Commitment Letter for Amendment and Extension of Accounts Receivable Securitization Facility between Metaldyne Corporation and GE Capital

  EXECUTED COPY March 31, 2005 Mr. Jeffrey M. Stafeil Executive Vice President and Chief Financial Officer Metaldyne Corporation 47603 Halyard Drive Plymouth, Michigan 48170-2429 Re: Commitment Letter Gentlemen: You have advised General Electric Capital Corporation ("GE Capital" or "Agent"; the terms "GE Capital" and "Agent" shall include any affiliate of GE Capital designated by it to provide all or any portion of the facility described herein) that Metaldyne Corporation (the "Company") is seeking (a) a seventh amendment (the "Seventh Amendment") of its existing accounts receivable securitization facility (the "Existing Facility"), (b) an extension of the Existing Facility and an increase of the maximum financing available under the Existing Facility to $175 million (the "Extension") and (c) a replacement accounts receivable securitization facility providing financing with availability in an amount up to $225 million (the "New Facility", together with the Seventh Amendment and the Extension, the "Facilities"), the proceeds of which New Facility would be used to refinance the Existing Facility and to provide for ongoing accounts receivable financing and to pay fees and expenses associated with the New Facility (the transactions contemplated by the New Facility, the "Transaction"). Based on our understanding of the transactions as described above, the information provided to date and subject to the terms and conditions herein, GE Capital is pleased to offer its commitments to (a) take an assignment of the Existing Facility and agree to the Seventh Amendment, (b) grant the Extension and (c) provide the New Facility described in this commitment letter (the "Commitment Letter"). As part of your review of this Commitment Letter, you should be aware that it is critical that both the Company and its external counsel conclude that the terms of the Transaction described below, which include, among other things, the Originators' (as defined below) sale, transfer and assignment of receivables and related security, the Originators' grant of a security interest with respect to such receivables and related security, the incurrence of additional obligations by the Originators and their affiliates, and the purchase of an undivided percentage ownership interest in accounts receivable by GE Capital from a special purpose subsidiary of the Company, do not conflict with any existing loan agreement, security agreement, bond indenture or any supplement thereto or any other material agreement to which the Company or any of its affiliates is a party. In addition, and without limitation, we wish to note that (i) a customary opinion of your external counsel to the effect that the terms of the Transaction do not conflict with material loan agreements, security agreements, bond indentures or any supplements thereto, in each case, to which the Originators or any of their affiliates party to the Transaction is a party (which agreements may be specified in an opinion from internal counsel to the Company) and (ii) such 1  other opinions standard for a securitization of this type, in each case in form and substance acceptable to GE Capital and its counsel, shall be required in order to close the Transaction. SUMMARY OF PROPOSED TERMS -------------------------------------------------------- I. SEVENTH AMENDMENT TO EXISTING FACILITY MATURITY OF SEVENTH AMENDMENT: January 1, 2007. PURCHASE OF EXISTING COMMITMENTS AND NET INVESTMENTS: Pursuant to Transfer Supplements with the existing Committed and Conduit Purchaser, GE Capital will purchase and assume all Commitments and all outstanding Net Investments under the Receivables Transfer Agreement, dated as of November 28, 2000, as heretofore amended (the "Existing RTA"; all capitalized terms used in Parts I and II of this Commitment Letter shall have the meanings assigned to such terms in the Existing RTA if not otherwise defined herein). Such purchase shall be made at par value. The Transfer Supplements will also be signed and consented to by the Company, MTSPC, Inc. ("MTSPC") and JPMorgan Chase Bank, as existing Administrative Agent. TRANSFER OF ADMINISTRATIVE AGENCY: Pursuant to a Seventh Amendment to the Existing RTA, the existing Administrative Agent will resign and GE Capital will appoint itself as the replacement Administrative Agent. GE Capital will review the agency provisions of the Existing RTA and consider whether any amendments thereto are necessary to conform to GE Capital institutional requirements; however, no substantive impact on MTSPC is expected. The Company, as limited guarantor, will acknowledge and agree to succession of GE Capital as Administrative Agent. ADDITIONAL AMENDMENTS TO RECEIVABLES TRANSFER 2  AGREEMENT: As part of the Seventh Amendment, the Existing Facility shall be further amended in accordance with the terms and conditions of the copy of the March 22, 2005 draft of Amendment No. 7 to the Existing Facility attached as Exhibit A hereto (with the exception of the revised maturity date) (collectively, the "Additional Amendments"); provided that the Additional Amendments shall cease to be effective on the 60th day after the effective date of the Seventh Amendment unless on or before such date the Agent has entered into an intercreditor agreement (in form and substance satisfactory to Agent) with JPMorgan Chase Bank, as administrative agent under the Company's senior credit agreement (the "Lender Agent"). AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT: Any direct references to JPMorgan Chase Bank in the Receivables Purchase Agreement will be replaced with references to GE Capital. AMENDMENT TO LOCKBOX AGREEMENTS, CURRENCY HEDGING ARRANGEMENTS, CREDIT DEFAULT SWAPS AND UCC FINANCING STATEMENTS: Existing lockbox providers will execute consents to assignments of the Lockbox Agreements to GE Capital as the replacement Administrative Agent; existing currency hedge providers and credit default swap issuers will execute consents to assignments of any currency hedge agreements and credit default swaps to GE Capital as the replacement Administrative Agent; and the UCC-1 Financing Statements filed by the existing Administrative