Amendment No. 4 to Credit Agreement among General Bearing Corporation, KeyBank National Association, and Lenders

Summary

This amendment, dated September 30, 2004, modifies the existing Credit Agreement between General Bearing Corporation, KeyBank National Association (as Administrative Agent), and the participating lenders. The amendment updates certain investment limits, revises schedules, and clarifies that all obligations under the amended agreement remain secured. It becomes effective once specific conditions are met, including execution by all parties and receipt of required documents and fees. The amendment confirms that all previous guarantees and collateral arrangements continue to apply to the updated agreement.

EX-10.26 2 e400896_ex10-26.txt AMENDMENT NUMBER 4 TO THE CREDIT AGREEMENT Exhibit 10.26 AMENDMENT NO. 4 TO CREDIT AGREEMENT AMENDMENT NO. 4 to Credit Agreement (this "Amendment") entered into as of September 30, 2004 among GENERAL BEARING CORPORATION (the "Borrower"), the Lenders party hereto and KEYBANK NATIONAL ASSOCIATION, as Administrative Agent (the "Administrative Agent"). WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to the Credit Agreement dated as of December 20, 1999 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"); and WHEREAS, the obligations of the Borrower under the Credit Agreement are guaranteed by the Subsidiary Guarantors party to the Guarantee and Collateral Agreement dated as of December 20, 1999 (the "Guarantee Agreement") between the Subsidiary Guarantors and the Administrative Agent; and WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent amend certain provisions of the Credit Agreement, and the Lenders and the Administrative Agent have agreed to make such amendments subject to the terms and conditions set forth herein; and WHEREAS, terms not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Amendments to Credit Agreement. (a) Additional Definitions. Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions in the appropriate alphabetical order: "Amendment No. 4" means Amendment No. 4 to Credit Agreement, dated as of September 30, 2004, by and among the Borrower, the Lenders and the Administrative Agent. (b) Investments. Section 7.8 of the Credit Agreement is hereby amended by deleting clause (h) thereof in its entirety and substituting the following therefor: (h) Investments by the Borrower or any of its Domestic Subsidiaries in Foreign Subsidiaries and other Affiliates of the Borrower in an aggregate amount not to exceed for any Fiscal Year set forth below the amount set forth below opposite such Fiscal Year: Aggregate Amount Fiscal Year of Investment ----------- ------------- Fiscal Year 2003 $1,750,000 Fiscal Year 2004 $2,800,000 Fiscal Year 2005 and each Fiscal Year thereafter $2,000,000 provided that (x) both before and after giving effect to such Investment, no Default shall exist or result therefrom and (y) commencing with Fiscal Year 2005, in the event that Investments made or incurred during the immediately preceding Fiscal Year are less than the amounts permitted to be made or incurred during such Fiscal Year pursuant to this Section 7.8(h) without giving effect to any amounts permitted to be carried forward to such Fiscal Year from the immediately preceding Fiscal Year, an amount equal to the lesser of (I) such unused amount and (II) $800,000 may be carried forward to the immediately succeeding Fiscal Year provided that (A) no amounts once carried forwarded to the next Fiscal Year may be carried forward to the Fiscal Years thereafter and (B) all Investments made or incurred in any Fiscal Year shall be applied first to reduce the amount of Investments permitted to be made or incurred in such Fiscal Year pursuant to this Section 7.8(h) without giving effect to any amounts permitted to be carried forward to such Fiscal Year from the immediately preceding Fiscal Year and then to reduce the amount carried forward. (c) Schedules to Credit Agreement. The Schedules to the Credit Agreement are hereby amended as set forth in the schedules attached hereto as Exhibit A. (d) Schedules to Guarantee and Collateral Agreement. The Schedules to the Guarantee and Collateral Agreement are hereby amended as set forth in the schedules attached hereto as Exhibit B. (e) General. All references to "this Agreement" in the Credit Agreement and to "the Credit Agreement" in the other Loan Documents shall be deemed to refer to the Credit Agreement as amended by this Amendment. 