Exhibit 10.1

 

LIMITED WAIVER AND AMENDMENT NO. 1
TO
CREDIT AGREEMENT

 

This LIMITED WAIVER AND AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”)
is entered into as of this 5th day of February, 2003, by and among ROLLER
BEARING COMPANY OF AMERICA, INC., a Delaware corporation (“Borrower”); the other
Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, “GE Capital”), for itself, as
Lender, and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.  Unless otherwise specified herein, capitalized terms used in this
Amendment shall have the meanings ascribed to them in Annex A to the Credit
Agreement (as hereinafter defined).

 

RECITALS

 

WHEREAS, Borrower, the other Credit Parties, Agent and Lenders entered into that
certain Credit Agreement dated as of May 30, 2002 (as amended, supplemented,
restated or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, in December, 2002, Borrower made a cash dividend to Holdings in the
amount of $2,506,530 (the “December Dividend”) the proceeds of which were used
by Holdings to pay the semiannual interest due December 15 under the Discount
Debentures and the Discount Debentures Indenture;

 

WHEREAS, Borrower has informed Agent and Lenders that the payment of the
December Dividend, as a Restricted Payment under the Senior Subordinated
Indenture, did not comply with the terms of the Senior Subordinated Indenture
(“the Senior Subordinated Indenture Default”); and

 

WHEREAS, Borrower has requested that Agent and Lenders (i) grant limited waivers
with respect to the Credit Agreement in connection with the payment of the
December Dividend and (ii) amend certain provisions of the Credit Agreement, all
upon the terms and subject to the conditions as herein set forth.

 

NOW THEREFORE, in consideration of the foregoing recitals, mutual agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Agent, Lenders, Borrower and the
Credit Parties agree as follows:

 

SECTION 1.                            AMENDMENTS.  THE CREDIT AGREEMENT IS
HEREBY AMENDED AS FOLLOWS:

 

(A)                                  SECTION 1.1(A)(III) OF THE CREDIT AGREEMENT
IS AMENDED BY REPLACING THE PHRASE “TO BE LESS THAN $7,500,000” WITH THE PHRASE
“TO BE LESS THAN $3,500,000 DURING THE PERIOD FROM JANUARY 31, 2003 THROUGH
APRIL 30, 2003 OR TO BE LESS THAN $7,500,000 AT ANY OTHER TIME”.

 

(B)                                 SECTION 1.3(B)(I) OF THE CREDIT AGREEMENT IS
AMENDED BY REPLACING THE PHRASE “IS LESS THAN $7,500,000” WITH THE PHRASE “IS
LESS THAN $3,500,000 DURING THE PERIOD FROM JANUARY 31, 2003 THROUGH APRIL 30,
2003 OR IS LESS THAN $7,500,000 AT ANY OTHER TIME”.

 

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(C)                                  SECTION 1.3(B)(V) OF THE CREDIT AGREEMENT
IS AMENDED BY ADDING THERETO THE FOLLOWING CLAUSE (C), RELETTERING EXISTING
CLAUSES (C) THROUGH (E) AS CLAUSES (D) THROUGH (F):

 

(C)  the Holdings February 2003 Issuance, so long as all proceeds of such
issuance are invested in Borrower within one Business Day following the receipt
thereof by Holdings;

 

(D)                                 SECTION 1.6(H) OF THE CREDIT AGREEMENT IS
AMENDED BY ADDING AT THE END THEREOF THE FOLLOWING:

 

provided, that the Borrowing Availability based on such obligations shall not in
any event exceed $7,500,000 in the aggregate;

 

(E)                                  SECTION 2.2(D) OF THE CREDIT AGREEMENT IS
AMENDED BY REPLACING THE PHRASE “SHALL BE LESS THAN $7,500,000” WITH THE PHRASE
“SHALL BE LESS THAN $3,500,000 DURING THE PERIOD FROM JANUARY 31, 2003 THROUGH
APRIL 30, 2003 OR SHALL BE LESS THAN $7,500,000 AT ANY OTHER TIME”.

 

(F)                                    SECTION 6.2 OF THE CREDIT AGREEMENT IS
HEREBY AMENDED BY ADDING THERETO THE FOLLOWING CLAUSE (K), RELETTERING EXISTING
CLAUSE (K) AS CLAUSE (L):

 

(k)  Borrower may make (i) a one-time loan to (A) Schaublin for the purpose of
repaying in its entirety the Swiss Loan and the related indebtedness to Credit
Suisse and (B) RBC France for the purpose of repaying in its entirety its
outstanding indebtedness to CCF, provided, that such loan shall not exceed the
Dollar equivalent of Swiss Francs 10,375,000 in the aggregate, and (ii) from
time to time loans to Schaublin Holding or any of the Schaublin Operating
Companies to provide working capital financing and for other general corporate
purposes, provided, that the outstanding balance of any such loans shall not
exceed at any time $1,000,000 in the aggregate (collectively, the “Schaublin
Loans”);

 

(G)                                 SECTION 6.3 OF THE CREDIT AGREEMENT IS
HEREBY AMENDED BY AMENDING AND RESTATING CLAUSE (VI) THEREOF AS FOLLOWS:

 

(vi)  Indebtedness consisting of intercompany loans and advances, made by
Borrower to any Secured Guarantor or by any Secured Guarantor to Borrower or
another Secured Guarantor or Indebtedness consisting of the Schaublin Loans made
by Borrower to Schaublin Holding or any of the Schaublin Operating Companies;
provided, that:  (A) Borrower shall have executed and delivered to each such
Secured Guarantor, and each such Secured Guarantor and Schaublin Holding and
each Schaublin Operating Company shall have executed and delivered to Borrower
or another such Secured Guarantor, as applicable, a demand note