Agent against the Originators and MTSPC will need to be amended to reflect their 3  assignment to GE Capital as replacement Administrative Agent. LIEN SEARCHES: Lien searches to be performed and results to confirm no existence of adverse claims on the transferred Receivables and the collateral granted pursuant to Section 10.10 of the RTA. CERTIFIED DOCUMENTATION: MTSPC will certify and provide GE Capital with copies of all existing documentation of the Existing Facility so that GE Capital can confirm whether any other matters necessary to facilitate the Seventh Amendment or the Extension are necessary. SEVENTH AMENDMENT CLOSING FEE AND ADMINISTRATIVE FEE: Set forth in the Fee Letter of even date between GE Capital and the Company (the "Fee Letter"). CLOSING: Closing of the Seventh Amendment is conditioned upon satisfaction of each of the following: (a) no Termination Event or Potential Termination Event shall have occurred and be continuing, (b) the above-stated fees shall have been paid, (c) the above-described matters shall have been completed, (d) GE Capital has received reliance letters in form and substance reasonably satisfactory to GE Capital permitting GE Capital to rely on the legal opinions originally delivered in connection with the closing of the Existing Facility by (i) Cahill Gordon & Reindel LLP and (ii) other external counsel to any Originators that are parties to the Existing Facility on the date of the Extension, except in the case of (ii) to the extent that any such original opinion contains reliance language that is reasonably satisfactory to the Agent and its counsel, (e) the representations and warranties set forth in Section 3.01 of the Existing RTA shall be true and correct as of the closing date of the Seventh Amendment, and (f) Agent shall received satisfactory cash dominion and lock-box arrangements, including without limitation deposit account control agreements satisfactory to Agent (but until the New Facility is effective and provided that no Termination Event or Potential Termination Event is then in existence, Agent shall return to MTSPC on each business day the cash swept to Agent that day as a result of such cash dominion). The closing of the Seventh Amendment shall also be subject to the execution and delivery of final legal documentation with respect to the Seventh Amendment acceptable to GE 4  Capital and its counsel consistent with the terms set forth in this Commitment Letter. ASSIGNMENTS: GE Capital intends to assign and syndicate a portion of the Commitments with respect to the Existing Facility as amended through the Seventh Amendment pursuant to the terms and conditions described in the Fee Letter. -------------------------------------------------------- II. EXTENSION OF EXISTING FACILITY MATURITY OF EXTENSION: January 1, 2007. MAXIMUM COMMITMENT: One hundred seventy-five million dollars ($175,000,000). REVISED PRICING: LIBOR Reference Rate plus (a) 1.75% plus (b) on and after the 90th day after the closing of the Extension, 0.25%, plus (c) on and after the 180th day following the closing of the Extension, an additional 0.25%. The LIBOR Reference Rate shall be established as the 30-day LIBOR Rate applicable on the first business day of each calendar month (determined by reference to the Telerate Service). AMENDMENTS TO RECEIVABLES TRANSFER AGREEMENT: The Existing RTA as amended through the Seventh Amendment will be further amended to (a) modify the advance rates applicable to the Receivables based on the criteria set forth below in "Section III - New Facility," except that 75% will be the maximum percentage in the Dynamic Advance Rate (as defined below), (b) incorporate new eligibility criteria based on the criteria set forth below in "Section III - New Facility", (c) add a representation and warranty to Section 3.01 of the Existing RTA regarding the absence of a material adverse effect on MTSPC since its creation, (d) apply the concentration limits set forth in Exhibit B hereto, (e) incorporate the new portfolio reporting requirements set forth below in "Section III - New Facility" and (f) reflect other modifications acceptable to the Agent. 5  CLOSING: Closing of the Extension is conditioned upon satisfaction of each of the following: (a) Agent shall have entered into the aforesaid intercreditor agreement with the Lender Agent, (b) no Termination Event or Potential Termination Event shall have occurred and be continuing, and (c) the representations and warranties set forth in Section 3.01 of the Existing RTA shall be true and correct as of the closing date of the Extension, The closing of the Extension shall also be subject to the execution and delivery of final legal documentation acceptable to GE Capital and its counsel consistent with the terms set forth in this Commitment Letter. ASSIGNMENTS: GE Capital intends to assign and syndicate a portion of the Commitments with respect to the Extension pursuant to the terms and conditions described in the Fee Letter. 6  -------------------------------------------------------- III. NEW FACILITY TRANSACTION OVERVIEW: Trade receivables securitization facility pursuant to which the Purchasers will acquire an undivided percentage ownership interest ("Purchaser Interest") in Receivables owned or generated by the Originators and transferred to the Seller. Following the initial purchase, the Seller would automatically acquire a 100% interest in all newly generated Receivables of the Originators. Purchases of the Purchaser Interest shall be made by cash payments to the Seller. TRANSACTION PARTIES: ORIGINATORS: The "Originators" (as defined in the Existing Facility) and other subsidiaries of the Company approved by Agent (as defined below) following satisfactory completion of all business and legal due diligence with respect thereto and receipt of satisfactory results of an audit with respect to such other subsidiary and completion of the same conditions precedent as required for the addition of a "Seller" under and as defined in the Existing Facility (individually, an "Originator" and collectively, the "Originators"). SELLER: MTSPC or a newly-formed, special purpose bankruptcy-remote limited liability company that is wholly-owned by the Originators and a special purpose corporation that is a bankruptcy-remote