Exhibit 10.25
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT NO. 3 to Credit Agreement (this "Amendment") entered into as of
October 1, 2003 among GENERAL BEARING CORPORATION (the "Borrower"), the Lenders
party hereto and KEYBANK NATIONAL ASSOCIATION, as Administrative Agent (the
"Administrative Agent").
WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to the Credit Agreement dated as of December 20, 1999 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"); and
WHEREAS, the obligations of the Borrower under the Credit Agreement are
guaranteed by the Subsidiary Guarantors party to the Guarantee and Collateral
Agreement dated as of December 20, 1999 (the "Guarantee Agreement") between the
Subsidiary Guarantors and the Administrative Agent; and
WHEREAS, the Borrower has requested that the Lenders and the
Administrative Agent amend certain provisions of the Credit Agreement, and the
Lenders and the Administrative Agent have agreed to make such amendments subject
to the terms and conditions set forth herein; and
WHEREAS, terms not otherwise defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Amendments to Credit Agreement.
(a) Additional Definitions. Section 1.1 of the Credit Agreement is hereby
amended by adding the following new definitions in the appropriate alphabetical
order:
"Account Receivable" means any right of the Borrower to payment for
goods sold or services rendered, whether now existing or hereafter
arising.
"Amendment No. 3" means Amendment No. 3 to Credit Agreement, dated
as of October 1, 2003, by and among the Borrower, the Lenders and the
Administrative Agent.
"Appraised Value" means the value of the Designated Machinery and
Equipment as determined pursuant to the appraisal of the Designated
Machinery and Equipment to be delivered to the Administrative Agent.
"Borrowing Base Amount" means, as of any date of determination, a
sum equal to (a) the Borrowing Base Percentage of the book value of
Eligible Receivables (less reserves with respect to such Eligible
Receivables which the Administrative Agent may deem necessary in its sole
discretion from time to time) based upon the Borrowing Base Certificate
most recently delivered to the Administrative Agent under Section 6.2(i)
plus (b) the Borrowing Base Percentage of the value (determined at the
lower of cost (on a first-in, first-out basis in accordance with GAAP) or
market value) of Eligible Inventory based upon the Borrowing Base
Certificate most recently delivered to the Administrative Agent under
Section 6.2(i) plus (c) the Borrowing Base Percentage of the Appraised
Value of the Designated Machinery and Equipment. Notwithstanding anything
to the contrary in this definition, (i) if the Borrower shall fail to
deliver to the Administrative Agent a Borrowing Base Certificate on or
prior to any date required hereby, the Borrowing Base Amount shall be
deemed to be zero ($0.00) from and including such date to the date of
delivery to the Administrative Agent of such Borrowing Base Certificate
and (ii) each of the Borrower and each other Obligor acknowledges and
agrees that the Administrative Agent reserves the right, in its sole
discretion, to amend the percentages set forth in the definition of
"Borrowing Base Percentage" and the eligibility requirements set forth in
the definitions of "Eligible Inventory" and "Eligible Receivables" based
on the results of the Collateral audits to be conducted pursuant to
Section 6.12.
"Borrowing Base Certificate" means a certificate, duly executed by a
Responsible Officer of the Borrower and in the form of Exhibit A to
Amendment No. 3.
"Borrowing Base Commencement Date" means the second consecutive date
on which the Consolidated Funded Debt Ratio shall have exceeded 2.75 to 1,
provided the Administrative Agent, in its sole discretion, shall require
such date to constitute the Borrowing Base Commencement Date.
"Borrowing Base Percentage" means (a) with respect to Eligible
Receivables, initially 80%, (b) with respect to Eligible Inventory,
initially 60%, and (c) with respect to the Designated Machinery and
Equipment, initially 40%, or, in each case, such percentage as the
Administrative Agent shall determine from time to time.
"Designated Machinery and Equipment" means the machinery and
equipment of the Borrower subject to a fully perfected first priority
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security interest in favor of the Administrative Agent for the ratable
benefit of the Lenders pursuant to the Guarantee and Collateral Agreement
which is described on Exhibit B to Amendment No. 3.
