<SUBMISSION>
<ACCESSION-NUMBER>0001193805-03-001050
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20030927
<FILING-DATE>20031112
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>GENERAL BEARING CORP
<CIK>0001026221
<ASSIGNED-SIC>3562
<IRS-NUMBER>132796245
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-22053
<FILM-NUMBER>03991104
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>44 HIGH ST
<CITY>WEST NYWACK
<STATE>NY
<ZIP>10994
<PHONE>9143586000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>C/O GENERAL BEARING CORP
<STREET2>44 HIGH ST
<CITY>WEST NYACK
<STATE>NY
<ZIP>10994
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e300746_10q-gbc.txt
<DESCRIPTION>QUARTERLY REPORT
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

           |X| Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                    For the quarter ended September 27, 2003
                                       OR
          |_| Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
        For the transition period from _______________ to _______________

                         Commission file Number 0-22053

                           GENERAL BEARING CORPORATION
                           ---------------------------
             (Exact name of registrant as specified in its charter)

Delaware                                                     13-2796245
--------                                                     ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

44 High Street, West Nyack, New York                         10994
------------------------------------                         -----
(Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (845) 358-6000

        Securities registered pursuant to Section 12(b) of the Act: NONE

           Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock $.01 par value per share
                      -------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes |_| No

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). |_| Yes |X| No

At November 1, 2003, the Registrant had issued 7,114,200 shares of common stock,
$.01 par value per share, and had outstanding 3,753,972 shares.

<PAGE>

          CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
               FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

      The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements, which are statements other than those of
historical fact, including, without limitation, ones identified by the use of
the words: "anticipates," "estimates," "believes," "expects," "intends,"
"plans," "predicts," and similar expressions. In this Quarterly Report, such
statements may relate, among other things, to the recoverability of deferred
taxes, likely industry trends, the continued availability of credit lines, the
suitability of facilities, access to suppliers and implementation of joint
ventures and marketing programs. Such forward-looking statements involve
important risks and uncertainties that could cause actual results to differ
materially from those expected by the Company, and such statements should be
read along with the cautionary statements accompanying them and mindful of the
following additional risks and uncertainties possibly affecting the Company: the
possibility of a general economic downturn, which is likely to have an important
impact on historically cyclical industries such as manufacturing; significant
price, quality or marketing efforts from domestic or overseas competitors; the
loss of, or substantial reduction in, orders from a major customer; the loss of,
or failure to attain additional quality certifications; changes in U.S. or
foreign government regulations and policies, including the imposition of
antidumping orders on the Company or any of its suppliers; a significant
judgment or order against the Company in a legal or administrative proceeding;
and potential delays in implementing planned sales and marketing expansion
efforts and the failure of their effectiveness upon implementation.

<PAGE>

                          GENERAL BEARING CORPORATION

                         QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 27, 2003

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                      Page No.
                                                                                      --------
<S>                                                                                      <C>
PART I

      Item 1.     Financial Statements ................................................. 2 - 8

      Item 2.     Management's Discussion and Analysis of Results of Operations
                  and Financial Condition .............................................. 9 - 13

      Item 3.     Quantitative and Qualitative Disclosure about Market Risk............. 14 - 15

      Item 4.     Controls and Procedures............................................... 15

PART II

      Item 1.     Legal Proceedings .................................................... 16

      Item 6.     Exhibits and Reports on Form 8-K ..................................... 16

Signature              ................................................................. 17

Certifications         ................................................................. 18 - 22
</TABLE>


                                                                               1
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

Item 1.                   CONSOLIDATED BALANCE SHEETS
              (In Thousands - Except for Shares and Per Share Data)

<TABLE>
<CAPTION>
                                                             Sept. 27,     Dec. 28,
                                                               2003          2002
                                                            -----------   ----------
                              ASSETS                        (Unaudited)
<S>                                                           <C>          <C>
Current:
    Cash and cash equivalents                                 $  2,183     $  3,158
    Accounts receivable - net of allowance for doubtful
       accounts of $299 and $335                                11,379       10,742
    Inventories                                                 25,741       28,218
    Prepaid expenses and other current assets                    4,718        4,368
    Advances to affiliates                                         113          186
    Deferred tax assets                                          2,427        2,427
    Assets held for sale                                         9,072        7,578
                                                              --------     --------