subsidiary of any Originator ("SPE Member"), which Seller will acquire Receivables from each Originator via true sale pursuant to a Receivables Sale and Contribution Agreement (the "Sales Agreement"). PURCHASERS: GE Capital and other acceptable co-purchasers to be determined pursuant to syndication of the New Facility, and, so long as a Termination Event has not occurred nor is continuing, subject to the consent of Seller (not to be unreasonably withheld or delayed). SERVICER: Company, as "Master Servicer", through its operating subsidiaries and affiliates as Sub-Servicers (collectively, the "Servicers") will continue to perform all servicing and administration of the receivables portfolio in accordance with its normal practices, adhering to the Company's established credit and collection policies. The Servicers will also perform all collection duties relating to the Receivables. Pursuant to certain 7  conditions under a Servicer Termination Event, the Agent will reserve the right to replace any Servicer in any or all of these roles. ADMINISTRATIVE AGENT ("AGENT"): General Electric Capital Corporation or one of its affiliates. LEAD ARRANGER/ LEAD BOOKRUNNER: GECC Capital Markets Group, Inc. ("GECMG"), and GECMG will collaborate with the Company regarding designation of other arrangers and bookrunners, if any. TRANSACTION PARAMETERS: TERM: The New Facility shall expire on the earliest to occur of: a) Sixty (60) months after the closing of the Transaction (the "Closing Date"); b) Sixty-Three (63) months after the closing of the Seventh Amendment; and c) The occurrence of a Termination Event. MAXIMUM COMMITMENT: Two hundred twenty-five million dollars ($225,000,000). RECEIVABLES: Indebtedness of any person ("Obligor") arising from the sale of goods or provision of services under contract by the Company or any other Originator and any security or supporting obligations related thereto. CAPITAL: The sum of cash paid to the Seller by the Purchasers for the ownership interest in the Receivables, as reduced from time to time by Receivables collections. The maximum amount of Capital available to be paid to the Seller at any time shall equal the lesser of (a) the Maximum Commitment, and (b) an amount equal to the positive difference, if any, of: (i) the product of (1) the Dynamic Advance Rate multiplied by (2) the Net Receivables Balance, minus (ii) an amount equal to the Availability Block (as defined below), minus (iii) if the "Credit Memo Lag" (as defined in a manner acceptable to the parties) is greater than a number of days to be determined, a reserve amount calculated by a formula to be determined, minus (iv) the lesser of (X) such other reserves as the Agent (using its reasonable credit judgment and based on information regarding the Company, the Originators, the Seller, the Obligors or the Receivables, whether as a result of an audit or 8  otherwise) may from time to time specify to the Seller and the Company, which reserves shall be determined as a percentage of the Net Receivables Balance (and which reserves shall include, without limitation, reserves with respect to servicing fees and discount that would be instituted upon the occurrence and during the continuance of any Termination Event or incipient Termination Event) and (Y) so long as no Termination Event or prospective Termination Event shall have occurred and be continuing, 5.0% of the Net Receivables Balance. The "Availability Block" shall equal $5 million less an amount, if any, by which clause (i) minus clauses (iii) and (iv) exceeds the Maximum Commitment. TRANSFER PRICE OF RECEIVABLES: Receivables will be sold by the Originators under the Sales Agreement in true sales to the Seller at a price to be determined by the Originators and the Seller. NET RECEIVABLES BALANCE: The difference of the aggregate outstanding of all Eligible Receivables minus (a) amounts in excess of the Concentration Limits, and minus (b) unapplied cash and credits. DYNAMIC ADVANCE RATE: At any time, the lesser of (i) 85% and (ii) a percentage equal to 100% minus the sum of (A) 2 times the Monthly Dilution Ratio as of such date plus (B) 5%. DILUTION FACTORS: The portion of any Receivable which (a) was reduced or canceled as a result of (i) any defective, rejected or returned merchandise or services, or any failure by any Originator to deliver any merchandise or services or otherwise perform under the underlying contract or invoice, (ii) any change in or cancellation of any of the terms of such contract or invoice or any cash discount, rebate, retroactive price adjustment or any other adjustment by the Originators which reduces the amount payable by the Obligor on the related Receivable, (iii) any written-off amounts or (iv) any setoff in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related transaction or an unrelated transaction) or (b) is subject to any specific dispute, offset, counterclaim or defense whatsoever. MONTHLY DILUTION RATIO: As of the date of any determination, the quotient of: (a) the aggregate Dilution Factors for all Receivables during the month most recently ended divided by (b) the aggregate billed amount of all Receivables originated during the month that is two months prior to the most recently ended month. CONCENTRATION LIMIT: See Exhibit B attached hereto. 9  ELIGIBLE RECEIVABLES: To be included in Eligible Receivables, each Receivable and its related Obligor must meet certain eligibility criteria including, but not limited to, those listed below. a) Receivables must be generated solely by one of the Originators in the ordinary course of business; b) Receivables must be owned by Seller and transferred to the Purchasers free of claims, security interests or other encumbrances and not subject to recission, counterclaims, defenses or offset; c) Receivables must satisfy all applicable requirements of the Originators' credit and collection policies which must be acceptable to the Agent; d) A Receivable that is (i) unpaid for more than 120 days past its invoice date, or (ii) the Obligor of which is in a bankruptcy or similar proceeding, or (iii) which consistent with the Originators' Credit and Collection Policy has been or should be written off as uncollectible (each of the foregoing, a "Defaulted Receivable") will be ineligible; e) Receivables