"Eligible Inventory" means Inventory subject to a fully perfected
first priority security interest in favor of the Administrative Agent for
the ratable benefit of the Lenders pursuant to the Guarantee and
Collateral Agreement which is not on consignment from any third party and
which conforms to the representations and warranties contained in herein,
other than (a) obsolete or damaged Inventory, (b) Inventory consisting of
samples, prototypes, demonstrators or otherwise not of a type held for
sale in the ordinary course of the Borrower's business, (c) Inventory
which in the reasonable judgment of the Administrative Agent is considered
to be slow moving or otherwise not merchantable, (d) Inventory to be
returned to suppliers, (e) except as approved in writing by the
Administrative Agent, Inventory held by, or in transit to, third parties
(including to warehouses), except for those locations set forth on
Schedule 5 of the Guaranty and Collateral Agreement between Borrower and
Administrative Agent, dated December 20, 1999, as amended, subject to
Administrative Agent's receipt of such third party waivers or consents as
the Administrative Agent may reasonably require, (f) any reserves
reasonably required by the Administrative Agent for special order goods,
market value declines, xxxx and hold (deferred shipment) sales, and any
other matters in the reasonable determination of the Administrative Agent,
(g) except as otherwise provided for herein, as approved in writing by the
Administrative Agent, and for Inventory in transit to Borrower, Inventory
which is not located on the Borrower's owned or leased premises in the
United States, (h) Inventory not produced in compliance with the
requirements of the Fair Labor Standards Act and (i) Inventory which has
given rise to any Account Receivable which, at the time of determination
of Eligible Inventory, constituted an Eligible Receivable.
"Eligible Receivable" means an Account Receivable which conforms to
the representations and warranties contained in herein and as to which the
following requirements have been fulfilled to the reasonable satisfaction
of the Administrative Agent: (a) the Borrower has lawful title to such
Account Receivable, subject to the Lien granted to the Administrative
Agent for the ratable benefit of the Lender pursuant to the Guarantee and
Collateral Agreement; (b) such Account Receivable arose through the sale
of finished goods or merchandise or the rendition of services by the
Borrower; (c) the goods or merchandise, the sale of which gave rise to
such Account Receivable, have been shipped, or the services, the rendition
of which gave rise to such Account Receivable, have been performed; (d)
such Account Receivable shall have had excluded
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therefrom (i) any portion that is subject to any dispute, offset,
counterclaim or other claim or defense on the part of the account debtor
or to any claim on the part of the account debtor denying liability with
respect to such Account Receivable, and (ii) any returns, discounts,
claims, credits and allowances; (e) no return, rejection or repossession
of the merchandise in respect of such Account Receivable has occurred; (f)
the Borrower has the full and unqualified right to assign and grant a
security interest in such Account Receivable under and pursuant to the
Guarantee and Collateral Agreement; (g) such Account Receivable is
evidenced by an invoice rendered to the account debtor and no portion of
such Account Receivable is evidenced by any chattel paper, promissory note
or other instrument, unless each such chattel paper, promissory note or
other instrument is delivered to the Administrative Agent, duly endorsed
if necessary; (h) such Account Receivable is subject to a fully perfected
first priority security interest in favor of the Administrative Agent for
the ratable benefit of the Lenders pursuant to the Guarantee and
Collateral Agreement; (i) no portion of such Account Receivable is subject
to any security interest or Lien in favor of any Person other than the
Lien granted to the Administrative Agent for the ratable benefit of the
Lender pursuant to the Guarantee and Collateral Agreement or a Lien
described in clause (e), (f), (g), (h) or (i) of Section 7.3; (j) such
Account Receivable did not arise out of a transaction with a Subsidiary or
any employee, officer, agent, director, shareholder or Affiliate of the
Borrower; (k) the Borrower is not aware and has no reason to be aware of
any reorganization, bankruptcy, receivership, custodianship, insolvency or
other like condition in respect of the account debtor of such Account
Receivable; (l) the account debtor with respect to such Account Receivable
is not any foreign government, the United States of America, any State,
political subdivision, department, agency or instrumentality thereof, (m)
the Administrative Agent is, and continues to be, reasonably satisfied
with the credit standing of the account debtor in relation to the amount
of credit extended; (n) such Account Receivable is from an account debtor
resident of the United States, Canada or Puerto Rico or (ii) such other
jurisdiction as may be consented to by the Administrative Agent; and (o)
such Account Receivable was not purchased or otherwise acquired by the
Borrower other than through the sale of finished goods and merchandise or
through the rendition of services by the Borrower. Notwithstanding
anything to the contrary set forth in the loan documents, neither the
Administrative Agent nor any Lender shall have a lien on, and Borrower
shall be free to transfer, encumber or otherwise dispose of, with any
third party, any Account Receivable from any entity in a foreign
jurisdiction, which is not an Eligible Receivable.
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"Inventory" means all finished goods and other merchandise of the
Borrower, whether now owned or hereafter acquired, held for sale,
excluding, to the extent included therein, raw materials, intermediates,
work-in-process, semi-finished inventory (other than work-in-process,
semi-finished inventory and raw materials that solely require light
assembly and packaging to complete), packaging materials, scrap inventory,
manufacturing supplies and spare parts.
"Responsible Officer" means, with respect to any Person, the
president, chief financial officer, principal accounting officer,
treasurer or controller of such Person.