 

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(collectively, the “Intercompany Notes”) to evidence any such intercompany
Indebtedness owing at any time by Borrower to such Secured Guarantor or by such
Secured Guarantor, Schaublin Holding and the Schaublin Operating Companies to
Borrower or such other Secured Guarantor, as applicable, which Intercompany
Notes shall be in form and substance reasonably satisfactory to Agent and shall
be pledged and delivered to Agent pursuant to the applicable Pledge Agreement or
Security Agreement as additional collateral security for the Obligations;
(B) Borrower, each Secured Guarantor, Schaublin Holding and each of the
Schaublin Operating Companies shall record all intercompany transactions on its
books and records in a manner reasonably satisfactory to Agent; (C) the
obligations of Borrower and each Secured Guarantor under any such Intercompany
Notes shall be subordinated to the Obligations in a manner reasonably
satisfactory to Agent; (D) no Event of Default shall be continuing after giving
effect to any such proposed intercompany loan; and (E) the aggregate balance of
all such intercompany loans, including the Schaublin Loans, owing by any Secured
Guarantor, Schaublin Holding or any of the Schaublin Operating Companies
incurred during the time that the EBITDA of such Person has been negative for a
trailing twelve month period ending on the last day of any Fiscal Month shall
not be increased by more than $2,000,000 over the amount of such Person’s
intercompany loan obligations as of the last day of such period; provided, that
a Secured Guarantor, Schaublin Holding or any of the Schaublin Operating
Companies, as the case may be, shall no longer be subject to that $2,000,000
limitation if that Secured Guarantor, Schaublin Holding or the Schaublin
Operating Company, as applicable, has had positive EBITDA for the trailing
twelve-month periods ending on the last day of six consecutive Fiscal Months;
provided, further, that if a Secured Guarantor, Schaublin Holding or any of the
Schaublin Operating Companies, as the case may be, has been subject to that
$2,000,000 limitation, then became exempt from it and again has a negative
EBITDA for a trailing twelve-month period, not more than $2,000,000 of
additional intercompany loans may be received by it after the date when it again
has a negative EBITDA;

 

(H)                                 SECTION 6.14 OF THE CREDIT AGREEMENT IS
HEREBY AMENDED BY ADDING THERETO THE FOLLOWING CLAUSE (D):

 

(d)  Notwithstanding the foregoing Section 6.14(a), Borrower may pay a Dividend
to Holdings in an amount not to exceed $3,050,000 as long as (i) the Holdings
February Issuance has occurred and the proceeds thereof were used in accordance
with Section 1.3(b)(v)(C); (ii) promptly upon receipt of the proceeds of such
Dividend, Holdings immediately uses all of such proceeds solely to

 

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redeem the preferred Stock of Holdings issued pursuant to the Holdings February
Issuance; and (iii) no Default or Event of Default has occurred and is
continuing.

 

(I)                                     SECTION 6.14(A) OF THE CREDIT AGREEMENT
IS HEREBY AMENDED BY AMENDING AND RESTATING CLAUSES (A) AND (E) THEREOF AS
FOLLOWS:

 

(a)  payments of interest and principal of intercompany loans and advances
between Borrower and Secured Guarantors, Schaublin Holding and Schaublin
Operating Companies to the extent permitted by Section 6.3;

 

(e)  payments of management fees to Whitney & Co. in equal quarterly
installments, as long as such payments of management fees do not exceed $450,000
in the aggregate during any Fiscal Year and a payment of a fee to Whitney & Co.
not to exceed $151,261.50 in connection with the Holdings February 2003
Issuance;

 

(J)                                     SECTION 6.16 OF THE CREDIT AGREEMENT IS
AMENDED BY REPLACING THE PHRASE “SECURED GUARANTOR” WITH THE PHRASE “SECURED
GUARANTOR, SCHAUBLIN HOLDING OR ANY OF THE SCHAUBLIN OPERATING COMPANIES”.

 

(K)                                  SECTION 8.1(F) OF THE CREDIT AGREEMENT IS
AMENDED BY REPLACING THE PHRASE “LESS $7,500,000” WITH THE PHRASE “LESS
$3,500,000 DURING THE PERIOD FROM JANUARY 31, 2003 THROUGH APRIL 30, 2003 OR
LESS $7,500,000 AT ANY OTHER TIME”.

 

(L)                                     SECTION 8.1(M) OF THE CREDIT AGREEMENT
IS AMENDED BY REPLACING THE PHRASE “SECURED GUARANTOR” WITH THE PHRASE “SECURED
GUARANTOR, SCHAUBLIN HOLDING OR ANY OF THE SCHAUBLIN OPERATING COMPANIES”.

 

(M)                               ANNEX A TO THE CREDIT AGREEMENT IS HEREBY
AMENDED BY ADDING THE FOLLOWING DEFINITIONS THERETO IN THEIR APPROPRIATE
ALPHABETICAL ORDER:

 

“Bovagnet” means Establissements J. Bovagnet SA, a French société anomyme and
subsidiary of Schaublin.

 

“Holdings February 2003 Issuance” means an issuance by Holdings of shares of its
Class A Preferred Stock occurring on or before February 15, 2003 resulting in
gross cash proceeds not to exceed $3,025,230.

 

“RBC France” means myonic SAS, Les Ulis (F) (to be renamed RBC France SAS), a
French société par actions simplifiée and wholly-owned subsidiary of Schaublin.