       Total current assets                                     55,633       56,677

Fixed assets, net                                               21,265       21,308
Investment in and advances to joint ventures
    and affiliates                                               4,196        3,670
Other assets                                                     1,081        1,336
                                                              --------     --------

Total Assets                                                  $ 82,175     $ 82,991
                                                              ========     ========

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
    Bank - revolving line of credit                           $     --     $ 14,458
    Notes payable - banks                                        8,254        7,114
    Accounts payable:
       Trade                                                     4,258        7,127
       Affiliates                                                  937        1,696
    Accrued expenses and other current liabilities               6,932        4,107
    Current maturities of long-term debt                           391          396
    Liabilities of discontinued operations                       9,072        7,578
                                                              --------     --------

       Total current liabilities                                29,844       42,476
                                                              --------     --------

Long-term debt, net of current maturities                       19,435        8,563

Other long-term liabilities - affiliate                            173          315

Deferred taxes                                                     714          714

Minority interests                                               8,988        9,464

Commitments and contingencies

Stockholders' equity:
    Preferred stock par value $.01 per share - 1,000,000
       shares authorized, none issued and outstanding               --           --
    Common stock par value $.01 per share - 19,000,000
       shares authorized, 7,114,200 and 7,102,200
       shares issued                                                71           71
    Additional paid-in capital                                  40,166       40,133
    Accumulated other comprehensive loss                          (916)      (1,084)
    Treasury stock at cost, 3,360,228 and 3,234,820 shares      (1,472)        (996)
    Accumulated deficit                                        (14,828)     (16,665)
                                                              --------     --------

       Total stockholders' equity                               23,021       21,459
                                                              --------     --------

Total liabilities and stockholder's equity                    $ 82,175     $ 82,991
                                                              ========     ========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               2
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (In Thousands - Except for Shares and Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Thirty-nine weeks ended         Thirteen weeks ended
                                                               ---------------------------     ---------------------------
                                                                Sept. 27,       Sept. 28,       Sept. 27,       Sept. 28,
                                                                   2003            2002           2003             2002
                                                               -----------     -----------     -----------     -----------
<S>                                                            <C>             <C>             <C>             <C>
Sales                                                          $    46,855     $    45,727     $    14,582     $    15,215

Cost of sales                                                       33,225          32,227          10,798          10,655
                                                               -----------     -----------     -----------     -----------

Gross profit                                                        13,630          13,500           3,784           4,560

Selling, general and administrative expenses                         9,463           8,929           3,132           3,071
                                                               -----------     -----------     -----------     -----------

Operating income                                                     4,167           4,571             652           1,489

Other expenses, net                                                    600           1,232             264             417
                                                               -----------     -----------     -----------     -----------

Income from continuing operations before income taxes                3,567           3,339             388           1,072

Income taxes                                                         1,242             742             143             204
                                                               -----------     -----------     -----------     -----------

Income from continuing operations before minority interests          2,325           2,597             245             868

Minority interests                                                     470             755              14             296
                                                               -----------     -----------     -----------     -----------

Income from continuing operations                                    1,855           1,842             231             572
                                                               -----------     -----------     -----------     -----------

Income / (loss) from discontinued operations                           (29)           (235)              8             (81)

Income (taxes) / benefit                                                10               2              (3)             55
                                                               -----------     -----------     -----------     -----------

Income (loss) from discontinued operations                             (19)           (233)              5             (26)
                                                               -----------     -----------     -----------     -----------

Net income                                                     $     1,836     $     1,609     $       236     $       546
                                                               ===========     ===========     ===========     ===========

Income per common share from continuing operations:
         Basic                                                 $      0.48     $      0.46     $      0.06     $      0.15
                                                               -----------     -----------     -----------     -----------
         Diluted                                               $      0.48     $      0.46     $      0.06     $      0.15
                                                               -----------     -----------     -----------     -----------

Loss per common share from discontinued operations:
         Basic                                                 $        --     $     (0.05)    $        --     $     (0.01)
                                                               -----------     -----------     -----------     -----------
         Diluted                                               $        --     $     (0.05)    $        --     $     (0.01)
                                                               -----------     -----------     -----------     -----------

Income per common share from net income:
         Basic                                                 $      0.48     $      0.41     $      0.06     $      0.14
                                                               -----------     -----------     -----------     -----------
         Diluted                                               $      0.48     $      0.41     $      0.06     $      0.14
                                                               -----------     -----------     -----------     -----------