owed by Obligors with more than 25% of its Receivables classified as Defaulted Receivables at any time will be ineligible; f) No obligor may be a government entity, unless it is the U.S. Government and the Receivables have been assigned in accordance with the Federal Assignment of Claims Act and otherwise acceptable to the Agent; g) Receivables must be payable in U.S. dollars and due from Obligors domiciled in the U.S., except that (i) Receivables owing by Obligors domiciled in Canada will be considered eligible to the extent that such Receivables do not exceed in the aggregate 20% of the Net Receivables Balance and (ii) Receivables payable in Canadian dollars will be considered eligible to the extent that the Transferor has entered into currency hedge agreements in form, substance and notional amounts acceptable to Agent and complied with other conditions to be set forth in the Financing documentation; h) Any "Tooling Receivable" (defined below) must be subject to an Obligor-approved Production Part Approval Process (P-PAP) document; as used herein, "Tooling Receivable" means an obligation of 10  an Obligor to pay for (i) tooling or equipment purchased or built by an Originator for the purpose of manufacturing products for such Obligor or (ii) services rendered in connection with building tooling for the purposes of manufacturing products for such Obligor. i) Receivables may not be from an affiliate of any Originator or the Seller; j) Receivables may not arise with respect to goods delivered on a "bill and hold" basis, consigned goods, unperformed services, "billed but not yet shipped" goods, "sale or return" goods or "progress billed" goods; k) An invoice and all other necessary documentation must have been issued with respect to such Receivables, and the Originator thereof has fulfilled all of its obligations in respect thereof; l) A portion of any Receivable will not be eligible to the extent there is a warranty reserve arising from a contractual warranty obligation with respect to such Receivable; m) Receivables may not be subject to or evidenced by debit memos, except to the extent that (i) such Receivables relate to Tooling Receivables, prototype inventory or steel surcharges, (ii) the aggregate amount of such Receivables relating to Tooling Receivables, prototype inventory or steel surcharges does not exceed $10,000,000 at any time and (iii) such Receivables relating to Tooling Receivables, prototype inventory or steel surcharges will become ineligible if the Seller does not provide reporting of the debit memos relating to such Receivables in form and substance satisfactory to Agent during any collateral audit; and n) Receivables that are from time to time indicated on the Transferor's records as "miscellaneous" accounts receivable will not be eligible. The criteria listed above are subject to further amplification and modification after review of the Receivables portfolio. OWNERSHIP INTEREST/COLLATERAL: The Originators and Seller will authorize the filing of UCC financing statements to perfect and evidence the interests of the Seller and the Purchased Interest in the 11  Receivables and related assets, including but not limited to, contracts evidencing the Receivables, any collateral, supporting obligations, credit default swaps with respect to the Receivables or other enhancements securing the Receivables, bank accounts, books and records (collectively, the "Collateral"). All Collateral will be free and clear of other liens, claims, and encumbrances, except for permitted liens and encumbrances acceptable to Agent. FEES AND EXPENSES: COMMITMENT FEE AND ADMINISTRATIVE FEE: Set forth in the Fee Letter UNUSED FEE: Monthly unused fee in an amount equal to 50 basis points per annum on the difference between average daily Capital and the Maximum Commitment. APPLICABLE RATE: LIBOR Reference Rate plus 2.25% (the "Applicable Margin"). The LIBOR Reference Rate shall be established as the 30-day LIBOR Rate applicable on the first business day of each calendar month (determined by reference to the Telerate Service). The pricing in the Existing Facility for "Conduit Purchasers" (as defined therein) shall be applicable to Purchasers that are conduits. DEFAULT YIELD RATE: Following a Termination Event, the Default Yield Rate shall apply, which is the Applicable Rate plus 2.0% per annum. OTHER TERMS: PORTFOLIO REPORTING: Daily Report: On each day on which the Seller proposes to sell Receivables to the Purchasers, by 11:00 am, New York time, the Master Servicer will deliver to the Agent a report in form and substance satisfactory to the Agent summarizing the Receivables activity for the preceding day (the "Daily Report"). This report will include a computation of the Dynamic Advance Rate based on the Reserve levels determined as of the prior Month End Report (as defined below). This report will utilize ineligibles and reserves calculated on the most recent Weekly Report (as defined below). Weekly Report: On the third business day of each week the Master Servicer will deliver to the Agent a report in form and substance satisfactory to the Agent summarizing the Receivables activity for the preceding 12  weekly period as of the end of the prior week (the "Weekly Report"); provided, however, that the Master Servicer will be required to deliver the Weekly Report only on the 15th and last day of each month if and for so long as the Company provides evidence satisfactory to the Agent that the Company has borrowing availability of not less than $30,000,000 under the Company's senior revolving credit facility at any time (and in the case of any such transition from weekly to bi-monthly reporting, the delivery of the initial bi-monthly Weekly Report shall not be required if such delivery would have occurred less than one week after the delivery of the most recent Weekly Report prior to such transition). The Weekly Report will include agings, roll-forwards, ineligibles and reserve levels. Monthly Report: The Master Servicer will deliver to the Agent a monthly report in form and substance satisfactory to the Agent summarizing the Receivables portfolio activity for the preceding period as of the end of each calendar month no later than the 15th day of the calendar month following such calendar month end (the "Month End