 

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“Schaublin” means Schaublin SA, a Swiss corporation and wholly-owned Subsidiary
of Schaublin Holding (excluding directors’ qualifying shares).

 

“Schaublin Holding” means Schaublin Holding SA, a Swiss corporation and
wholly-owned Subsidiary of Borrower (excluding directors’ qualifying shares).

 

“Schaublin Loans” has the meaning assigned to it in Section 6.2(k).

 

“Schaublin Operating Companies” means Shaublin, Bovagnet and RBC France.

 

“Swiss Loan” means the Indebtedness of RBC Schaublin S.A. to Credit Suisse
pursuant to the terms of the Credit Agreement dated as of December 27, 1999, as
amended and restated by that certain Credit Agreement dated as of December 12,
2002, not to exceed Swiss Francs 11,375,000 in the aggregate.”

 

(N)                                 PARAGRAPH (B) OF ANNEX G TO THE CREDIT
AGREEMENT IS HEREBY AMENDED BY REPLACING THE PHRASE “TO EXCEED $7,500,000” WITH
THE PHRASE “TO EXCEED $3,500,000 DURING THE PERIOD FROM JANUARY 31, 2003 THROUGH
APRIL 30, 2003 AND TO EXCEED $7,500,000 AT ANY OTHER TIME”.

 

(O)                                 EXHIBIT 4.1(B) TO THE CREDIT AGREEMENT IS
HEREBY REPLACED WITH EXHIBIT 4.1(B) ATTACHED HERETO.

 

SECTION 2.                            LIMITED WAIVER.  BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT AN EVENT OF DEFAULT EXISTS UNDER SECTION 6.14(B)(B)
OF THE CREDIT AGREEMENT BY VIRTUE OF BORROWER’S PAYMENT OF THE DECEMBER DIVIDEND
THAT RESULTED IN THE SENIOR SUBORDINATED INDENTURE DEFAULT (THE “EXISTING
DEFAULT”).  IMMEDIATELY UPON THE EFFECTIVENESS OF THIS AMENDMENT, AGENT AND
LENDERS HEREBY WAIVE THE EXISTING DEFAULT, PROVIDED, THAT AGENT AND LENDERS
SHALL RECEIVE NO LATER THAN FEBRUARY 15, 2003 A CERTIFICATE FROM BORROWER
REPRESENTING AND WARRANTING TO AGENT AND LENDERS THAT THE SENIOR SUBORDINATED
INDENTURE DEFAULT HAS BEEN CURED AND THAT NO DEFAULT OR EVEN OF DEFAULT EXISTS
UNDER THE SENIOR SUBORDINATED INDENTURE AND THE OTHER SUBORDINATED DEBT
DOCUMENTS (IT BEING UNDERSTOOD AND AGREED THAT IF AGENT AND LENDERS DO NOT
RECEIVE SUCH CERTIFICATE AS PROVIDED HEREIN OR ANY DECLARATION, DEMAND, EXERCISE
OF ANY DEFAULT RIGHTS AND REMEDIES OR OTHER ACTION IS TAKEN WITH RESPECT TO THE
SUBORDINATED INDENTURE DEFAULT, AGENT’S AND LENDERS’ WAIVER HEREUNDER SHALL
TERMINATE AND BE OF NO FURTHER FORCE AND EFFECT), AND PROVIDED, FURTHER, THAT
NOTHING CONTAINED HEREIN SHALL IN ANY WAY WAIVE, RELEASE MODIFY OR LIMIT
BORROWER’S OR ANY CREDIT PARTY’S OBLIGATIONS TO OTHERWISE COMPLY WITH ALL TERMS
AND CONDITIONS OF THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS NOR ANY OF
AGENT’S AND LENDERS’ RIGHTS AND PRIVILEGES IN RESPECT THEREOF.

 

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SECTION 3.                            CONDITIONS TO EFFECTIVENESS.  THIS
AMENDMENT SHALL BE EFFECTIVE UPON SATISFACTION OF THE FOLLOWING CONDITIONS
PRECEDENT:

 

(A)                                  THIS AMENDMENT SHALL HAVE BEEN EXECUTED AND
DELIVERED BY LENDERS AND THE CREDIT PARTIES.

 

(B)                                 EACH LENDER EXECUTING THIS AMENDMENT SHALL
HAVE BEEN PAID AN AMENDMENT FEE EQUAL TO THE PRODUCT OF (I) 15 BASIS POINTS
MULTIPLIED BY (II) THE SUM OF (X) THE PORTION OF THE PRINCIPAL BALANCE OF THE
TERM LOAN HELD BY SUCH LENDER PLUS (Y) THE REVOLVING LOAN COMMITMENT OF SUCH
LENDER, WHICH FEE SHALL BE NON-REFUNDABLE AND FULLY EARNED UPON EXECUTION HEREOF
BY THE LENDERS.

 

(C)                                  THE EXECUTION AND DELIVERY OR SATISFACTION
OF EACH OF THE AGREEMENTS, DOCUMENTS OR OTHER INSTRUMENTS OR CONDITIONS SET
FORTH IN THE CLOSING CHECKLIST ATTACHED HERETO AS ANNEX A (THE “CLOSING
CHECKLIST”), IN A FORM, SUBSTANCE AND MANNER SATISFACTORY TO AGENT.