"Revolving Loan Commitment Amount" means, (a) for the period from
October 1, 2003 to September 30, 2004, $23,000,000, and (b) for the period
commencing on October 1, 2004 and ending on the Scheduled Revolving
Termination Date, $21,000,000, in each case as the same may be reduced
pursuant to Section 2.4.3 or 2.4.4.
(b) Pricing Grid. Section 1.1 of the Credit Agreement is hereby amended by
deleting the definition of "Pricing Grid" and substituting the following
therefor:
"Pricing Grid" means the pricing grid attached to Amendment No. 3 as
Exhibit C.
(c) Scheduled Revolving Termination Date. Section 1.1 of the Credit
Agreement is hereby amended by deleting the definition of "Scheduled Revolving
Termination Date" and substituting the following therefor:
"Scheduled Revolving Termination Date" means July 31, 2006.
(d) Revolving Commitments. Section 2.1.1 of the Credit Agreement is hereby
deleted in its entirety and the following substituted therefor:
2.1.1. Revolving Commitments.
From time to time on any Business Day occurring during the Revolving
Commitment Period, each Revolving Lender will make revolving credit loans
(relative to such Lender, its "Revolving Loans") to the Borrower in a
principal amount equal to such Lender's Revolving Percentage of the
aggregate amount of each Borrowing of Revolving Loans requested by the
Borrower to be made on such day; provided, however, that no Revolving
Lender shall be required to make any Revolving Loan if, after giving
effect thereto, (x) the aggregate outstanding principal amount of such
Lender's Revolving Extensions of Credit would exceed such Lender's
Revolving Commitment or (y) the
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aggregate outstanding Revolving Extensions of Credit of all Lenders would
exceed the Revolving Loan Commitment Amount as then in effect; and
provided, further, that from and after Borrowing Base Commencement Date,
in the sole discretion of the Administrative Agent and upon notice to the
Borrower, no Lender shall be permitted or required to make any Revolving
Loan if, after giving effect thereto, (x) the aggregate outstanding
principal amount of such Lender's Revolving Extensions of Credit would
exceed such Lender's Revolving Commitment or (y) the aggregate outstanding
Revolving Extensions of Credit of all Lenders would exceed the lesser of
(i) the Borrowing Base Amount and (ii) the Revolving Loan Commitment
Amount as then in effect. During the Revolving Commitment Period the
Borrower may use the Revolving Commitments by borrowing, prepaying the
Revolving Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Loans may from time to
time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.3 and
2.5.
(e) Letter of Credit Commitment. Clause (b) of Section 2.1.2 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:
(b) extend the Stated Expiry Date of an existing Letter of
Credit previously issued hereunder, provided, however, that the Issuer
will have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the Letter of Credit Outstandings would
exceed the L/C Commitment Amount, (ii) the outstanding Acceptance
Obligations would exceed the Acceptance Commitment Amount, or (iii) the
aggregate outstanding Revolving Extensions of Credit of all Lenders would
exceed the Revolving Loan Commitment Amount as then in effect provided,
further, however, from and after Borrowing Base Commencement Date, in the
sole discretion of the Administrative Agent and upon notice to the
Borrower, the Issuer will have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the Letter of Credit
Outstandings would exceed the L/C Commitment Amount, (ii) the outstanding
Acceptance Obligations would exceed the Acceptance Commitment Amount, or
(iii) the aggregate outstanding Revolving Extensions of Credit of all
Lenders would exceed the lesser of (A) the Borrowing Base Amount and (B)
the Revolving Loan Commitment Amount as then in effect. Furthermore, the
Issuer shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuer or any
L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law. Each Letter of Credit shall be denominated in Dollars.
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(f) Acceptance Commitments. Section 2.1.3 of the Credit Agreement is
hereby amended by deleting the further proviso set forth therein in its entirety
and substituting the following therefor:
provided further that the Issuer will have no obligation to create any
Acceptances if, after giving effect to such creation, (i) the Acceptance
Obligations would exceed the Acceptance Commitment Amount or (ii) the
aggregate outstanding Revolving Extensions of Credit of all Lenders would
exceed (x) prior to the Borrowing Base Commencement Date, the Revolving
Loan Commitment Amount as then in effect and (y) from and after Borrowing
Base Commencement Date, in the sole discretion of the Administrative Agent
and upon notice to the Borrower, the lesser of (A) the Borrowing Base
Amount and (B) the Revolving Loan Commitment Amount as then in effect or
(iii) the aggregate outstanding Revolving Extensions of Credit of all
Lenders would exceed the Aggregate Available Revolving Commitment of all
Lenders.