Report"). The Month End Report will include agings, roll-forwards, ineligibles and the computations to determine the Dynamic Advance Rate and reserve levels. SYNDICATION: The New Facility will be syndicated in accordance with the Fee Letter. CONDITIONS PRECEDENT: The New Facility would be subject to conditions precedent typical for a transaction of this kind and would include, but not be limited to, the following: a) Completion of due diligence, legal review and audit satisfactory to the Agent of the Receivables and of the Seller's and the Originators' operations and operating locations; b) Termination of the Existing Facility and delivery of release and reconveyance documents and payoff agreements with respect thereto; c) Receipt of customary opinions (containing customary exceptions and qualifications) for a transaction of this nature from (1) Company's general counsel that are satisfactory to the Agent that address, among other things, no conflicts with material agreements (other than to the extent opined on by Company's outside counsel), and (2) 13  Company's outside counsel that are satisfactory to the Agent that address, among other things: i) true sale; ii) non-consolidation of assets; iii) no conflicts with other material debt agreements, laws or organizational documents; iv) perfection; and, v) corporate and enforceability matters and other opinions customary for transactions of this type; d) Corporate structure, capital structure, other debt instruments, material contracts, and governing documents of the Seller, SPE Member, the Originators and their affiliates to be acceptable to the Agent; e) Satisfactory cash dominion and lock-box arrangements, including without limitation deposit account control agreements satisfactory to Agent; f) The Agent shall have entered into an intercreditor agreement (in form and substance satisfactory to Agent) with the Lender Agent; g) Since the date hereof, no change in financial or capital market conditions generally that in the reasonable judgment of the Agent would have a material adverse effect on the Agent; and h) Acceptable final documentation. REPRESENTATIONS AND WARRANTIES: The Originators, SPE Member, the Servicer and the Seller would make various representations and warranties customary for a transaction of this kind, including, but not limited to, (a) representations regarding the Receivables sold at the time of each sale of Receivables, and (b) such other representations and warranties as determined by the Agent following completion of legal due diligence. COVENANTS: Standard and customary affirmative and negative covenants for a transaction of this type will be required of the Seller, SPE Member, Servicers and Originators. SERVICER TERMINATION EVENTS: The Agent shall have the right but not the obligation to replace any Servicer upon the occurrence of a Servicer Termination Event. Such Servicer Termination Events will be determined following due diligence. 14  TERMINATION EVENTS: Should any of the following events (each a "Termination Event") occur, all new purchases under the Receivables Purchase and Service Agreement may, at the Required Purchasers' (definition to be determined) discretion, cease and outstandings would liquidate as receivables are collected. Such Termination Events will include, but not be limited to, the following: a) The insolvency or the voluntary or involuntary filing for bankruptcy in respect of the Seller, SPE Member or any Originator; b) The date that is 90 days prior to the stated expiration date of any of the Company's revolving credit facilities; c) Violation, default, or breach by the Seller, the Company or any Originator of any of its covenants or agreements in any of the Transaction documents, including covenants as to the status of the Seller as "bankruptcy-remote" and the non-consolidation of the Seller and the Originators; d) Payment default (after giving effect to any grace period) of any indebtedness (in excess of a threshold amount to be determined and excluding current trade debt) of any Originator or any affiliate of an Originator or any other default (after giving effect to any grace period) of such Indebtedness that would permit or has caused acceleration thereof; e) Failure of the Agent to hold a fully perfected first priority security interest in the Collateral; f) Failure to maintain receivable performance within certain targets to be mutually agreed upon; g) A Servicer Termination Event shall have occurred; h) The Company or any of its Subsidiaries shall default in the observance or performance of any of the financial covenants set forth in Sections 6.13 through 6.16 of the Company's senior credit agreement (as in effect on this date and as the same may be hereafter amended, supplemented or restated); or i) Such other Termination Events as determined by the Agent through due diligence. 15  INDEMNITIES: The Seller and the Originators would provide standard and customary indemnities for a transaction of this type. GOVERNING LAW: New York -------------------------------------------------------- 16  GE Capital's commitment hereunder with respect to the New Facility is subject to the completion by GE Capital, its agents and its counsel of a collateral audit and other due diligence with respect to the Company and its affiliates and their respective Receivables with results satisfactory to GE Capital. By signing this Commitment Letter, each party hereto acknowledges that this Commitment Letter and the Fee Letter supersedes any and all discussions and understandings, written or oral, between or among GE Capital and any other person as to the subject matter hereof, including without limitation, any prior commitment letters, the "work letter" dated January 28, 2005 and any draft letters between GE Capital and the Company (collectively, the "Prior Letters"). No amendments, waivers or modifications of this Commitment Letter or any of its contents shall be effective unless expressly set forth in writing and executed by the parties hereto. This Commitment Letter is being provided to you on the condition that except as required by law (including without limitation any rule or regulation of the Securities and Exchange Commission), neither it, the Fee Letter, the Prior Letters nor their contents will be disclosed publicly