 

SECTION 4.                            LIMITED WAIVER AND AMENDMENT.  THE LIMITED
WAIVER AND AMENDMENTS SET FORTH HEREIN ARE EFFECTIVE SOLELY FOR THE PURPOSES SET
FORTH HEREIN AND SHALL BE LIMITED PRECISELY AS WRITTEN AND SHALL NOT BE DEEMED
TO (I) EXCEPT AS EXPRESSLY PROVIDED IN THIS AMENDMENT, BE A CONSENT TO ANY
AMENDMENT, WAIVER OR MODIFICATION OF ANY TERM OR CONDITION OF THE CREDIT
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT OR (II) PREJUDICE ANY RIGHT OR RIGHTS
THAT AGENT OR LENDERS MAY NOW HAVE OR MAY HAVE IN THE FUTURE UNDER OR IN
CONNECTION WITH THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

SECTION 5.                            REPRESENTATIONS AND WARRANTIES OF CREDIT
PARTIES.

 

(A)                                  THE EXECUTION, DELIVERY AND PERFORMANCE BY
EACH CREDIT PARTY OF THIS AMENDMENT HAS BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION AND THIS AMENDMENT IS A LEGAL, VALID AND BINDING OBLIGATION OF
SUCH CREDIT PARTY ENFORCEABLE AGAINST SUCH CREDIT PARTY IN ACCORDANCE WITH ITS
TERMS, EXCEPT AS THE ENFORCEMENT THEREOF MAY BE SUBJECT TO (I) THE EFFECT OF ANY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAW
AFFECTING CREDITORS’ RIGHTS GENERALLY AND (II) GENERAL PRINCIPLES OF EQUITY
(REGARDLESS OF WHETHER SUCH ENFORCEMENT IS SOUGHT IN A PROCEEDING IN EQUITY OR
AT LAW);

 

(B)                                 EACH OF THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THE CREDIT AGREEMENT IS TRUE AND CORRECT IN ALL MATERIAL RESPECTS
ON AND AS OF THE DATE HEREOF AS IF MADE ON THE DATE HEREOF, EXCEPT TO THE EXTENT
THAT SUCH REPRESENTATIONS AND WARRANTIES EXPRESSLY RELATE TO AN EARLIER DATE;
AND

 

(C)                                  NEITHER THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AMENDMENT BY EACH CREDIT PARTY NOR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY DOES OR SHALL CONTRAVENE, RESULT IN A BREACH
OF, OR VIOLATE (I) ANY PROVISION OF SUCH CREDIT PARTY’S CERTIFICATE OR ARTICLES
OF INCORPORATION OR BYLAWS, (II) ANY LAW OR REGULATION, OR ANY ORDER OR DECREE
OF ANY COURT OR GOVERNMENT INSTRUMENTALITY, OR (III) ANY INDENTURE, MORTGAGE,
DEED OF TRUST, LEASE, AGREEMENT OR OTHER INSTRUMENT TO WHICH SUCH CREDIT PARTY
OR ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH SUCH CREDIT PARTY OR ANY OF
ITS SUBSIDIARIES OR ANY OF THEIR PROPERTY IS BOUND, EXCEPT IN ANY SUCH CASE TO
THE EXTENT SUCH CONFLICT OR BREACH HAS BEEN WAIVED BY A WRITTEN WAIVER DOCUMENT,
A COPY OF WHICH HAS BEEN DELIVERED TO AGENT ON OR BEFORE THE DATE HEREOF.

 

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SECTION 6.                            REFERENCE TO AND EFFECT UPON THE CREDIT
AGREEMENT.

 

(A)                                  EXCEPT AS SPECIFICALLY SET FORTH ABOVE, THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL REMAIN IN FULL FORCE AND
EFFECT AND ARE HEREBY RATIFIED AND CONFIRMED.

 

(B)                                 THE EXECUTION, DELIVERY AND EFFECTIVENESS OF
THIS AMENDMENT SHALL NOT OPERATE AS A WAIVER OF ANY RIGHT, POWER OR REMEDY OF
AGENT OR ANY LENDER UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT, NOR
CONSTITUTE AMENDMENT OF ANY PROVISION OF THE CREDIT AGREEMENT OR ANY OTHER LOAN
DOCUMENT, EXCEPT AS SPECIFICALLY SET FORTH HEREIN.  UPON THE EFFECTIVENESS OF
THIS AMENDMENT, EACH REFERENCE IN THE CREDIT AGREEMENT TO “THIS AGREEMENT”,
“HEREUNDER”, “HEREOF”, “HEREIN” OR WORDS OF SIMILAR IMPORT SHALL MEAN AND BE A
REFERENCE TO THE CREDIT AGREEMENT AS AMENDED HEREBY.

 

(C)                                  EACH CREDIT PARTY ACKNOWLEDGES AND AGREES
THAT THE EXECUTION AND DELIVERY BY AGENT AND REQUISITE LENDERS OF THIS AMENDMENT
SHALL NOT BE DEEMED (I) TO CREATE A COURSE OF DEALING OR OTHERWISE OBLIGATE
AGENT OR LENDERS TO FORBEAR, WAIVE, CONSENT OR EXECUTE SIMILAR AMENDMENTS UNDER
THE SAME OR SIMILAR CIRCUMSTANCES IN THE FUTURE, OR (II) TO AMEND, RELINQUISH OR
IMPAIR ANY RIGHT OF AGENT OR LENDERS TO RECEIVE ANY INDEMNITY OR SIMILAR PAYMENT
FROM ANY PERSON OR ENTITY AS A RESULT OF ANY MATTER ARISING FROM OR RELATING TO
THIS AMENDMENT.