2 2. Effectiveness of Amendment. (a) The effectiveness of this Amendment is subject to the satisfaction of the following conditions: (i) The Administrative Agent shall have received a counterpart of this Amendment executed by the Borrower. (ii) The Administrative Agent shall have received counterparts of the Consent and Acknowledgment of Subsidiary Guarantors annexed hereto by each of the Subsidiary Guarantors. (iii) The Administrative Agent shall have received all fees and expenses due and payable on or prior to the date hereof (including, without limitation, all fees and expenses of counsel to the Administrative Agent. (iv) The Administrative Agent shall have received such other documents and certificates as the Administrative Agent or its counsel may reasonably request, all in form and substance satisfactory to the Administrative Agent and its counsel. (b) This Amendment shall become effective as of September 30, 2004 (the "Amendment No. 4 Effective Date") upon the satisfaction of the conditions set forth in Section 2(a) hereof. 3. Acknowledgments and Confirmations. The Borrower and each Subsidiary Guarantor acknowledges and confirms that the Liens granted pursuant to the Loan Documents secure, without limitation, the Indebtedness, liabilities and obligations of the Borrower to the Administrative Agent and the Lenders under this Amendment, whether or not so stated in the Loan Documents, and that the term "Obligations" as used in the Loan Documents (or any other term used therein to refer to the Indebtedness, liabilities and obligations of the Borrower to the Administrative Agent or any of the Lenders) includes, without limitation, the Indebtedness, liabilities and obligations to the Administrative Agent and the Lenders under the Credit Agreement as amended by this Amendment. 4. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that: (a) The representations and warranties set forth in the Loan Documents (other than the representations and warranties made as of a specific date and as set forth in Exhibits A and B hereto) are true and correct in all material respects as of the date hereof and with the same effect as though made on and as of the date hereof, except that (i) Shanghai General Bearing Co., Ltd., Ningbo General Bearing Co., Ltd. and Jiangsu General Ball & Roller Co., 3 Ltd. may, from time to time, incur Guarantee Obligations which are non-recourse to the Borrower or any Guarantor Subsidiary and (ii) in December 2003, the Borrower disposed of the assets and liabilities of General Ball and Roller, Inc. (formerly known as WMW Machinery Company, Inc.) and its interest in World Machinery Works, S.A., collectively representing substantially all of the assets of the Borrower's machine tools segment. (b) No Default or Event of Default and no event or condition which, with the giving of notice or lapse of time or both, would constitute such a Default or Event of Default, now exists or would exist. (c) (i) The execution, delivery and performance by the Borrower of this Amendment is within its organizational powers and have been duly authorized by all necessary action (corporate or otherwise) on the part of the Borrower, (ii) this Amendment is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, and (iii) neither this Amendment nor the execution, delivery and performance by the Borrower hereof: (A) contravenes the terms of the Borrower's organization documents, (B) conflicts with or results in any breach or contravention of, or the creation of any Lien under, any document evidencing any contractual obligation to which the Borrower is a party or any order, injunction, writ or decree to which the Borrower or its property is subject, or (C) violates any requirement of law. 5. Effect; No Waiver. Except as specifically set forth herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms and are hereby ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement, except as specifically set forth herein. 