or privately except to those individuals who are your officers, directors, employees, auditors, lawyers, or advisors who have a need to know as a result of being involved in the Facilities and then only on the condition that such matters may not be further disclosed. No one shall, except as required by law, use the name of, or refer to, GE Capital, or any of its affiliates, in any correspondence, discussions, advertisement or disclosure made in connection with the Facilities without the prior consent of GE Capital. No person, other than the parties signatory hereto, is entitled to rely upon this Commitment Letter or any of its contents. Regardless of whether the commitments herein are terminated or either Facility closes, the Company agrees to pay upon demand to GE Capital all reasonable out-of-pocket expenses (including all reasonable costs and fees of legal, auditing and other consultants) incurred in connection with this Commitment Letter, the Fee Letter, the Prior Letters, and evaluation, documentation and negotiation of the Facility and the Transaction, and a field examination fee at market rates plus actual out-of-pocket expenses in connection with the conduct of GE Capital's field audit and due diligence. Regardless of whether any commitment herein is terminated or either Facility closes, the Company shall indemnify and hold harmless each of GE Capital, its affiliates, and the directors, officers, employees, and representatives of any of them (each, an "Indemnified Person"), from and against all claims, suits, actions, proceedings, losses (including, but not limited to, attorneys' fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal, except that such fees, disbursements and costs with respect to attorneys shall be payable only with respect to one law firm, local counsel and special regulatory counsel), damages, and liabilities of any kind (and expenses directly related to such claims, suits, actions, proceedings, losses, damages and liabilities) which may be incurred by, or asserted against, any such Indemnified Person in connection with, or arising out of, this Commitment Letter, the Fee Letter, the Prior Letters, the Facilities, the Transaction, any other related financing, documentation, any actions or failures to act in connection therewith, any disputes or environmental liabilities, or any related investigation, litigation, or proceeding (collectively, the "Indemnified Amounts"), excluding, however, Indemnified Amounts to the extent found in a final non-appealable judgment of a court of competent jurisdiction to have resulted from gross negligence or willful misconduct of such Indemnified Person. Under no circumstances shall GE Capital or any of its affiliates be liable for any punitive, exemplary, consequential or indirect damages which may be alleged to result in connection with this Commitment Letter, the Fee Letter, the Prior Letters, the Transaction, or the Facilities or any other financing, regardless of whether the commitment herein is terminated or the Transaction or either Facility closes. 17  EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS COMMITMENT LETTER, THE PRIOR LETTERS, ANY TRANSACTION RELATING HERETO OR THERETO, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY HERETO CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY OF THE PARTIES HERETO PERTAINING TO THIS COMMITMENT LETTER, THE FEE LETTER, THE PRIOR LETTERS, OR THE TRANSACTIONS UNDER CONSIDERATION, ANY OTHER FINANCING RELATED THERETO, AND ANY INVESTIGATION, LITIGATION, OR PROCEEDING RELATED TO OR ARISING OUT OF ANY SUCH MATTERS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT (INCLUDING AN APPELLATE COURT) LOCATED OUTSIDE OF SUCH JURISDICTION. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND HEREBY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR INCONVENIENT FORUM. This Commitment Letter is governed by and shall be construed in accordance with the laws of the State of New York applicable to contracts made and performed in that State. GE Capital shall have access to all relevant facilities, personnel and accountants, and copies of all documents which GE Capital may request, including business plans, financial statements (actual and pro forma), books, records, and other documents of the Company, each Originator and the Seller. This Commitment Letter shall be of no force and effect unless on or before 5:00 p.m. Eastern Standard Time on April 2, 2005, this Commitment Letter and the Fee Letter are executed and delivered by the Company to GE Capital at 1100 Abernathy Rd., Suite 900, Atlanta, Georgia 30328. Once this Commitment Letter has been so executed and delivered by the Company, GE Capital's commitment to provide (a) the Seventh Amendment in accordance with the terms of this Commitment Letter shall cease if the Seventh Amendment does not close for any reason (other than GE Capital's breach of its commitments hereunder), on or before May 15, 2005, (b) the Extension in accordance with the terms of this Commitment Letter shall cease if the Extension does not close for any reason (other than GE Capital's breach of its commitments hereunder), on or before January 1, 2007, and (c) the New Facility in accordance with the terms of this Commitment Letter shall cease if the New Facility does not close for any reason (other than GE Capital's breach of its commitments hereunder), on or before August 15, 2005, and, notwithstanding any further discussions, negotiations or other actions taken after such date, neither GE Capital nor any of its affiliates shall have any liability to any person in connection with its refusal to fund the Seventh Amendment, the Extension or the New Facility or any portion thereof after such applicable date. 18  Thank you for this opportunity to work with Metaldyne Corporation. We look forward to continuing to work with you towards completing this transaction and expanding GE Capital's relationship with you. Sincerely, GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Curtis J. Correa ----------------------------------- Name: Curtis J. Correa Title: Duly Authorized Signatory AGREED AND ACCEPTED THIS 31ST DAY OF MARCH, 2005. METALDYNE CORPORATION By: /s/ Jeffrey M. Stafeil --------------------------------------- Name: Jeffrey M. Stafeil Title: Executive Vice