 

SECTION 7.                            COSTS AND EXPENSES.  AS PROVIDED IN
SECTION 11.3 OF THE CREDIT AGREEMENT, BORROWERS AGREE TO REIMBURSE AGENT FOR ALL
FEES, COSTS AND EXPENSES, INCLUDING THE FEES, COSTS AND EXPENSES OF COUNSEL OR
OTHER ADVISORS FOR ADVICE, ASSISTANCE, OR OTHER REPRESENTATION IN CONNECTION
WITH THIS AMENDMENT.

 

SECTION 8.                            GOVERNING LAW.  THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.

 

SECTION 9.                            HEADINGS.  SECTION HEADINGS IN THIS
AMENDMENT ARE INCLUDED HEREIN FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT
CONSTITUTE A PART OF THIS AMENDMENT FOR ANY OTHER PURPOSES.

 

SECTION 10.                     COUNTERPARTS.  THIS AMENDMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED AN
ORIGINAL, BUT ALL SUCH COUNTERPARTS SHALL CONSTITUTE ONE AND THE SAME
INSTRUMENT.  IN THE EVENT THAT ANY SIGNATURE IS DELIVERED BY FACSIMILE
TRANSMISSION, SUCH SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF THE
PARTY EXECUTING (OR ON WHOSE BEHALF THE SIGNATURE IS EXECUTED) THE SAME WITH THE
SAME FORCE AND EFFECT AS IF SUCH FACSIMILE SIGNATURE PAGE WERE AN ORIGINAL
THEREOF, AND SUCH PARTY SHALL PROMPTLY FOLLOW ITS FACSIMILE SIGNATURE PAGE BY
MAILING OF A HARD COPY ORIGINAL.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first written above.

 

 

BORROWER:

 

 

 

ROLLER BEARING COMPANY OF AMERICA,
INC., a Delaware corporation

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

 

GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender

 

 

 

 

 

 

 

By:

 

/s/

Kevin T. Murray

 

 

Duly Authorized Signatory

 

 

 

 

CONGRESS FINANCIAL CORPORATION
(WESTERN), as Lender

 

 

 

 

 

 

 

By:

 

/s/

Jeffrey K. Scott, V.P.

 

:

Duly Authorized Signatory

 

[Signature Page to Limited Waiver and Amendment No.1]

 

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The following Persons are signatories to this Amendment in their capacity as
Credit Parties and not as Borrowers.

 

 

CREDIT PARTIES:

 

 

 

INDUSTRIAL TECTONICS BEARINGS
CORPORATION, a Delaware corporation

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

 

RBC NICE BEARINGS INC., a Delaware corporation

 

 

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

BREMEN BEARINGS, INC., a Delaware corporation

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

TYSON BEARING COMPANY, INC., a Delaware
corporation

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

RBC LINEAR PRECISION PRODUCTS, INC., a
Delaware corporation

 

 

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

MILLER BEARING COMPANY, INC., a Delaware
corporation

 

[Signature Page to Limited Waiver and Amendment No.1]

 

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By:

 

/s/

Anthony S. Cavalieri

 

Name:

Anthony S. Cavalieri

 

Title:

Chief Financial Officer

 

 

 

RBC OKLAHOMA, INC., a Delaware corporation

 

 

 

By:

 

/s/

Anthony S. Cavalieri

 

 

Duly Authorized Signatory

 

[Signature Page to Limited Waiver and Amendment No.1]

 

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EXHIBIT 4.1(b)

to

CREDIT AGREEMENT

 

BORROWING BASE CERTIFICATE

 

ROLLER BEARING COMPANY OF AMERICA, INC.

 

Date:                 ,          

 

This Certificate is given by Roller Bearing Company of America, Inc., a Delaware
corporation (“Borrower”) pursuant to Section 4.1(b) of that certain Credit
Agreement dated as of May 30, 2002 among Borrower, the other Credit Parties
party thereto, the Lenders from time to time party thereto and General Electric
Capital Corporation, as agent for the Lenders (as such agreement may have been
amended, restated, supplemented or otherwise modified from time to time the
“Credit Agreement”).  Capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement.

 

The undersigned is duly authorized to execute and deliver this Certificate on
behalf of Borrower.  By executing this Certificate such officer hereby certifies
to Agent and Lenders on behalf of Borrowers and without personal liability that:

 

(a)                                  Attached hereto as Schedule 1 is a
calculation of the proposed Borrowing Base for Borrower as of the above date;

 

(b)                                 Based on such schedule, the proposed
Borrowing Base as of the above date is:

 

$               

 

(c)                                  except as set forth on Schedule 2 hereto,
Borrower is in compliance with the Minimum Borrowing Availability contained in
Annex G of the Credit Agreement, as demonstrated on Schedule 2 hereto

 

(d)                                 Agent shall have the right to establish or
modify or eliminate Reserves against Eligible Accounts and Eligible Inventory
from time to time in its reasonable credit judgment to reflect issues with
respect to the collectability of Accounts arising or discovered by Agent after
the Closing Date or to reflect issues with respect to the salability of
Inventory arising or discovered by Agent after the Closing Date.  In addition,
Agent reserves the right at any time to adjust any of the criteria set forth
below and to establish new criteria in its reasonable credit judgment to reflect
changes in the Borrower’s or the applicable Secured Guarantor’s business
operations, the collectability of Accounts or salability of Inventory, subject
to the approval of Requisite Revolving Lenders in the case of adjustments or new
criteria which have the effect of making more credit

 

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available.  Borrower acknowledges that the exercise by Agent of any right
pursuant to this clause (d) shall have the effect of adjusting the proposed
Borrowing Base set forth above.

