending December 31, 2007 with the SEC.

(b)

As of the Closing Date, with respect to the Domestic Subsidiaries that are not a Credit Party, (x) no such Domestic Subsidiary conducts or engages in any business or operations, and (y) the aggregate Book Value of their assets and properties is not greater than $0, the aggregate amount of their liabilities is not greater than $0 and (z) the aggregate amount of their revenues for the four Fiscal Quarters ending immediately prior to the Closing Date is not greater than $0.

(c)

As of the Closing Date, Milacron Assurance has no assets or liabilities other than those associated with the provision of self-insurance to Parent and its other Subsidiaries and services related thereto, and does not conduct and is not engaged in any business or operations other than such business and operations related to the provision of such insurance and services related thereto all of which insurance and related services are provided solely for the benefit of Parent or its Subsidiaries.

3.13

Adverse Agreements, Etc . No Credit Party is a party to any agreement or instrument, or subject to any charter, limited liability company agreement, partnership agreement or other corporate, partnership or limited liability company restriction or any judgment, order, regulation, ruling or other requirement of a court or other Governmental Authority, which has, or in the future could reasonably be expected to have, a Material Adverse Effect.

3.14

Permits, Etc . Each Credit Party has, and is in compliance with all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, which,

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if not obtained, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and there is no claim that any thereof is not in full force and effect, except, to the extent any such condition, event or claim could not be reasonably be expected to have a Material Adverse Effect.

3.15

Properties .

(a)

Each Credit Party has good and marketable title to, valid leasehold interests in, or valid licenses to use, all property and assets material to its business, free and clear of all Liens, except Permitted Liens (including pursuant to the Financing Orders). All such properties and assets are in working order and condition, ordinary wear and tear excepted.

(b)

Schedule 3.15 sets forth a complete and accurate list, as of the Closing Date, of the location, by state and street address, of all real property owned or leased by each Credit Party. As of the Closing Date, each Credit Party has valid leasehold interests in the Leases described on Schedule 3.15 to which it is a party. Schedule 3.15 sets forth with respect to each such Lease, termination date and annual base rents. Each such Lease is valid and enforceable in accordance with its terms in all material respects and is in full force and effect. No consent or approval of any landlord or other third party in connection with any such Lease is necessary for any Credit Party to enter into and execute the Loan Documents to which it is a party, except as set forth on Schedule 3.15 . To the best knowledge of any Credit Party, no other party to any such Lease is in default of its material obligations thereunder, and no Credit Party (or any other party to any such Lease) has at any time delivered or received any notice of default which remains uncured under any such Lease and, as of the Closing Date, no event has occurred which, with the giving of notice or the passage of time or both, would constitute a default under any such Lease other than the commencement of the Chapter 11 Case and the Canadian Proceedings.

(c)

Except with respect to transfers made in compliance with this Agreement and other than a Permitted Lien that is an inchoate Lien securing obligations for the payment of money not overdue or not otherwise due and payable, Milacron Marketing Company (the “ Misplaced Note Holder ”) is the legal and beneficial owner of certain originals of notes identified by an asterisk as missing in Schedule I to the Pledge Agreement (the “ Misplaced Notes ”) free and clear of all Liens, except for the Lien created by the Loan Documents. As of the Closing Date, the Misplaced Notes are lost, destroyed or misplaced through inadvertence or otherwise and after conducting a diligent search of its records, no Credit Party has been able to locate the Misplaced Notes.

3.16

Full Disclosure . Each Credit Party has disclosed to Agent all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of any Credit Party to Agent or any Lender in connection with the negotiation of this Agreement or delivered

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hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which it was made, not misleading; provided that, with respect to DIP Budget, each Credit Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time prepared. Other than the commencement of the Chapter 11 Case and the Canadian Proceedings, there is no contingent liability or fact that could reasonably be expected to have a Material Adverse Effect which has not been set forth in a footnote included in the Financial Statements or a Schedule hereto.

3.17

Operating Lease Obligations . On the Closing Date, none of the Credit Parties has any Operating Lease Obligations with annual payments exceeding $100,000 other than the Operating Lease Obligations set forth on Schedule 3.17 .

3.18

Environmental Matters . Except as set forth on Schedule 3.18 , specific to each of the following subsections:

(a)

each Credit Party’s businesses, Facilities, operations, properties and assets are in material compliance with all Environmental Laws;

(b)

each Credit Party has obtained and is in material compliance with all material Environmental Permits necessary to operate, use or occupy all of such Credit Party’s businesses, Facilities, operations, properties and assets;

(c)

each Credit Party is in material compliance with any applicable financial assurance requirements under RCRA and any similar Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264 and 265, necessary, to operate, use or occupy all of such Credit Party’s businesses, or occupy all of such Credit Party’s Facilities and properties;

(d)

each Credit Party is in material compliance with all applicable and binding writs, orders, consent decrees, judgments, and injunctions, decrees, informational requests or demands issued by any Governmental Authority or Person pursuant to, or under, any Environmental Laws;

(e)

there are no material Environmental Liens associated or, to the knowledge of each Credit Party, threatened to be associated with any Credit Parties’ businesses, Facilities, operations, properties and assets;

(f)

there has been no Release at any of the properties currently or, during the period of ownership or operation by any Credit Party, previously owned or operated by any Credit Party or a predecessor in interest which could reasonably be expected to have a Material Adverse Effect;

(g)

to the knowledge of any Credit Party, there has been no Release at any disposal or treatment facility which received Hazardous Materials Handled by any Credit Party or any predecessor in interest which could reasonably be expected to have a Material Adverse Effect;

(h)

no Environmental Action has been asserted against any Credit Party or any predecessor in interest nor does any Credit Party have knowledge or notice of any threatened

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or pending Environmental Action against any Credit Party or any predecessor in interest which, in any case, could reasonably be expected to have a Material Adverse Effect;

(i)

to the knowledge of any Credit Party, no Environmental Actions have been asserted against any facilities that may have received Hazardous Materials Handled by any Credit Party or any predecessor in interest which could reasonably be expected to have a Material Adverse Effect;

(j)

no property now or, during the period of ownership or operation by any Credit Party, formerly owned or operated by a Credit Party has been used as a treatment, storage or disposal site for any Hazardous Material, except as could not reasonably be expected to have a Material Adverse Effect;

(k)

during the past three (3) years, no Credit Party has failed to report to the proper Governmental Authority any Release which is required to be so reported by any Environmental Laws, except as could not reasonably be expected to have a Material Adverse Effect; and

(l)

except, in each case, as could not reasonably be expected to have a Material Adverse Effect, no Credit Party has received any written notification pursuant to any Environmental Laws that (A) any work, repairs, construction or Capital Expenditures are required to be made in respect as a condition of continued compliance with any Environmental Law or Environmental Permit or (B) any Environmental Permit referred to above is about to be reviewed, made, subject to limitations or conditions, revoked, withdrawn or terminated.

3.19

Insurance . Each Credit Party keeps its property adequately insured and maintains (i) insurance to such extent and against such risks, including fire, as is customary with companies of similar size and in the same or similar businesses, (ii) workmen’s compensation insurance in the amount required by applicable law, (iii) public liability insurance, which shall include product liability insurance, in the amount customary with companies of similar size and in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (iv) such other insurance as may be required by law. Schedule 3.19 sets forth a list of all insurance maintained by each Credit Party on the Closing Date.