President and Chief Financial Officer 19  Form of Exhibit A to Commitment Letter -------------------------------------- SECTION 1. Schedule A of the Receivables Transfer Agreement. (a) The following definitions in Schedule A of the Receivables Transfer Agreement are hereby amended by replacing or adding, as the case may be, the following defined terms in their entirety: "Commitment Expiry Date" shall mean the earliest to occur of (i) the date on which all amounts due and owing to the CP Conduit Purchasers and the Committed Purchasers under the Receivables Transfer Agreement and the other Transaction Documents have been paid in full, (ii) the date on which the Aggregate Commitment has been reduced to zero pursuant to the Receivables Transfer Agreement, (iii) The Termination Date, and (iv) April 28, 2006. "Credit Default Swap" shall mean 20  (i) the credit default swap dated as of April 8, 2004 between the Transferor and an Eligible Counterparty with respect to the payment obligations of DaimlerChrysler AG, (ii) the credit default swap dated as of April 9, 2004 between the Transferor and an Eligible Counterparty with respect to the payment obligations of Ford Motor Company, (iii) the credit default swap dated as of February 13, 2004, between the Transferor and an Eligible Counterparty with respect to the payment obligations of General Motors Corporation, or (iv) the credit default swap dated as of [ ], between the Transferor and an Eligible Counterparty with respect to the payment obligations of Dana Corporation, as applicable, in each case which shall be satisfactory in form, substance, amount and in all other respects to the Administrative Agent and each Committed Purchaser, as the same may from time to time be modified, supplemented, amended, extended or replaced as consented to by the Administrative Agent and each Committed Purchaser. "Dilution Period" shall mean, on any day, a number equal to a fraction, the numerator of which is the sum of all Receivables which arose during the three Settlement Period immediately preceding such day and the denominator of which is the Net Receivables Balance. "Dilution Ratio" shall mean, as of the last day of each Settlement Period, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of Diluted Receivables arising during such Settlement Period and the denominator of which is the aggregate principal amount of all Receivables originated by the Sellers during the Settlement Period three Settlement Periods prior to the Settlement Period ended on such day. "Loss and Dilution Reserve Ratio" shall mean, on any day, the greater of (a) the sum of (i) 16% plus (ii) the product of (x) the average Dilution Ratio over the immediately preceding fiscal 12-month period and (y) DSO divided by 30, (b) 21% and (c) the sum of the Loss Reserve Ratio plus the Dilution Reserve Ratio. "Notional Amount" shall mean (i) with respect to DaimlerChrysler AG, an amount up to $12,500,000, (ii) with respect to General Motors Corporation, an amount up to $7,500,000, (iii) with respect to Ford Motor Company, an amount up to $20,000,000, and (iv) with respect to Dana Corporation, an amount up to $5,000,000. (b) The definition of "Dilution Reserve Ratio" is hereby amended by (i) replacing the definition of "e" in its entirety with the following: 21  e = the highest three-month average Dilution Ratio that occurred during the period of 12 consecutive Settlement Periods ending prior to such earlier Settlement Date; and (c) The definition of "Eligible Receivable" is hereby amended by (i) replacing subclause (3) thereto in its entirety with the following: (3) the Obligor of which is (A) a United States resident or a resident of a U.S. territory; provided, however, that Receivables of an Obligor which is resident in Canada (excluding residents of the Province of Quebec) shall be deemed to be Eligible Receivables (x) if such Receivables would otherwise be Eligible Receivables except for the fact that such Obligor is not a United States resident or a resident of a U.S. territory and (y) only to the extent the aggregate principal amount of such Receivables does not exceed 5.0% of the Outstanding Balance of all Receivables (B) a Designated Obligor at the time of the initial creation of an interest therein hereunder, (C) not an Official Body or an Affiliate of any of the parties to the Receivables Transfer Agreement, (D) not the subject of an Event of Bankruptcy, and (E) an Eligible Obligor; SECTION 2. Amendments to Section 7.01 of the Receivables Transfer Agreement. Section 7.01 of the Receivables Transfer Agreement is hereby amended by (i) replacing "2.5%" with "3.00%" in subclause (k) thereto. SECTION 3. Amendments to Schedule C of the Receivables Transfer Agreement. Schedule C of the Receivables Transfer Agreement is hereby amended to read in its entirety as set forth in Schedule C attached to this Amendment. 22  SCHEDULE C ---------- Schedule of Special Obligors ---------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- Special Obligor Percentage Limit Conditions (together with its Subsidiaries) - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- New Venture Gear 12% So long as the long-term rating of Magna International Inc. is at least BBB by S&P. - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- DaimlerChrysler AG The lesser of DaimlerChrysler AG shall be a Special Obligor until 4/8/05 (the "Daimler (X) the sum of Cutoff Date", as such date may be extended following the purchase of a (i) 4%, plus new Credit Default Swap acceptable to (ii) the quotient the Administrative Agent) so long as (expressed as a the (i) a Credit Default Swap is in full percentage) of (A) force and effect with an Eligible Notional Amount Counterparty with an expiration date no of the applicable earlier than the date which is 90 days after Credit Default Swap the applicable Daimler Cutoff Date and (ii) divided by (B) the such Obligor shall be rated at least BBB- Outstanding Balance and Baa3 by S&P and Moody's, respectively. of Eligible Receivables, and (Y) 20%. - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- General Motors Corporation The lesser of General Motors Corporation shall be a Special Obligor until 4/14/05 the "GM (X) the sum of Cutoff Date", as such date may be extended following the purchase of a