 

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IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed by its
                                this         day of                       ,
        .

 

 

ROLLER BEARING COMPANY OF AMERICA,
INC.

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Borrowing Base Certificate]

 

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Schedule 1

to Exhibit 4.1(b)

 

BORROWING BASE CALCULATION

 

ROLLER BEARING COMPANY OF AMERICA, INC.

 

[All dollar amounts are in thousands]

 

Line 1

Accounts of the Borrower and Secured Guarantors.

 

$

 

*

 

 

 

 

 

 

 

Less:Ineligible Accounts:

 

 

 

 

 

 

 

 

 

 

Accounts that do not arise from the sale of goods or the performance of services
by Borrower or a Secured Guarantor in the ordinary course of its business;

 

 

 

 

 

 

 

 

 

 

 

Accounts (i) upon which Borrower’s or the applicable Secured Guarantor’s right
to receive payment is not absolute or is contingent upon the fulfillment of any
condition whatsoever or (ii) as to which Borrower or the applicable Secured
Guarantor is not able to bring suit or otherwise enforce its remedies against
the Account Debtor through judicial process, or (iii) if the Account represents
a progress billing consisting of an invoice for goods sold or used or services
rendered pursuant to a contract under which the Account Debtor’s obligation to
pay that invoice is subject to Borrower’s or the Secured Guarantors’ completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer; [Note: includes pre-bill]

 

 

 

 

 

 

 

 

 

 

 

Any Account to the extent that any defense, counterclaim, setoff or dispute is
asserted as to such Account; [Note: current portion of a positive balance on the
Account aging coded “RPS”]

 

 

 

 

 

 

 

 

 

 

 

Accounts that are not true and correct statements of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;

 

 

 

 

 

 

 

 

 

 

 

Accounts with respect to which an invoice has not been sent to the applicable
Account Debtor;

 

 

 

 

2

--------------------------------------------------------------------------------

 

 

 

Accounts that (i) are not owned by Borrower or a Secured Guarantor or (ii) are
subject to any right, claim, security interest or other interest of any other
Person, other than Liens described in clauses (a) and (g) of the definition of
Permitted Encumbrances in the Credit Agreement and Liens in favor of Agent, on
behalf of itself and Lenders but only to the extent of such right, claim,
security interest or other interest;

 

 

 

 

 

 

 

 

 

Accounts that arise from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer with
any Credit Party;

 

 

 

 

 

 

 

 

 

Accounts that are the obligations of an Account Debtor that is the United States
government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof, unless Borrower,
or the applicable Secured Guarantor, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting assignment thereof; provided, that
the Borrowing Availability based on such obligations shall not in any event
exceed $7,500,000 in the aggregate;

 

 

 

 

 

 

 

 

 

Accounts that are the obligations of an Account Debtor located in a foreign
country other than (A) Canada (excluding the province of Newfoundland, the
Northwest Territories and the Territory of Nunavut) or (B) the United Kingdom,
unless payment thereof is assured by a letter of credit assigned and delivered
to Agent or credit insurance, satisfactory to Agent as to form, amount and
issuer;

 

 

 

 

 

 

 

 

 

Accounts to the extent Borrower or any Secured Guarantor or any Subsidiary
thereof is liable for goods sold or services rendered by the applicable Account
Debtor to Borrower or any Secured Guarantor or any Subsidiary thereof but only
to the extent of the potential offset;

 

 

 

 

 

 

 

 

 

Accounts that arise with respect to goods that are delivered on a bill-and-hold,
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;

 

 

 

3

--------------------------------------------------------------------------------

 

 

 

Accounts that are in default; provided, that, an Account shall be deemed in
default upon the occurrence of any of the following: 

 

 

 

 

 

 

 

 

 

(i)the Account is not paid within the earlier of: 60 days following its due date
or 120 days following its original invoice date; unless payment thereof is
secured by a letter of credit satisfactory to Agent as to form, substance and
issuer.

 

 

 

 

 

 

 

 

 

past due credits

 

 

 

 

 

 

 

 

 

(ii)the Account Debtor obligated upon such Account suspends business, makes a
general assignment for the benefit of creditors or fails to pay its debts
generally as they come due; or

 

 

 

 

 

 

 

 

 

(iii)a petition is filed by or against any Account Debtor obligated upon such
Account under any bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief or other law or laws
for the relief of debtors;

 

 

 

 

 

 

 

 

 

Accounts excluded under the default criteria (i) — (iii) above shall be excluded
in their entirety, meaning that any past due credits with respect thereto shall
also be excluded thereunder

 

 

 

 

 

 

 

 

 

Accounts that are the obligations of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the criteria of Accounts in default set forth immediately above

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Accounts as to which any of the representations or warranties in the Loan
Documents are untrue in any material respect;

 

 

 

 

 

 

 

 

 

Accounts to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper;

 

 

 

4

--------------------------------------------------------------------------------

 

 

 

Accounts to the extent that such Accounts, together with all other Accounts
owing by such Account Debtor and its Affiliates (excluding the United States
government as Account Debtor) as of any date of determination exceed 15% of all
Eligible Accounts;

 

 

 

 

 

 

 

 

 

Accounts that are payable in any currency other than Dollars, Canadian Dollars,
Pounds Sterling or Euros.