(g) Mandatory Payments. Clause (a) of Section 2.4.3 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:
(a) Mandatory Prepayment of Revolving Loans. etc. If on any
date (after giving effect to any other payments on such date) (i) the
aggregate outstanding amount of all Revolving Extensions of Credit of all
Lenders exceeds the Revolving Loan Commitment Amount as then in effect or
(ii) if such date is on or after the Borrowing Base Commencement Date, the
aggregate Revolving Extensions of Credit of all Lenders exceeds the
Borrowing Base Amount as then in effect, the Borrower will make a
mandatory prepayment on such date of Revolving Loans and, if necessary,
cash collateralize the Letter of Credit Outstandings and the Acceptance
Obligations in an aggregate amount equal to such excess. Notwithstanding
the foregoing, if the excess described in clause (ii) of this paragraph
2.4.3(a) existed immediately prior to the Borrowing Base Commencement
Date, then Borrower shall have 120 days from the Borrowing Base
Commencement Date to make the prepayment of such excess as required in
this paragraph.
(h) Certain Representations and Warranties. Article IV of the Credit
Agreement is hereby amended by adding the following new Section 4.25 to read in
its entirety as follows:
SECTION 4.25 Accounts Receivables and Inventory.
(a) With respect to each Account Receivable: (i) no
transaction giving rise to such Account Receivable violated or will
violate any applicable federal, state or local law, rule or ordinance, the
violation
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of which could reasonably be expected to have a Material Adverse Effect,
(ii) each such Account Receivable is not subject to terms prohibiting the
assignment thereof or requiring notice or consent to such assignment,
except for notices and consents that have been obtained and (iii) each
such Account Receivable represents a bona fide transaction which requires
no further act on the Borrower's part to make such Account Receivable
payable by the account debtor with respect thereto, and, to the Borrower's
knowledge, such Account Receivable is not subject to any offsets or
deductions other than credits to customers in the ordinary course of
business and does not represent any inventory being held on consignment,
guaranteed sale, sale or return or other similar understanding or any
obligation of any Affiliate of the Borrower.
(b) With respect to all Inventory: Except as otherwise
provided for herein or authorized by the Administrative Agent, (i) such
Inventory is located at the premises of the Borrower set forth on Exhibit
D to Amendment No. 3, (ii) no such Inventory is subject to any Lien other
than Liens permitted by clause (e), (f), (g), (h) or (i) of Section 7.3,
and (iii) except as permitted hereby, no such Inventory is on consignment
or is now stored or shall be stored any time with a bailee, warehouseman
or similar Person.
(i) Conditions to Credit Extensions. Section 5.2 of the Credit Agreement
is hereby amended by adding a new clause (d) thereto to read in its entirety as
follows:
(d) At the time of and immediately after giving effect to such
Credit Extension, the aggregate outstanding Revolving Extensions of Credit
of all Lenders shall not exceed (i) if such Credit Extension shall occur
prior to the Borrowing Base Commencement Date, the sum of the Revolving
Loan Commitment Amount as then in effect, and (ii) if such Credit
Extension shall occur on or after the Borrowing Base Commencement Date,
the lesser of (x) the Borrowing Base Amount and (y) the sum of the
Revolving Loan Commitment Amount as then in effect.
(j) Quarterly Financial Statements. Section 6.1 of the Credit Agreement is
hereby amended by deleting clauses (a) and (b) thereof in their entirety and
substituting the following therefor:
(a) Annual Financial Statements. As soon as available, but in any
event within 90 days after the end of each Fiscal Year of the Borrower, a
copy of the (i) audited consolidated statement of cash flow and (ii)
audited consolidated and unaudited internally-prepared consolidating
balance sheets and income statements of the Borrower and its consolidated
Subsidiaries, as at the end of such year, setting forth in each case in
comparative form the figures for the previous year, reported
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on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Xxxxxx, Xxxx &
Werlin, LP or another firm of independent certified public accountants
satisfactory to the Administrative Agent.
(b) Quarterly Financial Statements. As soon as available, but in any
event not later than 45 days after the end of each Fiscal Quarter of the
Borrower, (i) unaudited consolidated statement of cash flow, (ii) the
unaudited consolidated and consolidating balance sheets of the Borrower
and its consolidated Subsidiaries, as at the end of such quarter and (iii)
the related unaudited consolidated and consolidating statement of income
for such quarter and the portion of the Fiscal Year through the end of
such Fiscal Quarter, setting forth in each case in comparative form the
figures for the previous Fiscal Year, certified as to Borrower only by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments).