6. Miscellaneous. (a) The Borrower shall pay the Administrative Agent upon demand for all reasonable expenses, including reasonable attorneys' fees and expenses of the Administrative Agent, incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment. (b) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. (c) This Amendment shall be binding upon the Borrower, the Administrative Agent and the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Administrative Agent and the Lenders and the respective successors and assigns of the Administrative Agent and the Lenders. 4 (d) This Amendment (and the Consent and Acknowledgment of Subsidiary Guarantors annexed hereto) may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. [The remainder of this page intentionally has been left blank.] 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first above written. GENERAL BEARING CORPORATION By: /s/ David L. Gussack -------------------------------------- Name: David L. Gussack Title: Chief Executive Officer KEYBANK NATIONAL ASSOCIATION, as Administrative Agent, Issuer and Lender By: /s/ Robert D. Scott -------------------------------------- Name: Robert D. Scott Title: Vice President General Bearing Amendment No. 4 Signature Page CONSENT AND ACKNOWLEDGMENT OF SUBSIDIARY GUARANTORS Each of the undersigned Subsidiary Guarantors hereby (1) consents to the execution and delivery by the Borrower of the foregoing Amendment; (2) agrees that the definition of "Obligations" (and any other term referring to the indebtedness, liabilities and obligations of the Borrower to the Administrative Agent or any of the Lenders) in the Guarantee Agreement and the other Loan Documents shall include the Indebtedness of the Borrower under the Amendment; (3) agrees that the definition of "Credit Agreement" in the Guarantee Agreement and the other Loan Documents to which it is a party is hereby amended to mean the Credit Agreement as amended by the foregoing Amendment; (4) reaffirms its continuing liability under its Guarantee Agreement (as modified hereby); and (5) confirms and agrees that it is a Subsidiary Guarantor party to the Guarantee Agreement and that the Guarantee Agreement and the other Loan Documents to which it is a party are, and shall continue to be, in full force and effect in accordance with their respective terms. GENERAL BEARING BALL AND ROLLER, INC. By: /s/ David L. Gussack --------------------------------- Name: Title: CHINA BEARING CENTER, INC. By: /s/ David L. Gussack --------------------------------- Name: Title: NN GENERAL, LLC By: /s/ David L. Gussack --------------------------------- Name: Title: GENERAL BALL AND ROLLER, INC. By: /s/ David L. Gussack --------------------------------- Name: Title: Consent and Acknowledgment of Subsidiary Guarantors Signature Page GENBEARCO INTERNATINAL CORP. By: /s/ David L. Gussack --------------------------------- Name: Title: HYATT ZWZ BEARING CORPORATION By: /s/ David L. Gussack --------------------------------- Name: Title: Consent and Acknowledgment of Subsidiary Guarantors Signature Page EXHIBIT A TO AMENDMENT NO. 4 TO CREDIT AGREEMENT Schedules to Credit Agreement Amended Schedule 1.1B CAPITALIZATION OF BORROWER Authorized shares: Total: 20,000,000 Common: 19,000,000 Preferred: 1,000,000 Issued shares: Common: 7,124,450 @ $.01 par value Outstanding Shares: 3,790,222 Shareholders: Approximately 66% of outstanding shares held by former shareholders of General Bearing Ball & Roller, Inc. Approximately 34% held by public shareholders Options: Approximately 358,550 outstanding Transfer Agent: American Stock Transfer & Trust Company Warrants: None Domestic Subsidiaries: Total Total No. held shares Issued by GBC ------ ------ ------ General Bearing Ball & Roller, Inc. 200 Common no par 200 200 General Ball and Roller, Inc. 1000 Common .01 par 100 100* 150,000 preferred .01 par 0 0 NN General, LLC 50 Class A 50 50 50 Class B 50 50 China Bearing Center, Inc 200 Common no par 200 200* Rockland Manufacturing Co. N/A (Partnership) Genbearco International Corp. 100 Common no par 100 100 Hyatt ZWZ Bearing Corporation 200 Common no par 100 65 *Owned by General Bearing