3.20

Use of Proceeds . Borrowers shall utilize the proceeds of the Loans for working capital and for other general corporate purposes in a manner consistent in all material respects with the 13-Week Budget, together with any variance permitted under Annex G , for payment of (a) post-petition operating expenses and other working capital and financing requirements of Borrowers subject to the 13-Week Budget, (b) certain transaction fees, costs and expenses, (c) certain other costs and expenses incurred in the administration of the Chapter 11 Case and the Canadian Proceedings and (d) amounts owed pursuant to the Pre-Petition Credit Agreement to the extent consistent with the 13-Week Budget. Borrowers shall not be permitted to use the proceeds of the Loans: (a) to finance in any way any action, suit, arbitration, proceeding, application, motion or other litigation of any type adverse to (i) the interests of Agent and the Lenders or their rights and remedies under this Agreement or the other Loan Documents, or (ii) the interests of the Prior Agent, the Prior Lenders, the Senior Secured

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Noteholders, the Senior Secured Notes Collateral Agent and the Senior Secured Notes Trustee under the Pre-Petition Loan Documents or the Senior Secured Notes Documents, including, without limitation, for the payment of any services rendered by the professionals retained by Borrowers or any Committee in connection with the assertion of or joinder in any claim, counterclaim, action, proceeding, application, motion, objection, defense or other contested matter, the purpose of which is to seek, or the result of which would be to obtain, any order, judgment determination, declaration or similar relief (A) invalidating, setting aside, avoiding or subordinating, in whole or in part, the Prior Lenders Obligations or the Liens securing same, or the Obligations or the Liens securing same, or the obligations under the Senior Secured Notes Documents or the liens securing same, (B) for monetary, injunctive or other affirmative relief against any Prior Lender, Senior Secured Noteholders, Prior Agent, Senior Secured Notes Trustee, Senior Secured Notes Collateral Agent, Lender or Agent or their respective counsel, or (C) preventing, hindering or otherwise delaying the exercise by any Prior Lender, Senior Secured Noteholder, Prior Agent, Senior Secured Notes Trustee, Senior Secured Notes Collateral Agent, Lender or Agent of any rights and remedies under the Financing Orders, the Pre-Petition Loan Documents, the Loan Documents or applicable law, or the enforcement or realization (whether by foreclosure, credit bid, further order of the court or otherwise) by any or all of the Prior Lenders, the Prior Agent, the Lenders and Agent upon any of their Collateral; provided , however , that an amount not in excess of $50,000 will be available for the payment of fees and expenses of professionals of any Committee incurred in investigating the claims of Prior Agent and Prior Lenders, (a) to make any distribution under a plan of reorganization in the Chapter 11 Case or under a plan of compromise or arrangement in the Canadian Proceedings, (b) to make any payment in settlement of any claim, action or proceedings, before any court, arbitrator or other governmental body without the prior written consent of Agent or as may be ordered or approved by such court after appropriate notice or hearing and (c) to pay any fees or similar amounts to any Person who has proposed or may propose to purchase interest in Borrowers or any other Credit Party (including so-called “topping fees” and similar amounts) without the prior written consent of Agent other than any adequate protection payments payable, if any, to the Senior Secured Notes Trustee or the Senior Secured Noteholders pursuant to the Financing Orders.

3.21

Location of Bank Accounts . Schedule 3.21 , as amended from time to time by Borrower Representative (by delivery of a revised Schedule 3.21 to Agent), sets forth a complete and accurate list of all deposit, checking and other bank accounts, all securities and other accounts maintained with any broker dealer and all other similar accounts maintained by each Credit Party, together with a description thereof (i.e., the bank or broker dealer at which such deposit or other account is maintained and the account number and the purpose thereof). No Credit Party maintains any other accounts other than those set forth on Schedule 3.21 .

3.22

Intellectual Property .

(a)

Except as set forth on Schedule 3.22 each Credit Party owns or licenses or otherwise has the right to use all material licenses, permits, patents, patent applications, trademarks, trademark applications, service marks, tradenames, trade secrets, copyrights, copyright applications, franchises, authorizations and other intellectual property rights that are necessary for the operation of its business, without infringement upon or conflict with the rights of any other Person with respect thereto. Set forth on Schedule 3.22 is a complete and accurate

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list as of the Closing Date of all material licenses, patents, patent applications, trademark and servicemark registrations and applications, tradenames, copyright registrations and applications and internet domain names. Except as set forth on Schedule 3.22 , no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Credit Party infringes upon or conflicts with any rights owned by any other Person, and no claim or litigation regarding any of the foregoing is pending or threatened in writing. To the best knowledge of each Credit Party, no third-party intellectual property, statute, law, rule, regulation, standard or code is pending or proposed, which, individually or in the aggregate, could have a Material Adverse Effect.

(b)

Each Credit Party has taken reasonable measures to protect the secrecy, confidentiality and value of all trade secrets used in its business (collectively, the “ Business Trade Secrets ”). To the best knowledge of any Credit Party, none of the Business Trade Secrets have been disclosed to any Person other than employees or contractors of the Credit Parties who had a need to know and use such Business Trade Secrets in the ordinary course of employment or contract performance and who executed appropriate confidentiality agreements prohibiting the unauthorized use or disclosure of such Business Trade Secrets and containing other terms reasonably necessary or appropriate for the protection and maintenance of such Business Trade Secrets. To the best knowledge of any Credit Party, no unauthorized disclosure of any Business Trade Secrets has been made.

3.23

Material Contracts . Set forth on Schedule 3.23 is a complete and accurate list as of the Closing Date of all Material Contracts of each Credit Party, showing the parties and subject matter thereof and amendments and modifications thereto. As of the Closing Date, each such Material Contract (i) is in full force and effect and is binding upon and enforceable against each Credit Party that is a party thereto and, to the best knowledge of such Credit Party, all other parties thereto in accordance with its terms, (ii) has not been otherwise amended or modified, and (iii) except as occasioned by the Chapter 11 Case, is not in default due to the action of any Credit Party or, to the best knowledge of any Credit Party, any other party thereto.

3.24

Holding Company and Investment Company Acts . None of the Credit Parties is an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

3.25

Employee and Labor Matters . Except in each case, as could not reasonably be expected to result in material liability to any Credit Party, there is (i) no unfair labor practice complaint pending or, to the best knowledge of any Credit Party, threatened against any Credit Party before any Governmental Authority and no grievance or arbitration proceeding pending or, to the best knowledge of any Credit Party, threatened against any Credit Party which arises out of or under any collective bargaining agreement that would affect a material portion of the business of any Credit Party, (ii) no strike, labor dispute, slowdown, stoppage or similar action pending or threatened against any Credit Party or (iii) to the best knowledge of any Credit Party, no union representation question existing with respect to the employees of any Credit Party and no union organizing activity taking place with respect to any of the employees of any Credit Party. No Credit Party or any of its ERISA Affiliates has incurred any material liability or obligation under the Worker Adjustment and Retraining

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Notification Act (“WARN”) or similar state or foreign law, which remains unpaid or unsatisfied. To the knowledge of any Credit Party, the hours worked and payments made to employees of any Credit Party have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements other than violations of immaterial obligations of any Credit Party resulting in immaterial liability incurred by any Credit Party. All material payments due from any Credit Party on account of wages, vacation pay and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of such Credit Party.

3.26

Customers and Suppliers . Except as set forth on Schedule 3.26, there exists no actual or threatened termination, cancellation or limitation of, or modification to or change in, the business relationship between (i) any Credit Party, on the one hand, and any customer or any group thereof, on the other hand, whose agreements with any Credit Party are individually or in the aggregate material to the business or operations of the Credit Parties taken as a whole, or (ii) any Credit Party, on the one hand, and any supplier thereof, on the other hand, whose agreements with any Credit Party are individually or in the aggregate material to the business or operations of the Credit Parties taken as a whole, and there exists no present state of facts or circumstances that could give rise to or result in any such termination, cancellation, limitation, modification or change which would, individually or in the aggregate, be material to the business or operations of the Credit Parties taken as a whole.

