Exhibit
10.34


 


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”.


 


1

















 


(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 (1):


 


(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


 


2

















 


another such Secured
Guarantor, as applicable, a demand note (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 Intercornpany 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


 


3

















 


Dividend, Holdings
immediately uses all of such proceeds solely to 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
RBC France SAS (formerly named myonic SAS), a French société par actions simplifiée
and wholly-owned subsidiary of Schaublin.


 


4

















 


“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 Schaublin, 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
event 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.


 


5

















 


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


 


6

















 


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.


 


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]


 


7

















 


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., 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/ Ken T. Murray

  	
   

  
	
   

  	
   

  	
  Duly Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  CONGRESS FINANCIAL CORPORATION

  (WESTERN), as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey K. Scott

  	
   

  
	
   

  	
   

  	
  Name: Jeffrey K. Scott

  
	
   

  	
   

  	
  Title: Vice President

  



 


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


 


S - 1

















 


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

  



 


S - 2

















 


	
   

  	
  MILLER BEARING COMPANY, INC., a

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony S.
  Cavalieri

  	
   

  
	
   

  	
   

  	
  Name: Anthony S.
  Cavalieri

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  RBC OKLAHOMA, INC., a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony S.
  Cavalieri

  	
   

  
	
   

  	
   

  	
  Name: Anthony S.
  Cavalieri

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  



 


S - 3

















 


ANNEX A


 


CLOSING CHECKLIST


 


for


 


LIMITED WAIVER AND AMENDMENT NO. I TO

CREDIT AGREEMENT


 


by
and among


 


GENERAL ELECTRIC CAPITAL CORPORATION,


 


as
Agent,


 


ROLLER BEARING COMPANY OF AMERICA, INC.,


 


as
Borrower,


 


THE OTHER CREDIT PARTIES SIGNATORY THERETO,


 


as
Credit Parties, and


 


THE LENDERS FROM TIME TO TIME SIGNATORY THERETO


 


February
5, 2003


 

















 


1.                                      Limited
Waiver and Amendment No. 1


 


(i)                                     Annex
A - Closing Checklist


 


(ii)                                  Exhibit
4.1(b) to Credit Agreement (Borrowing Base Certificate)


 


2.                                      Joinder Agreement
adding Schaublin Holding, Schaublin, Bovagnet and RBC France as Credit Parties
under the Credit Agreement, as set forth therein


 


3.                                      Demand
Promissory Note by Schaublin Holding


 


(i)                                     Endorsement


 


4.                                      Demand
Promissory Note by Schaublin


 


(i)                                     Endorsement


 


5.                                      Demand
Promissory Note by Bovagnet


 


(i)                                     Endorsement


 


6.                                      Demand
Promissory Note by RBC France


 


(i)                                     Endorsement


 


7.                                      Copies of a duly
executed payoff letter, in form and substance satisfactory to Agent, executed
by all parties to the Swiss Loan documents evidencing repayment in full of all
obligations relating to the Swiss Loans, together with appropriate terminations
of agreements, pledges, releases of liens and similar documents in form and
substance satisfactory to Agent


 


8.                                      Copies of a duly
executed payoff letter, in form and substance satisfactory to Agent, executed
by all parties to the credit facility between RBC France and CCF evidencing
repayment in full of all obligations relating to such credit facility, together
with appropriate terminations of agreements, pledges, releases of liens and
similar documents in form and substance satisfactory to Agent


 


9.                                      Post Closing
Matters Agreement


 


A-1

















 


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


 


1

















 


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.


 


2

















 


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]


 

















 


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;

  	
   

  	
   

  	
   

  



 


1

















 


	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  



 


2

















 


	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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.

  	
   

  	
   

  	
   

  



 


3

















 


	
   

  	
   

  	
  (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)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  



 


4

















 


	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  



 


5

















 


	
   

  	
   

  	
  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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
   

  	
   

  



 


6

















 


	
  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;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  



 


7

















 


	
   

  	
   

  	
  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;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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


 


8

















 


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 $7.50

  	
   

  	
  $

  	
  7,500,000

  	
  *

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance

  	
   

  	
  Yes/No

  	
   

  



 












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


 


9