new Credit (iii) the applicable Default Swap acceptable to the percentages set forth Administrative Agent) so long as (i) a in the definition of Credit Default Swap is in full force and "Concentration Factor" effect with an EligibleCounterparty with an if such Obligor was not expiration date no earlier than the date a Special Obligor and which is 90 days after the applicable GM Cutoff Date and (ii) such Obligor shall be (iv) the quotient (expressed rated at least BBB- and Baa3 by S&P and as a percentage) of (A) Moody's, respectively. the Notional Amount of the applicable Credit Default Swap divided by (B) the Outstanding Balance of Eligible Receivables and, and (Y) 15%. - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- Ford Motor Company The lesser of Ford Motor Company shall be a Special Obligor until 4/9/05 (the "Ford Cutoff (X) the sum of Date", as such date may be extended following the purchase of a new Credit (v) the applicable percentages Default Swap acceptable to the set forth in the definition Administrative Agent) so long as (i) a of "Concentration Factor" Credit Default Swap is in full force and if such Obligor was not a effect with an Eligible Counterparty with an Special Obligor and expiration date no earlier date than the date which is 90 days after the applicable (vi) the quotient (expressed as a Ford Cutoff Date and (ii) such Obligor shall percentage) of (A) the be rated at least BBB- and Baa3 by S&P and Notional Amount of the Moody's, respectively. applicable Credit Default Swap divided by (B) the Outstanding Balance of Eligible Receivables and, and (Y) 20%. - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- Dana Corporation The lesser of Dana Corporation shall be a Special Obligor until [_____](the "Dana Cutoff (X) the sum of Date", as such date may be extended following the purchase of a new Credit (vii) the applicable percentages Default Swap acceptable to the set forth in the definition Administrative Agent) so long as (i) a of "Concentration Factor" Credit Default Swap is in full force and if such Obligor was not effect with an Eligible Counterparty with an a Special Obligor and expiration date no earlier date than the date which is 90 days after the applicable (viii) the quotient (expressed as Dana Cutoff Date and (ii) such Obligor shall a percentage) of (A) the be rated at least BBB- by S&P or Baa3 by Notional Amount of the Moody's. applicable Credit Default Swap divided by (B) the Outstanding Balance of Eligible Receivables and, and (Y) 10%. - -------------------------------- ---------------------------------------- ---------------------------------------- - -------------------------------- ---------------------------------------- ---------------------------------------- Benteler Automotive Inc 6% - -------------------------------- ---------------------------------------- ---------------------------------------- 23  Exhibit B to Commitment Letter ------------------------------ CONCENTRATION LIMITS -------------------- For any Obligor, at any time, the percentage of the Net Receivables Balance (a) set forth in the table below for "Base Concentration Limits" adjacent to such Obligor's senior unsecured long-term debt rating by Standard & Poor's (or the equivalent for Moody's, but applying the lower of the two ratings), or (b) if Seller has purchased a credit default swap with respect to any Obligor which credit default swap is in full force and effect and in the amount and otherwise on terms and in form and substance acceptable to the Agent, and which such credit default swap has been assigned to the Agent pursuant to an assignment in form and substance acceptable to the Agent and acknowledged by the related seller of protection, set forth in the table below for "Credit Default Swap Obligors" adjacent to such Obligor's senior unsecured long-term debt rating by Standard & Poor's (or the equivalent for Moody's, but applying the lower of the two ratings); provided, that the aggregate concentration limit permitted for Ford Motor Company, Daimler Chrysler and General Motors shall not exceed 55.0%, or (c) if the Agent has otherwise approved a higher limit for specific Obligors, such higher percentage; provided, that in the case of an Obligor with one or more affiliated Obligors, the foregoing concentration limits and the Receivables related thereto shall be treated as if such Obligor and such one or more affiliated Obligors were one Obligor. Base Concentration Limits - --------------------------------------- ---------------------------------------- RATING CONCENTRATION - --------------------------------------- ---------------------------------------- A- or Better 20.00% - --------------------------------------- ---------------------------------------- BBB- to BBB+ 15.00% - --------------------------------------- ---------------------------------------- BB- to BB+ 7.50% - --------------------------------------- ---------------------------------------- Not Rated or lower than BB- 5.00% - --------------------------------------- ---------------------------------------- Credit Default Swap Obligors - ------------------------------- ------------------------- ---------------------- RATING MAXIMUM CONCENTRATION DISCOUNT FACTOR - ------------------------------- ------------------------- ---------------------- A- or Better 30.00% 0% - ------------------------------- ------------------------- ---------------------- BBB- to BBB+ 25.00% 0% - ------------------------------- ------------------------- ---------------------- BB- to BB+ 15.00% 20% - ------------------------------- ------------------------- ---------------------- Not Rated or lower than BB- 5.00% 50% - ------------------------------- ------------------------- ---------------------- As of any date, the Concentration limit for each Credit Default Swap Obligor shall be equal to the lesser of (a) the Maximum Concentration applicable to such Obligor set forth in the "Credit Default Swap Obligors" table above and (b) an amount equal to (A) the applicable Base Concentration Limit set forth in the "Base Concentration Limits" table set forth above plus (B) the face value of the applicable credit default swap multiplied by (1.0 minus the Discount Factor), divided by the outstanding balance of the Eligible Receivables at such time. 24