3.27

Name; Jurisdiction of Organization; Organizational ID Number; Chief Place of Business; Chief Executive Office; FEIN . Schedule 3.27 sets forth a complete and accurate list as of the Closing Date of (i) the full and correct legal name of each Credit Party, (ii) the jurisdiction of organization of each Credit Party, (iii) the organizational identification number of each Credit Party (or indicates that such Credit Party has no organizational identification number), (iv) each place of business of each Credit Party, (v) the chief executive office of each Credit Party and (vi) the federal employer identification number of each Credit Party.

3.28

Tradenames . Schedule 3.28 hereto sets forth a complete and accurate list as of the Closing Date of all tradenames, business names or similar appellations used by each Credit Party or any of its divisions or other business units during the past five years.

3.29

Locations of Collateral . There is no location at which any Credit Party has any Collateral (except for Inventory in transit and Inventory in locations not within the United States with an aggregate Book Value not exceeding $650,000) other than (i) those locations listed on Schedule 3.29 and (ii) any other locations approved in writing by Agent (and with respect to Inventory, Agent) from time to time. Schedule 3.29 hereto contains a true, correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Collateral of each Credit Party is stored. None of the receipts received by any Credit Party from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person’s assigns.

3.30

Security Interests . Upon the entry of and subject to the terms of the Financing Orders, each Collateral Document creates in favor of Agent, for the benefit of Agent and the Lenders, a legal, valid and enforceable security interest in the Collateral secured thereby.

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To the extent governed by the Code, upon the entry of and subject to the terms of the Financing Orders and the filing of the UCC financing statements and Personal Property Security Act financing statements and Registry of Personal and Moveable Real Rights registrations described in paragraph E of Annex D and, to the extent governed by United States federal law or Canadian law, upon the recording of the Patent Security Agreements, Trademark Security Agreements and Copyright Security Agreements in the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office, as applicable, such security interests in and Liens on the Collateral granted thereby that may be perfected by such aforementioned filings or recordings shall be perfected, first priority security interests (subject, as to priority, only to the Carve-Out Amount and the Permitted Liens that, as a matter of law (including, without limitation, the priority rules of the Code, the Personal Property Security Act and the Register of Personal and Moveable Real Rights, as applicable), would be prior to the Liens of Agent and, with respect to Senior Secured Priority Collateral only, Liens in favor of the Senior Secured Notes Trustee and DIP Term Loan Agent), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements in accordance with applicable law, (ii) the recording of the Collateral Assignments for Security pursuant to the Patent Security Agreement, Trademark Security Agreement and Copyright Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired U.S. patent, trademark and copyright applications and registrations and (iii) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign intellectual property.

3.32

Schedules . All of the information which is required to be scheduled to this Agreement is set forth on the Schedules attached hereto, is correct and accurate and does not omit to state any information material thereto.

3.33

Canadian Pension and Benefit Plan Matters . The Canadian Pension Plans are duly registered under the ITA and all other applicable laws which require registration and no event has occurred which is reasonably likely to cause the loss of such registered status. All material statutory obligations of any Credit Party (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Canadian Pension Plans and the funding agreements therefor have been performed in a timely fashion. There are no outstanding suits concerning the assets of the Canadian Pension Plans or the Canadian Benefit Plans. Each of the Canadian Pension Plans is fully funded on a solvency basis (using actuarial methods and assumptions which are consistent with the valuations last filed with the applicable Governmental Authorities and which are consistent with generally accepted actuarial principles). None of the Canadian Borrowing Base Guarantors employs any employees outside of Canada.

3.34

Reorganization Matters .

(a)

The Chapter 11 Case was commenced on the Petition Date in accordance with applicable law and proper notice thereof and proper notice for (x) the motion seeking

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approval of the Loan Documents and the Financing Orders, (y) the hearing for the approval of the Interim Order and (z) the hearing for the approval of the Final Order has been given. Borrowers shall give, on a timely basis as specified in the Financing Orders, all notices required to be given to all parties specified in the Financing Orders.

(b)

The Canadian Proceedings were commenced on March 10, 2009 in accordance with applicable law and proper notice thereof and proper notice for (x) the motion and hearing seeking recognition of the Chapter 11 Case pursuant to Section 18.6 of the CCAA and the approval of the Chapter 11 Recognition Order and (y) the motion and hearing seeking the approval of the DIP Recognition Order has been given.

(c)

After the entry of the Interim Order, and pursuant to and to the extent permitted in the Interim Order and the Final Order, the Obligations will constitute allowed administrative expense claims in the Chapter 11 Case having priority over all administrative expense claims and unsecured claims against Borrowers now existing or hereafter arising, of any kind whatsoever, including, without limitation, all administrative expense claims of the kind specified in Sections 326, 330, 331, 503(b), 507(a), 507(b), 726, 1114 or any other provision of the Bankruptcy Code or otherwise, as provided under Section 364(c)(l) of the Bankruptcy Code, subject, as to priority only, to the Carve-Out Amount.

(d)

After the entry of the Interim Order (and the DIP Recognition Order with respect to the Canadian Borrowing Base Guarantor) and pursuant to and to the extent provided in the Interim Order and the Final Order and the Canadian Orders, the Obligations will be secured by a valid and perfected first priority Lien on all of the Collateral subject to the terms of the Intercreditor Agreement and the Financing Orders.

(e)

The Interim Order (with respect to the period prior to entry of the Final Order) or the Final Order (with respect to the period on and after entry of the Final Order), as the case may be, is in full force and effect and has not been reversed, stayed, modified or amended.

(f)

Notwithstanding the provisions of Section 362 of the Bankruptcy Code, and subject to the applicable provisions of the Interim Order, the Final Order or the Canadian Orders, as the case may be, upon the maturity (whether by acceleration or otherwise) of any of the Obligations, Agent and Lenders shall be entitled to immediate payment of such Obligations and to enforce the remedies provided for hereunder or under applicable law, without further application to or order by the Bankruptcy Court or the Canadian Court, as applicable, subject to the terms of the Loan Documents.

FINANCIAL STATEMENTS AND INFORMATION

4.1

Reports and Notices .

(a)

Each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required herein, the Financial Statements, notices, and other information at the times, to the Persons and in the manner set forth in Annex E .

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(b)

Each Credit Party executing this Agreement hereby agrees that, from and after the Closing Date and until the Termination Date, it or the Borrower Representative, as provided in Annex F, shall deliver to Agent or to Agent and Lenders, as required herein, the various Collateral Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b) ) at the times, to the Persons and in the manner set forth in Annex F .

4.2

Communication with Accountants . Each Credit Party executing this Agreement authorizes (a) Agent and (b) so long as an Event of Default has occurred and is continuing, each Lender, to communicate directly with its independent certified public accountants, including Ernst & Young LLP, and authorizes and shall instruct those accountants to communicate to Agent and each Lender information relating to any Credit Party with respect to the business, results of operations and financial condition of any Credit Party.