Weighted average number of common shares:
         Basic                                                   3,847,021       3,962,466       3,809,969       3,883,880
                                                               -----------     -----------     -----------     -----------
         Diluted                                                 3,853,967       3,972,506       3,824,512       3,895,790
                                                               -----------     -----------     -----------     -----------
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               3
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                Thirty-nine weeks ended          Thirteen weeks ended
                                               -------------------------      -------------------------
                                                Sept. 27,      Sept. 28,       Sept. 27,      Sept. 28,
                                                  2003           2002            2003           2002
                                               ----------     ----------      ----------     ----------
<S>                                            <C>            <C>             <C>            <C>
Net income                                     $    1,836     $    1,609      $      236     $      546

Derivative fair market value adjustment               168           (388)            148           (289)
                                               ----------     ----------      ----------     ----------

Comprehensive income                           $    2,004     $    1,221      $      384     $      257
                                               ==========     ==========      ==========     ==========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               4
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              Thirty-nine weeks ended
                                                                         ----------------------------------
                                                                         Sept. 27, 2003      Sept. 28, 2002
                                                                         --------------      --------------
<S>                                                                       <C>                 <C>
Cash flows from operating activities:
        Net income                                                        $      1,836        $      1,609
    Adjustments to reconcile net income to cash provided
      by operating activities:
        Minority interests                                                        (477)                 92
        Depreciation and amortization                                            1,803               1,444
        Deferred income taxes                                                       --                 (59)
        Equity in income of joint ventures and affiliates                         (321)               (133)
        Other non-cash items charged to income                                      34                  38
        (Gain) / loss on sales of fixed assets                                      --                  (4)
    Changes in:
        Accounts receivable                                                       (637)                114
        Inventories                                                              2,228                (354)
        Prepaid expenses and other assets                                          458              (1,732)
        Due from affiliates                                                     (1,268)               (395)
        Accounts payable and accrued expenses                                      124                 415
                                                                          ------------        ------------

           Net cash provided by operating activities                             3,780               1,035
                                                                          ------------        ------------

Cash flows from investing activities:
    Investment in affiliate                                                       (281)               (401)
    Fixed asset purchases                                                       (2,063)             (2,748)
    Net proceeds from sale of fixed assets                                          --                  12
                                                                          ------------        ------------

           Net cash used in investing activities                                (2,344)             (3,137)
                                                                          ------------        ------------

Cash flows from financing activities:
    Purchase of treasury stock                                                    (476)               (688)
    Net proceeds from note payable - banks                                         597               3,606
    Repayment of other long-term debt                                             (158)               (104)
    Net proceeds from (repayment of) revolving credit facility                  (2,374)                526
                                                                          ------------        ------------

         Net cash provided by (used in) financing activities                    (2,411)              3,340
                                                                          ------------        ------------

Net increase (decrease) in cash and cash equivalents                              (975)              1,238
Cash and cash equivalents, beginning of period                                   3,158               1,847
                                                                          ------------        ------------
Cash and cash equivalents, end of period                                  $      2,183        $      3,085
                                                                          ============        ============
Cash paid during the period for:
    Interest                                                              $      1,141        $      1,304
                                                                          ============        ============
    Income taxes                                                          $        441        $        218
                                                                          ============        ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               5
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of          The accompanying unaudited condensed consolidated
      Presentation      financial statements for General Bearing Corporation and
                        subsidiaries ("the Company") have been prepared in
                        accordance with generally accepted accounting principles
                        for interim financial information and with the
                        instructions to Form 10-Q and Regulation S-X.
                        Accordingly, they do not include all of the information
                        and footnotes required by generally accepted accounting
                        principles for complete financial statements. In the
                        opinion of management, all adjustments (consisting
                        solely of normal recurring accruals) considered
                        necessary for a fair presentation have been included.
                        Operating results for the thirty-nine weeks ended
                        September 27, 2003 are not necessarily indicative of the
                        results that may be expected for the year ending January
                        3, 2004. For further information, refer to the
                        consolidated financial statements and footnotes thereto
                        included in the Company's Annual Report on Form 10-K for
                        the year ended December 28, 2002.