(k) Borrowing Base Certificate. Section 6.2 of the Credit Agreement is
hereby amended by (i) deleting clause (a) thereof in its entirety and
substituting the following therefor:
(a) Annual Certificate of Certified Public Accountants. Concurrently
with the delivery of the financial statements referred to in Section
6.1(a), a certificate of the independent certified public accountants
reporting on such financial statements stating that (i) in making the
examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate and (ii) the
consolidating balance sheet and related consolidating statements of income
and cash flows delivered with such financial statements were subjected to
the auditing procedures applied in such accountants' audit of the
consolidated balance sheet and related statements of income and cash flows
and that the information set forth in such consolidating financial
statements is fairly stated in all material respects in relation to such
consolidated financial statements taken as a whole.
and (ii) adding a new clause (i) thereto to read in its entirety as follows:
(i) Borrowing Base Certificate. Commencing with the month in
which the Borrowing Base Commencement Date occurs, within 10 Business Days
after the last day of each fiscal month, a Borrowing Base Certificate duly
completed and setting forth the calculations required thereby, as of such
last day.
(l) Certain Covenants. Article VI is hereby amended by adding new Sections
6.11 and 6.12 thereto to read in their entirety as follows:
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SECTION 6.11 Information Regarding Collateral.
The Borrower will furnish to the Administrative Agent prompt
written notice of any change in (i) the legal name of any Obligor, (ii)
the jurisdiction of organization of any Obligor, (iii) the location of the
chief executive office of any Obligor, its principal place of business,
any office in which it maintains books or records relating to Collateral
owned or held by it or on its behalf or any office or facility at which
Collateral owned or held by it or on its behalf is located (including the
establishment of any such new office or facility), (iv) the identity or
organizational structure of any Obligor such that a filed financing
statement becomes misleading or (v) the organizational identification
number or the Federal Taxpayer Identification Number of any Obligor. The
Borrower shall not effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral.
The Borrower shall promptly notify the Administrative Agent if any
material portion of the Collateral is damaged or destroyed.
SECTION 6.12 Collateral Monitoring.
The Borrower shall permit the Administrative Agent or any
agent of the Administrative Agent to perform, with such frequency as the
Administrative Agent may determine in its reasonable discretion or as the
Required Lenders may require, any field examination, Collateral analysis,
Collateral audit or other business analysis or audit relating to the
Borrower and the Subsidiaries, provided that the first such Collateral
audit shall be completed on or before September 19, 2003 and the second
such Collateral audit shall be completed on or before June 19, 2004. The
Borrower shall pay to the Administrative Agent, promptly after demand
therefor, (i) all reasonable out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with any such examination, analysis
or audit and (ii) in the event that any such examination, analysis or
audit is conducted by the Administrative Agent, any Affiliate of the
Administrative Agent or any officer, employee, agent or advisor of the
Administrative Agent or such Affiliate, a reasonable fee per day for each
person employed in connection with such examination, analysis or audit.
(m) Financial Covenants. Section 7.1 of the Credit Agreement is hereby
deleted in its entirety and the following substituted therefor:
SECTION 7.1 Financial Condition Covenants.
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(a) Consolidated Funded Debt Ratio. The Borrower shall not
permit the Consolidated Funded Debt Ratio as of the last day of any Fiscal
Quarter occurring during any period set forth below to be greater than the
ratio set forth opposite such period:
Consolidated
Period Funded Debt Ratio
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The Fiscal Quarter beginning on or closest to October 1, 2002 through (and
including) the Fiscal Quarter ending on or closest to June 30, 2003 4.00 to 1
The Fiscal Quarter beginning on or closest to July 1, 2003 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2003 3.25 to 1
The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2005 3.00 to 1
The Fiscal Quarter beginning on or closest to October 1, 2005 and
thereafter 2.75 to 1
provided, however, in determining the Consolidated Funded Debt Ratio for
each Fiscal Quarter commencing with the Fiscal Quarter beginning on or
closest to October 1, 2001, "Consolidated Funded Debt" and "Consolidated
EBITDA" (including, without limitation, "Consolidated Net Income") shall
be calculated solely in respect of the Borrower on a non-consolidated
basis.
(b) Consolidated Fixed Charge Coverage Ratio. The Borrower
shall not permit the Consolidated Fixed Charge Coverage Ratio as of the
last day of any Fiscal Quarter occurring during any period set forth below
to be less than the ratio set forth below opposite such period:
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Consolidated Fixed
Period Charge Coverage Ratio
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The Fiscal Quarter beginning on or closest to October 1, 2001 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2003 1.20 to 1
The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2004 2.00 to 1
The Fiscal Quarter beginning on or closest to October 1, 2004 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2005 2.50 to 1
The Fiscal Quarter beginning on or closest to October 1, 2005 and
thereafter 3.00 to 1
provided, however, in determining the Consolidated Fixed Charge Coverage
Ratio for each Fiscal Quarter commencing with the Fiscal Quarter beginning
on or closest to October 1, 2001, "Consolidated EBITDA" (including,
without limitation, "Consolidated Net Income"), income tax expense and
"Consolidated Fixed Charges" (including, without limitation, "Consolidated
Interest Expense") shall be calculated solely in respect of the Borrower
on a non-consolidated basis.