AFFIRMATIVE COVENANTS

Each Credit Party executing this Credit Agreement jointly and severally agrees as to all Credit Parties that from and after the Closing Date and until the Termination Date it will:

5.1

Additional Guaranties and Collateral Security . Cause:

(a)

each wholly owned Subsidiary of any Credit Party not in existence on the Closing Date, to execute and deliver to Agent promptly and in any event within three (3) Business Days after the formation, acquisition or change in status thereof (A) a Guaranty guaranteeing the Obligations, (B) a joinder to the Security Agreement substantially in the form attached as Annex I to the Security Agreement, (C) if such Subsidiary has any Subsidiaries, joinder to the Pledge Agreement substantially in the form attached as Annex I to the Pledge Agreement together with (x) certificates evidencing all of the Stock of any Person owned by such Subsidiary (other than a Foreign Subsidiary) and, in the case of a Foreign Subsidiary, all of the non-voting Stock and sixty-five percent (65%) of the voting Stock of such Foreign Subsidiary, (y) undated stock powers executed in blank with signature guaranteed, and (z) such opinion of counsel and such approving certificate of such Subsidiary as Agent may reasonably request in respect of complying with any legend on any such certificate or any other matter relating to such shares; provided that (i) the provisions contained in clauses (x) and (y) of this clause (C) shall not apply until the date upon which the Discharge of Term Obligations has occurred, and (ii) until the date upon which the Discharge of Term Obligations has occurred, the opinion and certificate referred to in clause (z) of this clause (C) shall be, in each case, limited in scope and substance to the opinion and certificate, if any, delivered to the Senior Secured Notes Trustee or the DIP Term Loan Agent, as applicable, in connection with such Subsidiary becoming party to any Senior Secured Notes Document or DIP Term Loan Documents, (D)(1) prior to the Discharge of Term Obligations, to the extent mortgages are delivered creating on the owned real property of such Subsidiary a perfected first priority security interest securing the Senior Term Obligations, one or more Mortgages creating on such real property a perfected second priority Lien on such property, and thereafter, at the request of Agent, one or more Mortgages creating on such real property a perfected, first priority Lien on such real property and (2) prior to the Discharge of Term Obligations, to the

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extent delivered to the Senior Secured Notes Trustee or the DIP Term Loan Agent, as applicable, and thereafter, at the request of Agent, a Title Insurance Policy covering such real property, a current ALTA survey thereof and a surveyor’s certificate, each in form and substance reasonably satisfactory to Agent, together with such other agreements, instruments and documents as Agent may require whether comparable to the documents required under Section 5.19 or otherwise, (E) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent in order to create, perfect, establish the first priority of or otherwise protect any Lien purported to be covered by any such Security Agreement or Pledge Agreement or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary shall become Collateral for the Obligations; provided , however , that in no event shall (i) any Credit Party be required to grant a Lien on any Excluded Assets or (ii) any Foreign Subsidiary be required to guaranty the Obligations or grant a Lien on any of its assets to secure the Obligations if such guaranty or Lien may result in a “deemed dividend” to any of the Credit Parties; and

(b)

each owner of the Stock of any such Subsidiary to execute and deliver promptly and in any event within three (3) Business Days after the formation or acquisition of such Subsidiary a joinder to the Pledge Agreement substantially in the form attached as Annex I to the Pledge Agreement, together with (A) certificates evidencing, (x) in the case such Subsidiary is a Domestic Subsidiary, all of the Stock of such Subsidiary, and (y) in the case such Subsidiary is a directly owned Foreign Subsidiary, all of the non-voting Stock and sixty-five percent (65%) of the voting Stock of such Subsidiary, (B) undated stock powers or other appropriate instruments of assignment executed in blank with signature guaranteed, (C) such opinion of counsel and such approving certificate of such Subsidiary as Agent may reasonably request in respect of complying with any legend on any such certificate or any other matter relating to such shares, and (D) prior to the Discharge of Term Obligations, to the extent delivered to the Senior Secured Notes Trustee or the DIP Term Loan Agent, as applicable, and thereafter, at the request of Agent, such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent; provided that (i) the provisions contained in clauses (A) and (B) of this paragraph shall not apply until the date upon which the Discharge of Term Obligations has occurred, (ii) until the date upon which the Discharge of Term Obligations has occurred, the opinion and certificate referred to in clause (C) of this paragraph shall be, in each case, limited in scope and substance to the opinion and certificate, if any, delivered to the Senior Secured Notes Trustee or the DIP Term Loan Agent, as applicable, in connection with any pledge of such Subsidiary pursuant to the Senior Secured Notes Documents or the DIP Term Loan Documents, and (iii) in no event shall any Credit Party be required to grant a Lien on any Excluded Assets.

5.2

Compliance with Laws, Etc .Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders (including, without limitation, all Environmental Laws) and with all material agreements, (excluding agreements in respect of Indebtedness), such compliance to include, without limitation, (i) paying before the same become delinquent all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its properties, and (ii) paying all lawful claims which if unpaid might become a Lien or charge upon any of its properties, except to the extent contested in good faith by proper proceedings which

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stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, other than in the case of clauses (i) and (ii) above, taxes, assessments and governmental charges and levies and other lawful claims described therein, the aggregate amount of which does not at any time exceed $100,000.

5.3

Preservation of Existence, Etc . Except as permitted by Section 6.3 or resulting from the Chapter 11 Case or the Canadian Proceedings or as set forth on Schedule 5.3, maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges in all material respects, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the absence of any such qualification could not reasonably be expected to result in a Material Adverse Effect.

5.4

Keeping of Records and Books of Account . Keep, and cause each of its Subsidiaries to keep, adequate records and books of account, with adequate and sufficient entries made to permit the preparation by Parent of its financial statements in accordance with GAAP.

5.5

Inspection Rights . Permit, and cause each of its Subsidiaries to permit, the agents and representatives of Agent (and, at any time during the continuance of an Event of Default, the agents and representatives of each Lender) at any time and from time to time during normal business hours, at the expense of Borrowers, to examine and make copies of and abstracts from its records and books of account, to visit and inspect its properties, to verify materials, leases, notes, Accounts, deposit accounts, Inventory and its other assets, to conduct audits, physical counts, valuations, appraisals, Phase I Environmental Site Assessments reasonably necessary to determine compliance with or liabilities under Environmental Laws or examinations and to discuss its affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives. In furtherance of the foregoing, each Credit Party hereby authorizes its independent accountants, and the independent accountants of each of its Subsidiaries, to discuss the affairs, finances and accounts of such Person (independently or together with representatives of such Person) with the agents and representatives of Agent in accordance with this Section 5.5 . Furthermore, so long as any Event of Default has occurred and is continuing, Borrowers shall provide Agent with reasonable access to their suppliers and customers.

5.6

Maintenance of Properties, Etc . Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are, in any material respects, necessary or useful in the proper conduct of its business in working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

5.7

Maintenance of Insurance . Maintain, and cause each of its Subsidiaries to maintain, as in effect on the Closing Date, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability,

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hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies of similar size and in similar businesses similarly situated; provided , however , that any changes to the amount, adequacy and scope of the insurance in effect on the Closing Date that are material and adverse to the Lenders must be reasonably acceptable to Agent in its Permitted Discretion; provided , further , Parent and its Subsidiaries may maintain self-insurance (which shall include insurance maintained through Milacron Assurance) in connection with the insurance requirements set forth above to the extent reasonably prudent and consistent with past practices. All policies covering the Collateral are to be made payable to Agent for the benefit of Agent and the Lenders, as its interests may appear, in case of loss, under a standard non-contributory “lender” or “secured party” clause and are to contain such other provisions as Agent may require to fully protect the Lenders’ interest in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to Agent and the policies are to be premium prepaid, with the loss payable and additional insured endorsement in favor of Agent and such other Persons as Agent may designate from time to time, and shall use reasonable efforts to cause its insurance providers to provide for not less than thirty (30) days’ prior written notice to Agent of the exercise of any right of cancellation. If any Credit Party or any of its Subsidiaries fails to maintain such insurance, Agent may arrange for such insurance, but at Borrowers’ expense and without any responsibility on Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, Agent shall have the sole right, in the name of the Lenders, any Credit Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

5.8

Obtaining of Permits, Etc . Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all material permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business.