 

 

 

 

 

 

 

 

 

(i)                                     Dollar equivalent of Accounts payable in
Canadian Dollars:

$____________

 

 

 

 

 

 

 

 

 

(ii)                                  Dollar equivalent of Accounts payable in
Pounds Sterling:

$___________

 

 

 

 

 

 

 

 

 

(iii)                               Dollar equivalent of Accounts payable in
Euros:

$___________

 

 

 

 

 

 

 

 

Dollar equivalent of an Account shall be calculated at the rate at which
Canadian Dollars, Pounds Sterling (British Pound), or Euros as applicable, may
be exchanged into U.S. dollars as published in The Wall Street Journal.

 

 

 

 

 

 

Line 2

 

Less Unapplied Cash Reserves, if any

 

 

 

 

 

 

 

Line 3

 

Total Ineligible Accounts

 

 

 

 

 

 

 

Line 4

 

Total Eligible Accounts (Accounts less Total Ineligible Accounts and Reserves,
if any) (Line 1 less Line 3)

 

 

 

 

 

 

 

 

 

Advance Rate

85

%

 

 

 

 

 

Line 5

 

Accounts Availability

 

 

 

 

 

 

 

Line 6

 

Less Dilution Reserve, if any

 

 

 

 

 

 

 

Line 7

 

Net Accounts Availability

 

 

 

 

 

 

 

Line 8

 

Inventory (other than Component Parts and Purchased Parts)

 

 

 

5

--------------------------------------------------------------------------------

 

Less:

 

Ineligible Inventory:

 

 

 

 

 

 

 

 

 

Inventory that is not owned by Borrower or any Secured Guarantor free and clear
of all Liens and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has issued a
bond to assure Borrower’s or a Secured Guarantor’s performance with respect to
that Inventory), except Liens described in clauses (a), (d), (e) and (g) of the
definition of Permitted Encumbrances in the Credit Agreement and the Liens in
favor of Agent, on behalf of itself and Lenders;

 

 

 

 

 

 

 

 

 

Inventory that (i) is not located on premises owned, leased or rented by
Borrower or any Secured Guarantor and set forth in Disclosure Schedule (3.2),
(ii) is not located on premises acquired or leased by Borrower or any Secured
Guarantor in connection with any Permitted Acquisition, or (iii) is stored at a
leased location, unless Agent has given its prior consent thereto and unless
either (x) a reasonably satisfactory landlord waiver has been delivered to
Agent, or (y) Reserves reasonably satisfactory to Agent have been established
with respect thereto, or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at a location owned by Borrower or any Secured
Guarantor subject to a mortgage in favor of a lender other than Agent, unless a
reasonably satisfactory mortgagee waiver has been delivered to Agent, or (v) is
located at any site if the aggregate book value of Inventory at any such
location is less than $50,000;

 

 

 

 

 

 

 

 

 

Inventory that is placed on consignment or is in transit, except for Inventory
in transit between domestic locations of Credit Parties as to which Agent’s
Liens have been perfected at origin and destination;

 

 

 

 

 

 

 

 

 

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

 

 

 

6

--------------------------------------------------------------------------------

 

 

 

Inventory that is excess, obsolete, slow moving (in excess of 2-years’ supply), 
unsalable (scrap),  shopworn, seconds, damaged or unfit for sale;

 

 

 

 

 

 

 

 

 

Inventory that consists of display items or packing or shipping materials,
manufacturing supplies, Inventory which is not subject to an outstanding
purchase order that is not revocable by its terms or is not sold in the ordinary
course of business, work-in-process Inventory or replacement parts;

 

 

 

 

 

 

 

 

 

custom-made

 

 

 

 

 

 

 

 

 

Inventory that is not of a type held for sale in the ordinary course of
Borrower’s or the applicable Secured Guarantor’s business;

 

 

 

 

 

 

 

 

 

Inventory that is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders subject to Permitted Encumbrances (includes
Inventory at foreign locations);

 

 

 

 

 

 

 

 

 

Inventory that breaches in any material respect any of the representations or
warranties pertaining to Inventory set forth in the Loan Documents;

 

 

 

 

 

 

 

 

 

Inventory that consists of any costs associated with “freight-in” charges;

 

 

 

 

 

 

 

 

 

Inventory that consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available; or

 

 

 

 

 

 

 

 

 

Inventory that is not covered by casualty insurance in accordance with Section
5.4 of the Credit Agreement.

 

 

 

 

 

 

 

Line 10

 

Less Costing Reserves, if any

 

 

 

 

 

 

 

Line 11

 

Less Gross Margin Reserve, if any

 

 

 

 

 

 

 

Line 12

 

Less Shipping Overhead Reserve, if any

 

 

 

 

 

 

 

Line 13

 

Less Timing Reserve, if any

 

 

 

7

--------------------------------------------------------------------------------

 

Line 14

 

Less Intercompany Profit

 

 

 

 

 

 

 

Line 15

 

Total Ineligible Inventory

 

 

 

 

 

 

 

Line 16

 

Total Eligible Finished Goods and Raw Material Inventory (Line 8 less Line 15)
(excluding Component Parts and Purchased Parts, “FG & RM Eligible Inventory”)

 

 

 

 

 

 

 

 

 

Advance Rate

65

%

 

 

 

 

 

Line 17

 

FG & RM Inventory Availability

 

 

 

 

 

 

 

Line 18

 

Landlord Wavier/Rent Reserve, if any

 

 

 

 

 

 

 

Line 19

 

Net FG & RM Inventory Availability

 

 

 

 

 

 

 

Line 20

 

Inventory consisting of Component Parts and Purchased Parts

 

 

 

 

 

 

 

 