2.    Discontinued      In December 2002, the Company's Board of Directors and
      Operations        management resolved to discontinue the operations of the
                        machine tool segment by disposing of the net assets by
                        sale during 2003. In accordance with Statement of
                        Financial Accounting Standards No. 144, "Accounting for
                        the Impairment or Disposal of Long Lived Assets", prior
                        year statements of operations of the Company have been
                        reclassified to segregate discontinued operations from
                        continuing operations. A detail of the major classes of
                        the assets and liabilities of the discontinued
                        operations is as follows: (In thousands)

                                                           Sept. 27,    Dec. 28,
                                                             2003         2002
                                                           ---------    --------
Assets:

Cash                                                        $  267       $   52
Accounts receivable                                          1,328        1,475
Inventory                                                    4,118        3,394
Prepaid expenses & other current assets                        733          360
Fixed assets                                                 2,626        2,297
                                                            ------       ------

Total assets                                                $9,072       $7,578
                                                            ======       ======

Liabilities:
Accounts payable                                            $2,304       $1,866
Accrued expenses & other current liabilities                 3,808        1,998
Notes payable - bank                                         2,102        2,369
Current maturities of long-term debt                             4           11
Minority interest                                              854        1,334
                                                            ------       ------

Total liabilities                                           $9,072       $7,578
                                                            ======       ======


                                                                               6
<PAGE>
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.    Inventories       Inventories consist of the following: (In Thousands)

<TABLE>
<CAPTION>
                                                   September 27, 2003   December 28, 2002
-----------------------------------------------------------------------------------------
<S>                                                         <C>                <C>
Finished bearings                                           $10,895            $ 9,686

Bearing raw materials, purchased parts and work
in process                                                   14,846             18,532
                                                            -------            -------

                                                            $25,741            $28,218
-----------------------------------------------------------------------------------------
</TABLE>

4.    Earnings per      Basic earnings per share includes no dilution and is
      Share             computed by dividing net income by the weighted average
                        number of common shares outstanding for the period.
                        Diluted earnings per share reflect, in periods in which
                        they have a dilutive effect, the dilution which would
                        occur upon the exercise of stock options. A
                        reconciliation of the shares used in calculating basic
                        and diluted earnings per share follows:

                                                     Thirty-nine weeks ended
                                                 -------------------------------
                                                 Sept. 27, 2003   Sept. 28, 2002
--------------------------------------------------------------------------------
Diluted earnings per share computation:

Basic weighted average common shares outstanding      3,847,021        3,962,466

Incremental shares from assumed exercise of
dilutive options                                          6,946           10,040
--------------------------------------------------------------------------------
                                                      3,853,967        3,972,506
--------------------------------------------------------------------------------

                                                       Thirteen weeks ended
                                                 -------------------------------
                                                 Sept. 27, 2003   Sept. 28, 2002
--------------------------------------------------------------------------------
Diluted earnings per share computation:

Basic weighted average common shares outstanding      3,809,969        3,883,880

Incremental shares from assumed exercise of
dilutive options                                         14,543           11,910
--------------------------------------------------------------------------------
                                                      3,824,512        3,895,790
--------------------------------------------------------------------------------


                                                                               7
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        For the thirty-nine weeks ended September 27, 2003 and
                        September 28, 2002, 245,800 and 287,800 options and
                        warrants outstanding, respectively, were anti-dilutive.
                        For the thirteen weeks ended September 27, 2003 and
                        September 28, 2002, 245,800 and 287,800 options and
                        warrants outstanding, respectively, were anti-dilutive.

5.    Derivative        The Company follows Statement of Financial Accounting
      Financial         Standards No. 133 ("SFAS 133") "Accounting for
      Instruments       Derivative Instruments and Hedging Activities", as
                        amended, and interpreted, which requires that all
                        derivative instruments be recorded on the balance sheet
                        at their fair value.

                        In order to manage it's exposure to changes in interest
                        rates, the Company has entered into an interest rate
                        swap agreement to hedge a portion of its total debt that
                        is subject to variable interest rates. This agreement is
                        considered to be a hedge against changes in the amount
                        of future cash flows associated with the interest
                        payments on variable rate debt obligations. For the
                        thirty-nine weeks ended September 27, 2003 and September
                        28, 2002, expenses recognized in earnings relating to
                        the interest rate swap totaled $311,000 and $318,000,
                        respectively and are included in the Statement of
                        Operations in "Other expenses, net". Any amounts
                        reported in "Comprehensive Income" will be reclassified
                        to earnings over the term of the agreement, through
                        2007.