5.9

Environmental . (i) Keep any property either owned or operated by it or any of its Subsidiaries free of any Environmental Liens; (ii) comply, and cause each of its Subsidiaries to comply, in all material respects with Environmental Laws and provide to Agent any documentation of such compliance which Agent may reasonably request; (iii) provide Agent timely written notice (and in any event, within ten (10) days of any Credit Party obtaining knowledge of such event) of any Release of a Hazardous Material in excess of any reportable quantity from or onto property currently or during the period of ownership or operation by any Credit Party, formerly owned or operated by it or any of its Subsidiaries and take any Remedial Actions required under Environmental Laws to abate said Release; provided , however , that no Credit Party shall be required to undertake any Remedial Action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-performance thereof and adequate reserves, if any, are being maintained with respect to such

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circumstances in accordance with GAAP; (iv) provide Agent with written notice within ten (10) days of the receipt of any of the following: (A) notice that an Environmental Lien has been filed against any property of any Credit Party or any of its Subsidiaries; (B) commencement of any Environmental Action, or written notice that an Environmental Action will be filed, against any Credit Party or any of its Subsidiaries which, if adversely determined, could be reasonably expected to have a Material Adverse Effect; and (C) notice of a violation, citation or other administrative order which could reasonably be expected to have a Material Adverse Effect; (v) maintain and preserve, in all material respects, all Environmental Permits necessary to operate, use or occupy each of the Credit Parties’ businesses, Facilities, operations, properties and assets; (vi) maintain and comply, in all material respects, with any applicable financial assurance requirements under RCRA and any similar Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264 and 265, necessary to operate, use or occupy each of the Credit Parties’ businesses, Facilities, operations, properties and assets; (vii) comply, in all material respects, with all applicable writs, orders, consent decrees, judgments, injunctions, communications by any Governmental Authority, decrees, informational requests or demands issued pursuant to, or arising under, any Environmental Laws; (viii) provide Agent with prompt written notice in the event any Credit Party is required to spend more than $100,000 individually or $500,000 in the aggregate to comply with any Environmental Laws that have been promulgated and enacted by a Governmental Authority throughout the term of this Agreement; and (ix) file and submit truthful and complete representations, including, without limitation, applications, warranty statements and accompanying materials provided in support of such representations, submitted by the Credit Parties to obtain insurance.

Without limiting the generality of the foregoing, whenever Agent reasonably determines that there is non-compliance, or any condition which requires any action by or on behalf of any Credit Party in order to avoid any material non-compliance, with any Environmental Law which could reasonably be expected to result in the imposition of material fines or penalties or otherwise materially and adversely affect the business, assets or prospects of the Credit Parties on a consolidated basis, and Credit Parties have not contested such non-compliance in good faith and by proper proceedings with the appropriate Governmental Authority, the Credit Parties shall, at Agent’s request and Borrowers’ expense: (i) cause an independent environmental engineer reasonably acceptable to Agent to conduct, as applicable, such reasonable assessments, investigations or tests of the site where any Credit Party’s non-compliance or alleged non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Agent a report as to such non-compliance setting forth the results of such assessments, investigations or tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report of such engineer whenever the scope of such non-compliance, or the applicable Credit Party’s response thereto or the estimated costs thereof, shall change in any material respect.

The Credit Parties acknowledge and agree that neither the Loan Documents nor the actions of Agent or any Lender pursuant thereto, taken alone, shall operate or be deemed (i) to place upon Agent or any Lender any responsibility for the operation, control, care, service, management, maintenance or repair of property or facilities of the Credit Parties or (ii) to make Agent or any Lender the “owner” or “operator” of any property or facilities of the Credit Parties or a “responsible party” within the meaning of applicable Environmental Laws.

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5.10

Further Assurances . Take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments or other documents as Agent may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected first priority Liens any of the Collateral or any other property of any Credit Party and its Subsidiaries for which a Lien is required to be granted under the Loan Documents (subject to the limitations contained in Section 5.1 and the Intercreditor Agreement, but excluding the Excluded Assets), but, in the case of the Stock of a Foreign Subsidiary, such Liens shall be limited to all of the non-voting Stock and sixty-five percent (65%) of the voting Stock of such Foreign Subsidiary, (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer and confirm unto Agent, each Lender and the L/C Issuer the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Credit Party (i) authorizes Agent to execute any such agreements, instruments or other documents in such Credit Party’s name and to file such agreements, instruments or other documents in any appropriate filing office and, (ii) authorizes Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Credit Party (including, without limitation, any such financing statements that indicate the Collateral as “all assets” or words of similar import).

5.11

Change in Collateral; Collateral Records . (i) Give Agent not less than thirty (30) days’ prior written notice of any change in the location of any Collateral with an aggregate Book Value exceeding $500,000, other than to locations set forth on Schedule 3.29 and with respect to which Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to Agent for the benefit of Agent and the Lenders from time to time, solely for Agent’s convenience in maintaining a record of Collateral, such written statements and schedules as Agent may reasonably require, designating, identifying or describing the Collateral.

5.12

Landlord Waivers; Collateral Access Agreements .

(a)

At any time any Collateral with a Book Value in excess of $300,000 (when aggregated with all other Collateral at the same location) is located on any real property of a Credit Party (whether such real property is now existing or acquired after the Closing Date) which is not owned by a Credit Party, use reasonable efforts to obtain a Landlord Waiver; provided , that in the event the Credit Parties (i) are unable to obtain any such Landlord Waiver or (ii) maintain Collateral with a Book Value in excess of $100,000 but less than or equal to $300,000 at any location that is not subject to Landlord Waiver, then Agent may establish Reserves to the Borrowing Base as it deems necessary in its Permitted Discretion with respect to any such Collateral that is included in the Borrowing Base; and

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(b)

Use reasonable efforts to obtain Bailee Letters or similar collateral access agreements, in form and substance reasonably satisfactory to Agent, providing access to Collateral located on any premises not owned by a Credit Party in order to remove such Collateral from such premises during an Event of Default; provided , that in the event the Credit Parties are unable to obtain any such written access agreements, Agent may establish Reserves to the Borrowing Base as it deems necessary in its Permitted Discretion with respect to any such Collateral that is included in the Borrowing Base.

5.13

Fiscal Year . Cause the Fiscal Year of Parent and its Subsidiaries to end on December 31 of each calendar year unless Agent consents to a change in such Fiscal Year (and appropriate related changes to this Agreement), such consent not to be unreasonably withheld.

5.14

Borrowing Base . Maintain all Loans in compliance with the then current Borrowing Base.

5.15

Use of Proceeds . Use the proceeds of the Loans and the Letters of Credit in accordance with Section 3.20 .

5.16

Conference Calls . If requested by Agent upon reasonable advance notice, conduct a monthly conference call to update Agent and the Lenders on Borrowers’ and their Subsidiaries’ consolidated financial condition, operations, prospects and respective businesses.

5.17

Misplaced Notes . If found, the Misplaced Note Holder agrees to promptly pledge, or cause to be pledged, the Misplaced Notes in favor of Agent, for the benefit of Lenders, as required under the Pledge Agreement.

5.18

Canadian Pension and Benefit Plans .

(a)

For each existing Canadian Pension Plan of any Canadian Borrowing Base Guarantor, such Canadian Borrowing Base Guarantor shall ensure that such plan retains its registered status under and is administered in all material respects in accordance with the applicable pension plan text, funding agreement, the ITA and all other applicable laws.

(b)

For each Canadian Pension Plan hereafter adopted by any Canadian Borrowing Base Guarantor that is required to be registered under the ITA or any other applicable laws, that Canadian Borrowing Base Guarantor shall use its best efforts to seek and receive confirmation in writing from the applicable Governmental Authorities to the effect that such plan is unconditionally registered under the ITA and such other applicable laws.