 

Less:      Ineligible Component Parts and Purchased Parts: 

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are not owned by Borrower or any
Secured Guarantor free and clear of all Liens and rights of any other Person
(including the rights of a purchaser that has made progress payments and the
rights of a surety that has issued a bond to assure Borrower’s or a Secured
Guarantor’s performance with respect to that Inventory), except Liens described
in clauses (a), (d), (e) and (g) of the definition of Permitted Encumbrances in
the Credit Agreement and the Liens in favor of Agent, on behalf of itself and
Lenders;

 

 

 

8

--------------------------------------------------------------------------------

 

 

 

Component Parts and Purchased Parts that (i) are not located on premises owned,
leased or rented by Borrower or any Secured Guarantor and set forth in
Disclosure Schedule (3.2), (ii) are not located on premises acquired or leased
by Borrower or any Secured Guarantor in connection with any Permitted
Acquisition, or (iii) are stored at a leased location, unless Agent has given
its prior consent thereto and unless either (x) a reasonably satisfactory
landlord waiver has been delivered to Agent, or (y) Reserves reasonably
satisfactory to Agent have been established with respect thereto, or (iii) is
stored with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves reasonably
satisfactory to Agent have been established with respect thereto, or (iv) are
located at a location owned by Borrower or any Secured Guarantor subject to a
mortgage in favor of a lender other than Agent, unless a reasonably satisfactory
mortgagee waiver has been delivered to Agent, or (v) are located at any site if
the aggregate book value of Inventory at any such location is less than $50,000;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are placed on consignment or are in
transit, except for Component Parts and Purchased Parts in transit between
domestic locations of Credit Parties as to which Agent’s Liens have been
perfected at origin and destination;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are covered by a negotiable document of
title, unless such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of Agent and
Lenders;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are excess, obsolete, slow moving (in
excess of 2-years’ supply), or unfit for sale;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are not subject to a first priority
lien in favor of Agent on behalf of itself and Lenders subject to Permitted
Encumbrances;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that breach in any material respect any of
the representations or warranties pertaining to Component Parts and Purchased
Parts set forth in the Loan Documents;

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that consist of any costs associated with
“freight-in” charges;

 

 

 

9

--------------------------------------------------------------------------------

 

 

 

Component Parts and Purchased Parts that consist of Hazardous Materials or goods
that can be transported or sold only with licenses that are not readily
available; or

 

 

 

 

 

 

 

 

 

Component Parts and Purchased Parts that are not covered by casualty insurance
in accordance with Section 5.4 of the Credit Agreement.

 

 

 

 

 

 

 

Line 21

 

Total Ineligible Component Parts and Purchased Parts

 

 

 

 

 

 

 

Line 22

 

Total Eligible Component Parts and Purchased Parts (Line 20 less Line 21)

 

 

 

 

 

 

 

Line 23

 

Total Eligible Inventory (Line 19 plus Line 22)

 

 

 

 

 

 

 

Line 24

 

25% of Total Eligible Inventory

 

 

 

 

 

 

 

Line 25

 

Total Eligible Component Parts and Purchased Parts in excess of 25% of the total
value of the Total Eligible Inventory, if any

 

 

 

 

 

 

 

 

 

Line 22 less Line 25

 

 

 

 

 

 

 

 

 

Advance Rate

30

%

 

 

 

 

 

Line 26

 

Component Parts and Purchase Parts Availability

 

 

 

 

 

 

 

Line 27

 

Borrowing Base (Line 7 plus Line 19 plus Line 26)

 

 

 

 

 

 

 

 

 

Less:Revolving Loan outstanding other than Overadvances (i.e., the sum of (i)
the aggregate amount of Revolving Credit Advances outstanding to Borrower plus
(ii) the aggregate Letter of Credit Obligations incurred on behalf of Borrower)

 

 

 

 

 

 

 

 

 

Less:Swing Line Loan outstanding other than Overadvances

 

 

 

 

 

 

 

 

 

Less:Required Minimum Borrowing Availability

$

 7,500,000

*

 

 

 

 

 

 

 

 

Borrowing Availability

 

 

 

--------------------------------------------------------------------------------

*3,500,000 during the period from January 31, 2003 through April 30, 2003

 

10

--------------------------------------------------------------------------------

 

Schedule 2

to Exhibit 4.1(b)

 

MINIMUM BORROWING AVAILABILITY
(Section E(b))

 

A.                                   Maximum Amount

 

$

 

 

 

 

 

 

B.                                     Borrowing Base (from Schedule 1 to
Exhibit 4.1(b) above)

 

$

 

 

 

 

 

 

C.                                     The lesser of A and B above

 

$

 

 

 

 

 

 

D.                                    Overadvances made but not demanded under
Section 1.1(a)(iii) of the Credit Agreement

 

$

 

 

 

 

 

 

E.                                    Revolving Loan outstanding other than
Overadvances in D (i.e., the sum of (i) the aggregate amount of Revolving Credit
Advances outstanding to Borrower plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of Borrower).

 

$

 

 

 

 

 

 

F.                                      Swing Line Loan outstanding

 

$

 

 

 

 

 

 

G.                                   E plus F

 

$

 

 

 

 

 

 

H.                                    Borrowing Availability (C minus G )

 

$

 

 

 

 

 

 

Required Minimum Borrowing Availability

 

$

7,500,000

*

 

 

 

 

In Compliance

 

Yes/No

 

 

--------------------------------------------------------------------------------

*3,500,000 for the period from January 31, 2003 through April 30, 2003

 

11

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