(c) Consolidated Interest Coverage Ratio. The Borrower shall
not permit the Consolidated Interest Coverage Ratio as of the last day of
any Fiscal Quarter occurring during any period set forth below to be less
than the ratio set forth below opposite such period:
Consolidated Interest
Period Coverage Ratio
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The Fiscal Quarter beginning on or closest to October 1, 2001 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2003 2.00 to 1
The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2004 3.50 to 1
The Fiscal Quarter beginning on or closest to October 1, 2004 through (and
including) the Fiscal Quarter ending on or closest to September 30, 2005 4.00 to 1
The Fiscal Quarter beginning on or closest to October 1, 2005 and
thereafter 4.50 to 1
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provided, however, in determining the Consolidated Interest Coverage Ratio
for each Fiscal Quarter commencing with the Fiscal Quarter beginning on or
closest to October 1, 2001, "Consolidated EBIT" (including, without
limitation, "Consolidated Net Income") and "Consolidated Interest Expense"
shall be calculated solely in respect of the Borrower on a
non-consolidated basis.
(d) Net Income. The Borrower shall not permit consolidated net
income of the Borrower from its consolidated non-U.S. operations and
Foreign Subsidiaries for any fiscal year (excluding discontinued
operations), commencing with the fiscal year ending on or closest to
December 31, 2003, to be less than $1.00.
(n) Fundamental Changes. Section 7.4 of the Credit Agreement is hereby
amended by adding a new clause (d) thereto to read in its entirety as follows:
(d) the Borrower may Dispose of the discontinued operations
and the related assets of its Subsidiary World Machinery Company, on such
terms as may be reasonably acceptable to the Administrative Agent.
(o) Dispositions of Property. Section 7.5 of the Credit Agreement is
hereby amended by deleting clause (c) thereof in its entirety and substituting
the following therefor:
(c) Dispositions permitted by Sections 7.4(c) and 7.4(d);
(p) Investments. Section 7.8 of the Credit Agreement is hereby amended by
(i) deleting clause (e) thereto in its entirety and substituting therefor
"[Intentionally Deleted]" and (ii) deleting clauses (h) and (i) thereto in their
entirety and substituting the following therefor:
(h) Investments by the Borrower or any of its Domestic
Subsidiaries in Foreign Subsidiaries and other Affiliates of the Borrower
in an aggregate amount not to exceed for any Fiscal Year set forth below
the amount set forth below opposite such Fiscal Year:
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Xxxxxxxxx Xxxxxx
Fiscal Year of Investment
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Fiscal Year 2003 $1,750,000
Fiscal Year 2004 and each Fiscal Year thereafter $1,000,000
provided, however, that both before and after giving effect to such
Investment, no Default shall exist or result therefrom.
(i) Investments in an aggregate amount not to exceed
$2,000,000 consisting of the repurchase of common stock of the Borrower in
transactions in accordance with all applicable law; provided that, both
before and after giving effect to each such repurchase, (i) the
Consolidated Funded Debt Ratio as of the last day of the most recently
ended Fiscal Quarter (calculated as if such repurchase occurred on such
last day) shall be less than 2.50 to 1 and (ii) no Default shall exist or
result therefrom.
(q) General. All references to "this Agreement" in the Credit Agreement
and to "the Credit Agreement" in the other Loan Documents shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
2. Effectiveness of Amendment.
(a) The effectiveness of this Amendment is subject to the satisfaction of
the following conditions:
(i) The Administrative Agent shall have received a counterpart of
this Amendment executed by the Borrower.
(ii) The Administrative Agent shall have received counterparts of
the Consent and Acknowledgment of Subsidiary Guarantors annexed hereto by each
of the Subsidiary Guarantors.
(iii) The Administrative Agent shall have received a certificate
from the secretary, assistant secretary, managing member or general partner of
the Borrower and each Subsidiary Guarantor attaching (A) a true and complete
copy of the resolutions of its board of directors or other managing body and of
all documents evidencing all necessary corporate action (in form and substance
satisfactory to the Administrative Agent) taken by it to authorize this
Amendment and the transactions contemplated hereby, (B) attaching a true and
complete copy of its Organic Documents, (C) setting forth the incumbency of its
officer or officers or other analogous counterpart who may sign this Amendment,
including therein a signature specimen of such officer or officers and (D)
attaching a certificate of good standing of the Secretary of State of the
jurisdiction of its formation and of each other jurisdiction in which it is
qualified to do business.