(c)

For each existing and hereafter adopted Canadian Pension Plan and Canadian Benefit Plan of any Canadian Borrowing Base Guarantor, such Canadian Borrowing Base Guarantor shall in a timely fashion perform in all material respects all statutory obligations (including fiduciary, funding, investment and administration obligations) required to be performed in connection with such plan and the funding media therefor.

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(d)

Each Canadian Borrowing Base Guarantor shall deliver to Agent if requested by Agent, promptly after the filing thereof by such Canadian Borrowing Base Guarantor with any applicable governmental authority, (i) copies of each annual and other return, report or valuation with respect to each Canadian Pension Plan of such Canadian Borrowing Base Guarantor; (ii) promptly after receipt thereof, a copy of any direction, order, notice, ruling or opinion that such Canadian Borrowing Base Guarantor may receive from any applicable governmental authority with respect to any Canadian Pension Plan of such Canadian Borrowing Base Guarantor; and (iii) notification within thirty (30) days of any increases having a cost to such Canadian Borrowing Base Guarantor in excess of Cdn.$250,000 per annum, in the benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the establishment of any new Canadian Pension Plan or Canadian Benefit Plan, or the commencement of contributions to any such plan to which such Canadian Borrowing Base Guarantor was not previously contributing.

5.19

After Acquired Real Property . Upon the acquisition by it or any of its Domestic Subsidiaries after the Closing Date of any interest (whether fee or leasehold) in any real property wherever located, but excluding any Excluded Assets, (each such interest being an “ After Acquired Property ”) (x) with a Current Value (as defined below) in excess of $750,000 in the case of a fee interest, or (y) requiring the payment of annual rent exceeding in the aggregate $100,000 in the case of a leasehold interest, promptly so notify Agent, setting forth with specificity a description of the interest acquired, the location of the real property, any structures or improvements thereon and either an appraisal or such Credit Party’s good-faith estimate of the current value of such real property (for purposes of this Section, the “ Current Value ”). Agent shall notify such Credit Party whether it intends to require a Mortgage and the other documents referred to below (subject to the limitations contained in Section 5.1 ) or in the case of leasehold, a leasehold Mortgage or Landlord’s Waiver (pursuant to Section 5.12 ). Upon receipt of such notice requesting a Mortgage, the Person which has acquired such After Acquired Property shall promptly furnish to Agent the following, in each case, prior to the Discharge of Term Obligations, to the extent delivered to the Senior Secured Notes Trustee or the DIP Term Loan Agent, as applicable, and thereafter, at the request of Agent, and each in form and substance reasonably satisfactory to Agent: (i) a Mortgage with respect to such real property and related assets located at the After Acquired Property, each duly executed by such Person and in recordable form, (ii) evidence of the recording of the Mortgage referred to in clause (i) above in such office or offices as may be necessary or, in the opinion of Agent, desirable to create and perfect a valid and enforceable second priority (or, in the event that the Senior Term Obligations have been paid in full, first priority) lien on the property purported to be covered thereby or to otherwise protect the rights of Agent and the Lenders thereunder, (iii) a Title Insurance Policy, (iv) a survey of such real property, certified to Agent and to the issuer of the Title Insurance Policy by a licensed professional surveyor reasonably satisfactory to Agent, (v) at Agent’s reasonable request, Phase I Environmental Site Assessments, or such other non-intrusive and non-Phase II environmental assessment as Agent may reasonably request, with respect to such real property, by a consultant reasonably satisfactory to Agent, provided that any consultant engaged by a Credit Party in connection with the acquisition of real property shall be presumptively satisfactory to Agent, (vi) in the case of a leasehold interest, a certified copy of the lease between the landlord and such Person with respect to such real property in which such Person has a leasehold interest, and the certificate of occupancy with respect thereto, (vii) in the case of a leasehold interest, an attornment and nondisturbance agreement between the landlord (and any fee mortgagee) with respect to such real property and Agent, and (viii) such other

LEGAL_US_E # 82813718.8

documents or instruments (including guarantees and opinions of counsel) as Agent may reasonably require. The Borrowers shall pay all reasonable fees and expenses, including reasonable attorneys’ fees (excluding any allocated costs of in-house counsel) and out-of-pocket expenses, and all title insurance charges and premiums, in connection with each Credit Party’s obligations under this Section 5.19 .

5.20

Senior Secured Priority Collateral . (i) Cause any and all proceeds of a sale of Senior Secured Priority Collateral received by such Credit Party or any of its Subsidiaries or any other amounts payable to the holders of the Senior Term Obligations or required to be held as Senior Secured Priority Collateral or otherwise applied in accordance with the Senior Secured Notes Indentures or the DIP Term Loan Agreement to be deposited into a Senior Secured Priority Account in accordance with the terms of Section 4.10(3) of the Senior Secured Notes Indenture or the DIP Term Loan Agreement, as applicable, (ii) promptly after such deposit, deliver (or cause to be delivered) to Agent an officer’s certificate of an Authorized Officer of Borrower Representative certifying that all such amounts have been deposited into a Senior Secured Priority Account, provided that, at no time shall any of such amounts be deposited to any other deposit or securities account maintained by the Credit Parties and (iii) within five (5) Business Days after the date upon which the Discharge of Term Obligations has occurred, transfer (or cause to be transferred) all amounts deposited to any Senior Secured Priority Account to a Blocked Account. Borrower Representative shall give Agent prompt written notice of any withdrawal from any Senior Secured Priority Account.

5.21

Intentionally Omitted .

5.22

Accounts Documentation . The Borrower Parties will at such intervals as Agent may reasonably require, execute and deliver confirmatory written assignments of the Accounts to Agent and furnish such further schedules and/or information as Agent may reasonably require relating to the Accounts, including, without limitation, sales invoices or the equivalent, credit memos issued, remittance advices, reports and copies of deposit slips and copies of original shipping or delivery receipts for all merchandise sold. In addition, the Borrower Parties shall notify Agent of any non-compliance in respect of the representations, warranties and covenants contained in Section 5.23 . The items to be provided under this Section 5.22 are to be in form reasonably satisfactory to Agent and are to be executed and delivered to Agent from time to time solely for its convenience in maintaining records of the Collateral. The Borrower Parties’ failure to give any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien on the Collateral. The Borrower Parties shall not re-date any invoice or sale or make sales on extended dating beyond that customary in such Credit Parties’ industry, and shall not re-bill any Accounts without promptly disclosing the same to Agent and providing Agent with a copy of such re-billing, identifying the same as such. If the Borrower Parties become aware of anything materially detrimental to any of such Borrower Parties’ material customers’ credit, such Borrower Parties will promptly advise Agent thereof.

5.23

Status of Accounts and Other Collateral . With respect to any Account of any Borrower Party that is included by the Borrower Parties as an Eligible Account in the calculation of the Borrowing Base, each Borrower Party covenants, represents and warrants: (a) such Borrower Party shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of Agent for the benefit of Agent and the Lenders and Permitted Liens), and

LEGAL_US_E # 82813718.8

shall be fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said Collateral; (b) each such Account shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold or services rendered by such Borrower Party; (c) no such Account shall be subject to any defense, offset, counterclaim, discount or allowance except as may be stated in the invoice relating thereto, discounts and allowances as may be customary in such Borrower Party’s business and as otherwise disclosed to Agent; (d) none of the transactions underlying or giving rise to any such Account shall violate any applicable state or federal laws or regulations, and all documents relating thereto shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) no agreement under which any deduction or offset of any kind, other than normal trade discounts, may be granted or shall have been made by such Borrower Party at or before the time such Account is created; (f) all agreements, instruments and other documents relating to any Account shall be true and correct and in all material respects what they purport to be; (g) such Borrower Party shall maintain books and records pertaining to said Collateral in such detail, form and scope as Agent shall reasonably require; (h) such Borrower Party shall promptly notify Agent if any Account arises out of contracts with any Governmental Authority, and will execute any instruments and take any steps reasonably required by Agent in order that all monies due or to become due under any such contract shall be assigned to Agent and notice thereof given to such Governmental Authority under the Federal Assignment of Claims Act or any similar state or local law; (i) such Borrower Party will, immediately upon learning thereof, report to Agent any material loss or destruction of, or substantial damage to, any of the Collateral, and any other matters affecting the value, enforceability or collectibility of any of the Collateral; (j) if any amount payable under or in connection with any such Account is evidenced by a promissory note or other instrument, such promissory note or instrument shall be promptly pledged, endorsed, assigned and delivered to Agent for the benefit of Agent and the Lenders as additional Collateral; and (k) such Borrower Party is not and shall not be entitled to pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever.