Ball & Roller, Inc. Amended Schedule 4.10 INTELLECTUAL PROPERTY COPYRIGHTS AND COPYRIGHT LICENSES None. PATENTS AND PATENT LICENSES None. TRADEMARKS AND TRADEMARK LICENSES: TRADEMARKS: "The General": United States Patent Office Registration No. 1,076,300 The General {logo}:United States Patent Office Registration No.1158822 "HYATT": See Attachment A Amended Schedule 4.7 LITIGATION 1. The Borrower was notified by United States Customs Service of its decision to assess additional antidumping duty and interest upon the liquidation of entry Nos. 419 0157180-6 of February 16, 1989 and 419 0158606 9 of April 6, 1989 on August 7, 1998. General Bearing has filed a Protest and Application for further review on approximately June 3, 1999. 2. Gussack Realty Company, General Bearing Corporation v. Xerox. In 1995 Gussack Realty Company and General Bearing filed an action against Xerox in the United States District Court for the Southern District of New York regarding contaminants contained in the subsurface of a property near property formerly leased by the Borrower. Xerox filed counterclaims. On approximately April 28, 1999, a jury exculpated the Borrower from liability for clean-up costs. On February 9, 1999, the New York State Department of Environmental Conservation (the "DEC") notified the Borrower and that it intended to conduct a Preliminary Site Assessment of the property to determine whether hazardous wastes had been disposed of at the site. 3. Agreement #D3-0002-95-03 between Gussack Realty Company and the DEC regarding the investigation and remediation of petroleum contamination the Grant Hardware Site. Gussack Realty, owner of 616 Route 303, Blauvelt, NY 10913, without admitting liability for the contamination's occurrence or maintenance has agreed to investigate and remediate the site to the DEC's satisfaction. The Agreement does not waive the DEC's right to pursue any claims against Gussack Realty company the DEC may have with regard to this site. 4. General Bearing Corporation vs. Shanghai Roller Bearing Factory and Shanghai Electric (Group) Co. In the second half of 2003 the Company learned of acts of misconduct, including misappropriation, by certain personnel at SGBC, which resulted in the loss or reduction of SGBC assets. In January, 2004, the company filed the two legal proceedings described below, seeking compensation for the damages resulting from the misconduct. First, on January 28, 2004, the Company filed suit in Federal District Court for the Southern District of New York against Shanghai Electric (Group) Corp., a Chinese company which is the indirect parent of SRBF, alleging Conversion and Intentional Interference with Contract and seeking unliquidated damages in excess of $75,000. The company is in the process of having the complaint served in accordance with the Hague Convention. Second, on February 6, 2004, the Company filed an arbitration proceeding against SRBF in the International Chamber of Commerce alleging breach of contract, conversion, fraud, and breach of fiduciary duty, and seeking an award of damages believed to be in excess of $4,000,000, inclusive of the Company's capital investment in SGBC. The demand for arbitration has been served on SRBF, who has failed to file an answer, and the ICC is in the process of appointing arbitrators. On February 24, 2004, the Company reached an agreement with SRBF (the "Settlement Agreement") whereunder: GBC was granted the right to acquire additional equity of SGBC, resulting in GBC holding a 51.39% majority interest therein for an additional investment of $250,000; SGBC's board of directors agreed that SGBC would pursue compensation from all persons who wrongfully acquired assets of SGBC; The employees of SGBC who were believed to have participated in the wrongful conduct were replaced and; GBC agreed to dismissal of the Lawsuits upon completion of its acquisition of the majority interest in SGBC. Subsequent to the above agreement, SRBF advised GBC that in order for it to be able to implement the above agreement, it needed to be compensated for land use rights which it had previously contributed to SGBC. GBC disputes that SRBF has the right to be further compensated for such rights and is proceeding with the Lawsuits. Amended Schedule 4.16A SUBSIDIARIES