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(iv) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Amendment No. 3 Effective Date) from an attorney satisfactory to the
Administrative Agent, on behalf of the Obligors, covering such matters relating
to this Amendment and the Loan Documents as the Administrative Agent shall
reasonably request. The Borrower hereby requests such counsel to deliver such
opinion.
(v) The Administrative Agent shall have received a fee, for the
benefit of each Lender executing and delivering a counterpart of this Amendment
to the Administrative Agent, equal to 0.375% of such Lender's Commitment.
(vi) The Administrative Agent shall have received such other
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Obligor, the authorization of the transactions contemplated by this
Amendment and any other legal matters relating to the Obligors, this Amendment,
the Loan Documents or the transactions contemplated hereby, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(b) This Amendment shall become effective as of October 1, 2003 (the
"Amendment No. 3 Effective Date") when the conditions set forth in Section 2(a)
hereof have been satisfied.
3. Acknowledgments and Confirmations. The Borrower and each Subsidiary
Guarantor acknowledges and confirms that the Liens granted pursuant to the Loan
Documents secure, without limitation, the Indebtedness, liabilities and
obligations of the Borrower to the Administrative Agent and the Lenders under
this Amendment, whether or not so stated in the Loan Documents, and that the
term "Obligations" as used in the Loan Documents (or any other term used therein
to refer to the Indebtedness, liabilities and obligations of the Borrower to the
Administrative Agent or any of the Lenders) includes, without limitation, the
Indebtedness, liabilities and obligations to the Administrative Agent and the
Lenders under the Credit Agreement as amended by this Amendment.
4. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:
(a) The representations and warranties set forth in the Loan
Documents (other than the representations and warranties made as of a specific
date) are true and correct in all material respects as of the date hereof and
with the same effect as though made on and as of the date hereof, except for
such matters as are set forth in a certificate of an Authorized Officer of the
Borrower to be delivered to the Administrative Agent within 60 days after the
Amendment No. 3 Effective Date; provided that none of the matters set forth in
such certificate shall disclose any material adverse fact or condition
concerning the business, assets, operations or financial condition of the
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Borrower and its Subsidiaries occurring since the date of the Credit Agreement
not disclosed to the Administrative Agent in writing prior to the Amendment No.
3 Effective Date.
(b) No Default or Event of Default and no event or condition which,
with the giving of notice or lapse of time or both, would constitute such a
Default or Event of Default, now exists or would exist.
(c) (i) The execution, delivery and performance by the Borrower of
this Amendment is within its organizational powers and have been duly authorized
by all necessary action (corporate or otherwise) on the part of the Borrower,
(ii) this Amendment is the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, and (iii) neither
this Amendment nor the execution, delivery and performance by the Borrower
hereof: (A) contravenes the terms of the Borrower's organization documents, (B)
conflicts with or results in any breach or contravention of, or the creation of
any Lien under, any document evidencing any contractual obligation to which the
Borrower is a party or any order, injunction, writ or decree to which the
Borrower or its property is subject, or (C) violates any requirement of law.
5. Effect; No Waiver. Except as specifically set forth herein, the Credit
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their terms and are hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of the Administrative Agent or the Lenders
under the Credit Agreement, nor constitute a waiver of any provision of the
Credit Agreement, except as specifically set forth herein.
6. Miscellaneous.
(a) The Borrower shall pay the Administrative Agent upon demand for
all reasonable expenses, including reasonable attorneys' fees and expenses of
the Administrative Agent, incurred by the Administrative Agent in connection
with the preparation, negotiation and execution of this Amendment.
(b) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(c) This Amendment shall be binding upon the Borrower, the
Administrative Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Administrative
Agent and the Lenders and the respective successors and assigns of the
Administrative Agent and the Lenders.
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(d) This Amendment (and the Consent and Acknowledgment of Subsidiary
Guarantors annexed hereto) may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
[The remainder of this page intentionally has been left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers on the
date first above written.
GENERAL BEARING CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent, Issuer and Lender
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
General Bearing Amendment No. 3 Signature Page
CONSENT AND ACKNOWLEDGMENT
OF SUBSIDIARY GUARANTORS
Each of the undersigned Subsidiary Guarantors hereby (1) consents to the
execution and delivery by the Borrower of the foregoing Amendment; (2) agrees
that the definition of "Obligations" (and any other term referring to the
indebtedness, liabilities and obligations of the Borrower to the Administrative
Agent or any of the Lenders) in the Guarantee Agreement and the other Loan
Documents shall include the Indebtedness of the Borrower under the Amendment;
(3) agrees that the definition of "Credit Agreement" in the Guarantee Agreement
and the other Loan Documents to which it is a party is hereby amended to mean
the Credit Agreement as amended by the foregoing Amendment; (4) reaffirms its
continuing liability under its Guarantee Agreement (as modified hereby); and (5)
confirms and agrees that it is a Subsidiary Guarantor party to the Guarantee
Agreement and that the Guarantee Agreement and the other Loan Documents to which
it is a party are, and shall continue to be, in full force and effect in
accordance with their respective terms.