5.24

Collateral Custodian . Upon the occurrence and during the continuance of any Default or Event of Default, Agent may at any time and from time to time employ and maintain on the premises of any Credit Party a custodian selected by Agent who shall have full authority to do all acts necessary to protect Agent’s and the Lenders’ interests. Each Credit Party hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever Agent may reasonably request to preserve the Collateral. All reasonable costs and expenses incurred by Agent by reason of the employment of the custodian shall be the responsibility of Borrowers and charged to the Loan Account.

5.25

Accounts Covenants.

(a)

With respect to any Account of any Borrower Party that is included by the Borrower Parties as an Eligible Account in the calculation of the Borrowing Base, Borrowers shall notify Agent promptly of: (i) any material delay in any Borrower Party’s performance of any of its material obligations to any Account Debtor or the assertion of any material claims, offsets, defenses or counterclaims by any Account Debtor, or any material disputes with Account

LEGAL_US_E # 82813718.8

Debtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse information known to any Borrower or Guarantor relating to the financial condition of any Account Debtor if the aggregate amount of all Accounts owing by such Account Debtor is greater than $250,000 and (iii) any event or circumstance which, to the best of any Borrower Party’s knowledge, would cause Agent to consider any then existing Accounts as no longer constituting Eligible Accounts. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor without Agent’s consent (which consent shall not be unreasonably withheld), except as provided in Section 6.14 . Subject to Section 6.14 , as long as no Event of Default has occurred and is continuing, Borrower Parties shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any Account Debtor. At any time that an Event of Default has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtors or grant any credits, discounts or allowances.

(b)

With respect to each Account of any Borrower Party that is included by the Borrower Representative as an Eligible Account in the calculation of the Borrowing Base: (i) the amounts shown on any invoice delivered to Agent or schedule thereof delivered to Agent shall be true and complete in all material respects, (ii) any payments made thereon shall be promptly delivered to Agent pursuant to the terms of this Agreement, (iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor except as provided in Section 6.14 , (iv) there shall be promptly reported to Agent in accordance with the terms of this Agreement any setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto and (v) none of the transactions giving rise thereto will violate any applicable foreign, Federal, state or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(c)

Agent shall have the right at any time or times, in Agent’s name or in the name of a nominee of Agent, to verify the validity, amount or any other matter relating to any Inventory or Accounts, by mail, telephone, facsimile transmission or otherwise.

5.26

Inventory Covenants . With respect to the Inventory of any Borrower Party that is included by the Borrower Representative as Eligible Inventory or Eligible Machinery-in-Process in the calculation of the Borrowing Base: (a) each such Borrower Party shall at all times maintain inventory records reasonably satisfactory to Agent (it being acknowledged that Agent is not aware of any inventory records that are not reasonably satisfactory), keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of such Inventory, such Borrower Party’s cost therefor and daily withdrawals therefrom and additions thereto; (b) such Borrower Parties shall conduct a physical count of such Inventory at any time Agent may reasonably request, and promptly following such physical inventory shall supply Agent with a report in the form and with such specificity as may be reasonably satisfactory to Agent concerning such physical count (it being acknowledged that Agent is not aware of any current practices that are not reasonably satisfactory); (c) such Borrower Parties shall not remove any such Inventory from the locations set forth or permitted herein, without the prior written consent of Agent, except for sales of such Inventory in the ordinary course of its business and except to move such Inventory directly from one location set forth or permitted herein to another such location and except for such Inventory shipped from the

LEGAL_US_E # 82813718.8

manufacturer thereof to such Borrower Party which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, the Borrower Parties shall, at their expense, deliver or cause to be delivered to Agent written appraisals as to such Inventory in form, scope and methodology reasonably acceptable to Agent (and consistent with the methodology used by Continental Plants) by Continental Plants or an appraiser reasonably acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (e) such Borrower Parties shall produce, use, store and maintain such Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of such Inventory shall constitute farm products or the proceeds thereof; (g) each such Borrower Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of such Inventory; (h) such Borrower Parties shall not sell such Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any such Borrower Party to repurchase such Inventory (unless such Inventory may be returned only if it is not damaged and is resalable in the normal course of business); (i) such Borrower Parties shall keep such Inventory in good and marketable condition; and (j) such Borrower Parties shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Borrower Representative to Agent pursuant to paragraph (a) of Annex F hereof, acquire or accept any such Inventory on consignment or approval outside the ordinary course of business.

5.27

Compliance with Milestones . Unless otherwise waived by the Requisite Lenders in their sole and absolute discretion, each Credit Party shall take all actions necessary to achieve the Milestones set forth on Exhibit M by the dates specified therein (or such later date as may be agreed to by the Requisite Lenders in their sole discretion).

5.28

Cooperation with Advisors . Each of the Credit Parties will use commercially reasonable efforts to provide full cooperation and assistance to Advisors hired by or at the discretion of Agent and the Lenders (or their counsel) to enable such Advisors to perform the services for which they are engaged.

5.29

Restructuring Advisor; Financial Advisor . Retain at all times (i) a restructuring advisor and (ii) a financial advisor that, in each case, has substantial experience and expertise advising Chapter 11 debtors-in-possession in large and complex bankruptcy cases (in each case, reasonably satisfactory to Agent); provided that the Credit Parties shall be permitted to replace any such advisor with any another advisor satisfying the requirements of this Section and shall be permitted a period a time (not to exceed 10 Business Days) to file an application with either Bankruptcy Court to employ such replacement advisor. It being understood that Rothschild Inc. and Conway, DelGenio, Gries & Co, LLC shall be sufficient advisors for purposes of this Section.

LEGAL_US_E # 82813718.8

NEGATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof until the Termination Date it shall not:

6.1

Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with respect to any of its properties, whether now owned or hereafter acquired; file or suffer to exist under the Code or any similar law or statute of any jurisdiction, an effective financing statement (or the equivalent thereof) creating an effective Lien thereto that names it or any of its Subsidiaries as debtor; sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement (or the equivalent thereof); sell any of its property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of Accounts) with recourse to it or any of its Subsidiaries or assign or otherwise transfer, or permit any of its Subsidiaries to assign or otherwise transfer, any account or other right to receive income; other than, as to all of the above, Permitted Liens.

6.2

Indebtedness . Create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted Indebtedness. Notwithstanding the foregoing, and except for the Carve-Out Amount, no Permitted Indebtedness shall be permitted to have an administrative expense claim status under the Bankruptcy Code senior to or pari passu with the super priority administrative expense claims of Agent and the Lenders as set forth herein and in the Financing Orders.