Amended Schedule 4.16B NON-OPERATING DOMESTIC SUBSIDIARIES

Amended Schedule 4.24A REAL PROPERTY OWNED BY BORROWER OR DOMESTIC SUBSIDIARIES NONE EXHIBIT B TO AMENDMENT NO. 4 TO CREDIT AGREEMENT Schedules to Guarantee and Collateral Agreement Amended Schedule 1 NOTICE ADDRESSES OF GUARANTORS General Bearing Ball & Roller, Inc. 44 High Street West Nyack, New York 10994 General Ball & Roller, Inc. 44 High Street West Nyack, New York 10994 Genbearco International Corp. 44 High Street West Nyack, New York 10994 China Bearing Center 44 High Street West Nyack, New York 10994 Hyatt ZWZ Bearing Corporation 44 High Street West Nyack, New York 10994 NN General, LLC 44 High Street West Nyack, New York 10994 Amended Schedule 2 DESCRIPTION OF INVESTMENT PROPERTY

Amended Schedule 4 LOCATION OF GRANTORS' CHIEF EXECUTIVE OFFICES AND JURISDICTION OF FORMATION Location of Offices: Jurisdiction of Formation - -------------------- ------------------------- General Bearing Ball & Roller, Inc. Delaware 44 High Street West Nyack, New York 10994 General Ball & Roller, Inc. Delaware 44 High Street West Nyack, New York 10994 Genbearco International Corp. New York 44 High Street West Nyack, New York 10994 Hyatt ZWZ Bearing Corporation New York 44 High Street West Nyack, New York 10994 NN General, LLC Delaware 44 High Street West Nyack, New York 10994 China Bearing Center, Inc. New York 44 High Street West Nyack, New York Amended Schedule 5 INVENTORY AND EQUIPMENT BY LOCATION Grantor and Location General Bearing Corporation Mahx F. Linster, Inc. 44 High Street 60 Technology Drive West Nyack, NY 10994 Alpharetta, GA 30202 R.J. Hughes Sales Inc. Applied Industrial Technologies 16 West 153 83rd Street 7575 Thoroughbred Drive Burr Ridge, IL 60521 Florence, KY 41042 Quality Carton Inc. Applied Industrial Technologies 100 Sterling Mine Road 11899 Cabernet Drive Sloatsburg, NY 10974 Fontana, CA 92337 G/S Associates Inc. Applied Industrial Technologies 3530 NW St. Helens Road 1515 Distribution Court Portland, OR 97210 Lithia Springs, GA 30122 Atlantic Bearing Co., Inc. Applied Industrial Technologies 606 N. Pender Street J.R. Cunin Distribution Center Wilson, NC ###-###-#### Claremont Road Carlisle, PA 17013 Western Reserve Industrial Sales Co. 1900 Enterprise Pkwy Electrolux Home Products Twinsburg, OH 44087 149 Brentwood Drive Hope, AR 71801 Jelco Services 4577 Mint Way Consolidated Metco Inc. Dallas, TX 75236 13940 N. Rivergate Blvd. Portland, OR 97203 Raymond H. Dobberpuhl, Inc. 9515 Unit A, East Rush Street Consolidated Metco Inc. S. El. Monte, CA 91733 719 Seacrest Avenue Monroe, NC 28110 Bartlett Bearing 4230-34 H Street American Allied Railway Equipment Co. Inc. Philadelphia, PA 19124 302 West Holland Street Washington, Il 61571 Castle Rubber Company 1003 Railroad Street East Butler, PA 16029 Kaman 910 S. Wanamaker Avenue, Ontario, CA 91761 Kaman 11920 Carrier Court, Louisville, KY 40299 Kaman 301 Old Niskayuna Road, Bldg 3-Suite 010, Latham, NY 12110 Kaman 4370 West 1750 South, Salt Lake City, UT 84104 Progress Rail 29 Road 32 North, Sidney, NE 69162 Progress Rail 168 Fischer Road, Jackson, SC 29831 Manville Rubber 1009 Kennedy Blvd., Manville, NJ 08835 SKF 4682 Radford Road East, Flowery Branch, GA 30542 Jonathan Engineered Solution Circuito Sigio XXI #2136, Mexicali, BCCP 21259, Mexico PSS Warehouse & Transportation Co., 614 Hampton Road, Cherry Hill, NJ 08002 All equipment at West Nyack location Amended Schedule 6 COPYRIGHTS AND COPYRIGHT LICENSES None. PATENTS AND PATENT LICENSES None. TRADEMARKS AND TRADEMARK LICENSES "The General": United States Patent Office Registration No. 1,076,300 The General {logo}:United States Patent Office Registration No.1158822 "HYATT": See Attachment A Amended Schedule 8 VEHICLES 1995 Dodge Intrepid 1998 Ford Econo Line Van E150 1998 Ford Escort 1999 Ford Taurus 1999 Volvo S80 2000 Dodge Intrepid 2001 BMW 330IA 2001 Lexus ###-###-#### Audi TT 2002 Ford Taurus 2003 Lexus LS430 2003 Mercedes E320S4 2003 Ford Explorer 2003 BMW 530IA 2004 Ford Explorer Amended Schedule 4.16A SUBSIDIARIES

Amended Schedule 4.16B NON-OPERATING DOMESTIC SUBSIDIARIES