WORLD MACHINERY COMPANY
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Secretary and Treasurer
WMW MACHINERY COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Secretary
CHINA BEARING CENTER, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
NN GENERAL, LLC
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: General Manager
General Bearing Amendment No. 3 Signature Page
EXHIBIT A
TO
AMENDMENT NO. 3
FORM OF BOROWING BASE CERTIFICATE
[SEE ATTACHED FORM]
BORROWING BASE CERTIFICATE
KeyBank National Association, as
Administrative Agent
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Pursuant to the Credit Agreement, dated as of December 20, 1999 (as the
same may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), by and among GENERAL BEARING CORPORATION, (the "Borrower"),
the Lenders party thereto and KEYBANK NATIONAL ASSOCIATION, as Administrative
Agent (in such capacity, the "Administrative Agent"), the undersigned hereby
certifies the truth, accuracy and completeness of the following information as
of the close of business on ___________ __, 200_. All of the terms used herein
without definition have the meanings given them in the Credit Agreement.
Eligible Receivables (in thousands)
(1) Total Accounts Receivable
(as of the date hereof) __________
(2) Ineligible Accounts Receivable
(including all required reserves) __________
(3) Total Eligible Receivables
(item (1) minus item (2)) __________
(4) 80% of item (3) __________
Eligible Inventory
(5) Total Inventory excluding (valued at lower
of cost or market as of the date hereof) __________
(6) Ineligible Inventory __________
(7) Total Eligible Inventory (item (5) minus item (6)) __________
(8) 60% of item (7) __________
Designated Machinery and Equipment
(9) Appraised Value of Designated Machinery
and Equipment __________
(10) 40% of item (9) __________
Borrowing Base Amount
(11) Total (item (4) plus item (8) plus item (10)) __________
Revolving Loans Outstanding:
(12) Aggregate principal amount of Revolving
Loans outstanding __________
Letter of Credit Outstandings:
(13) Aggregate Letter of Credit Outstandings of
all Lenders __________
Acceptance Obligations:
(14) Aggregate Acceptance Obligations of all Lenders __________
Excess (Deficit) Borrowing Base:
(15) Item (11) minus the sum of: item (12) plus
item (13) plus item (14) __________
The undersigned has executed this certificate as of the __th day of
_____________, 200_.
___________________________
Name: ____________________
Title: ____________________
EXHIBIT B
TO
AMENDMENT NO. 3
DESIGNATED MACHINERY AND EQUIPMENT
2 - Xxxxxxxxx Automatic U-Joint Cup Assembly Machines
EXHIBIT C
TO
AMENDMENT NO. 3
PRICING GRID
----------------------------------------------------------------------------------------------------------
Applicable Margin for
Consolidated Funded Debt Ratio Revolving Loans
--------------------------------------------
Eurodollar ABR Loans Revolving Applicable Margin
Loans Commitment for Bankers
Fee Rates Acceptances
----------------------------------------------------------------------------------------------------------
Less than or equal to 2.50 to 1 1.75% 0.50% 0.375% 1.75%
----------------------------------------------------------------------------------------------------------
greater than 2.50 to 1 and less 2.00% 0.75% 0.375% 2.00%
than or equal to 3.00 to 1
----------------------------------------------------------------------------------------------------------
greater than 3.00 to 1 and less 2.25% 1.00% 0.375% 2.25%
than or equal to 3.50 to 1
----------------------------------------------------------------------------------------------------------
greater than 3.50 to 1 2.75% 1.75% 0.375% 2.27%
----------------------------------------------------------------------------------------------------------
If any financial statements referred to in Section 6.1 of the Credit Agreement
are not delivered within the time periods specified therein, then, until such
financial statements are delivered, the Consolidated Funded Debt Ratio as at the
end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 3.50 to 1.0. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Funded Debt Ratio shall for the purposes of this
definition be deemed to be greater than 3.50 to 1.0. Each determination of the
Consolidated Funded Debt Ratio pursuant to this Pricing Grid shall be made with
respect to (or, in the case of Consolidated Funded Debt, as at the end on the
period of four consecutive Fiscal Quarters of the Borrower ending at the end of
the period covered by) the relevant financial statements except to the extent
otherwise provided in the Credit Agreement.
EXHIBIT D
TO
AMENDMENT NO. 3
LOCATION OF INVENTORY
General Bearing Corporation
00 Xxxx Xxxxxx
Xxxx Xxxxx, XX 00000