6.3

Fundamental Changes; Dispositions . Wind-up, liquidate or dissolve, or merge, consolidate or amalgamate with any Person, or convey, sell, lease or sublease, license or sublicense, transfer or otherwise dispose of, whether in one transaction or a series of related transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing), or purchase or otherwise acquire, whether in one transaction or a series of related transactions, all or substantially all of the assets of any Person (or any division thereof) (or agree to do any of the foregoing), or permit any of its Subsidiaries to do any of the foregoing; provided , however , that

(a)

any Credit Party and its Subsidiaries may (A) sell Inventory in the ordinary course of business, (B) dispose of excess, obsolete or worn-out equipment in the ordinary course of business in an aggregate amount not to exceed $500,000, (C) dispose of cash or sell or liquidate Permitted Investments or other cash equivalents, (D) enter, in the ordinary course of business and consistent with past practices, into operating leases and subleases or licenses or sublicenses of any property, (E) sell or otherwise dispose of accounts receivables, notes receivable and related assets in an aggregate face amount not to exceed $250,000 during the term of this Agreement and (F) sell or otherwise dispose of assets consisting of accounts receivable and related assets in connection with Permitted European Receivables Financing; provided that the Net Cash Proceeds of any disposition are paid to Agent for the benefit of Agent and the Lenders to be applied, to the extent required, pursuant to the terms of Section 1.3 ; and provided , further however , that in the case of any sale of Senior Secured Priority Collateral, the

LEGAL_US_E # 82813718.8

Credit Parties shall (1) give Agent prior notice of all such sales or dispositions, (2) certify that all proceeds thereof shall be deposited into a Senior Secured Priority Account in accordance with Section 5.20 and as otherwise required by the Senior Secured Notes Indenture, the DIP Term Loan Agreement, the Intercreditor Agreement or the Loan Documents, as applicable, and (3) notify Agent in accordance with Section 5.20 prior to any withdrawals from or deposits to any such account; and

(b)

any Foreign Subsidiary (x) may be merged into any other Foreign Subsidiary, or may be consolidated or amalgamated with another Foreign Subsidiary, so long as (A) no other provision of this Agreement would be violated thereby, (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (C) to the extent such Foreign Subsidiary is owned directly by a Credit Party, all of the non-voting Stock and sixty-five percent (65%) of the voting Stock of the surviving Foreign Subsidiary is the subject of the Pledge Agreement, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation or (y) may sell or otherwise dispose of, all or any part of its business, property or assets, whether now owned or hereafter acquired to any other Foreign Subsidiary so long as (A) no other provision of this Agreement would be violated thereby, and (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction.

6.4

Change in Nature of Business . Make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in Section 3.12 .

6.5

Loans, Advances, Investments, Etc . Make or commit or agree to make any loan, advance, guarantee of obligations, other extensions of credit or capital contributions to, or hold or invest in or commit or agree to hold or invest in, or purchase or otherwise acquire or commit or agree to purchase or otherwise acquire any shares of the Stock, bonds, notes, debentures or other securities of, or make or commit or agree to make any other investment in, any other Person, or purchase or own any futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or permit any of its Subsidiaries to do any of the foregoing, except for:

(a)

investments existing on the Closing Date, as set forth on Schedule 6.5 hereto, but not any increase in the amount thereof as set forth in such Schedule or any other material modification of the terms thereof,

(b)

investments permitted under clause (j) of the definition of “Permitted Indebtedness”,

(c)

Permitted Investments,

(d)

investments not constituting loans or advances by (A) any Domestic Credit Party in any other Domestic Credit Party and (B) any Foreign Subsidiary in any other Foreign Subsidiary,

(e)

loans and advances consistent with the 13-Week Budget to directors, officers and employees of Parent and its Subsidiaries in the ordinary course of business in an aggregate principal amount not to exceed $250,000 at any one time outstanding,

LEGAL_US_E # 82813718.8

(f)

investments under Hedging Agreements entered into in the ordinary course of financial management and not for speculative purposes,

(g)

pledges and deposits permitted under clause (f) of the definition of Permitted Liens,

(h)

investments in deposit accounts in the ordinary course of business,

(i)

investments received in connection with an insolvency proceeding of any supplier, customer or other Person having an obligation in favor of any Credit Party as a result of a settlement of delinquent accounts and deposits with, such customers, suppliers or other Persons arising in the ordinary course of business,

(j)

investments existing on the Closing Date not constituting loans or advances in the Subsidiaries of the Credit Parties and the creation of new Subsidiaries by any Credit Party so long as such creation is in compliance with Section 5.1 ,

(k)

investments constituting Contingent Obligations to the extent permitted under clause (l) of the definition of Permitted Indebtedness,

(l)

investments constituting Accounts arising in the ordinary course of business,

(m)

investments by a Credit Party in the capital stock of its Foreign Subsidiaries which is funded solely from the retirement of outstanding intercompany Indebtedness existing as of the Closing Date which is owing by such Foreign Subsidiary to such Credit Party, and

(n)

investments by a Credit Party in Foreign Subsidiaries in an amount not to exceed, $3,500,000 (provided that notwithstanding the foregoing, the aggregate amount of investments permitted under this clause (n) shall not exceed $500,000 without the prior written consent of Agent) during the term of this Agreement so long as the proceeds of such investment are directly, or indirectly, applied by such Foreign Subsidiary in accordance with the DIP Budget.

6.6

Intentionally Omitted .

6.7

Restricted Payments . (i) Declare or pay any dividend or other distribution, direct or indirect, on account of any Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, (ii) make any repurchase, redemption, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Stock of any Credit Party or any direct or indirect parent of any Credit Party, now or hereafter outstanding, (iii) make any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Stock of any Credit Party, now or hereafter outstanding, (iv) return any Stock to any shareholders or other equity holders of any Credit Party or any of its Subsidiaries, or make any other distribution of property, assets, shares of Stock, warrants, rights, options, obligations or securities thereto as such or (v) pay any management fees or any other fees or expenses

LEGAL_US_E # 82813718.8

(including the reimbursement thereof by any Credit Party or any of its Subsidiaries) pursuant to any management, consulting or other services agreement to any of the shareholders or other equityholders of any Credit Party or any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates of any Credit Party; provided , however , (A) any Subsidiary of any Credit Party may pay dividends or make other distributions to any Credit Party, (B) any Subsidiary that is not a Credit Party may pay dividends or make other distributions to any Credit Party or any Subsidiary of a Credit Party, and (C) any non-wholly owned Subsidiary of a Credit Party may pay dividends or make other distributions to its shareholders generally so long as the Credit Party or its respective Subsidiary which owns Stock in the Subsidiary paying such dividends or making such other distributions receives at least its proportionate share thereof (based upon its relative holdings of Stock in the Subsidiary paying such dividends and taking into account relative preferences, if any, of the various classes of Stock in such Subsidiary).

6.8

Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used for any purpose that would cause such Loan to be a margin loan under the provisions of Regulation T, U or X of the Federal Reserve Board.

6.9

Transactions with Affiliates . Enter into, renew, extend or be a party to, or permit any of its Subsidiaries to enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof, (ii) transactions with another Credit Party, (iii) transactions permitted by Sections 6.1 , 6.2 , 6.3 , 6.5 , 6.7 and/or 6.10 , or (iv) compensation, retirement, expense reimbursement and indemnification arrangements with directors, officers, employees or consultants in the ordinary course of business consistent with the 13-Week Budget.

6.10

Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries . Create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Credit Party or any Subsidiary of any Credit Party (i) to pay dividends or to make any other distribution on any shares of Stock of such Subsidiary owned by any Credit Party or any of its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness owed to any Credit Party or any of its Subsidiaries, (iii) to make loans or advances to any Credit Party or any of its Subsidiaries or (iv) to transfer any of its property or assets to any Credit Party or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing; provided , however , that nothing in any of clauses (i) through (iv) of this Section 6.10 shall prohibit or restrict compliance with:

(a)

this Agreement and the other Loan Documents;

(b)

any ag

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