6.    Litigation        Except as explained in Part II of this report, there has
                        been no material change in litigation since the events
                        reported in the Company's 10-Q for the fiscal quarter
                        ended June 28, 2003.


                                                                               8
<PAGE>

Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition

Business Overview

General Bearing Corporation and subsidiaries (collectively, the "Company")
operates in two business segments: Bearings ("Continuing Operations") and
Machine Tools ("Discontinued Operations"). In December 2002, the Company's Board
of Directors and management resolved to discontinue the operations of the
machine tool segment by disposing of the net assets by sale during 2003. During
2002, the Company reduced the net carrying amounts of the assets and liabilities
of the machine tools segment to zero and recorded an impairment write-down
associated with discontinued operations of approximately $2,242,000. Pursuant to
Statement of Financial Accounting Standards No. 144, the financial statements of
the Company have been reclassified to segregate discontinued operations from
continuing operations.

Continuing Operations

The Company manufactures and distributes a variety of bearings and bearing
components under the Hyatt(R) and The General(R) trademarks. The Company
supplies original equipment manufacturers ("OEMs") and distributors. The
Company's products, sold principally in the United States ("U.S.") and Asia, are
used in a broad range of applications, including automobiles, railroad cars,
locomotives, trucks, heavy duty trailers, office equipment, machinery and
appliances. General has entered into six joint ventures (5 with manufacturers in
the Peoples Republic of China ("PRC")) to enable it to manufacture high quality,
low cost bearings and bearing components. General obtains a majority of its
bearing and component requirements from its manufacturing plants in the PRC.

Results of Operations

      Sales. Sales for the third fiscal quarter ended September 27, 2003 ("Q-3
2003") of $14,582,000 represents a 4.2% decrease compared to the third fiscal
quarter ended September 28, 2002 ("Q-3 2002"). Decreased sales of radial ball
bearings, drive line components to the automotive industry and sales to
distributors due to the general downturn in U.S. manufacturing were partially
offset by increased sales in precision balls produced by Jiangsu General Bearing
Company, Ltd. which the Company began to sell in 2002.

      Sales for the thirty-nine weeks ended September 27, 2003 ("2003") of
$46,855,000 represents a 2.5% increase compared to the thirty-nine weeks ended
September 28, 2002 ("2002"). Increased sales of steering and drive line
components to the automotive industry, tapered roller bearings for heavy duty
truck trailers and tapered journal bearings to the railroad industry were
partially offset by lower sales volume in the heavy duty aftermarket as well as
lower sales volume to distributors. The reductions in sales to the heavy duty
aftermarket and distributors are believed to be related to the general downturn
in U.S. manufacturing.

      Gross Profit. Gross profit for Q-3 2003 of $3,784,000 represents a 17.0%
decrease compared to Q-3 2002. As a percentage of sales, gross profit (GP%) was
25.9% for Q-3 2003 compared to 30.0% for Q-3 2002. This decrease was mainly due
to reduction in sales volume as well as product mix.


                                                                               9
<PAGE>

      Gross profit for 2003 of $13,630,000 represents a 1.0% increase compared
to 2002. As a percentage of sales, GP% was 29.1% for 2003 compared to 29.5% for
2002. This decrease was mainly due to product mix.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses (S,G&A) as a percentage of sales were 21.5% in Q-3 2003
compared to 20.2% in Q-3 2002. S,G&A increased by $61,000 mainly due to
increases in salaries and professional fees, partially offset by reduced
freight, travel and entertainment and promotion expenses.

      S,G&A as a percentage of sales were 20.2% in 2003 compared to 19.5% in
2002. S,G&A increased by $534,000 mainly due to increases in salaries,
insurance, professional fees and depreciation, partially offset by reduced
promotion, travel, freight and telephone expenses.

      Operating Income. Operating income for Q-3 2003 of $652,000 represents a
56.2% decrease compared to Q-3 2002 due to the lower sales volume, lower GP% and
higher S,G&A.

      Operating income for 2003 of $4,167,000 represents an 8.8% decrease
compared to 2002 due to the lower GP% and higher S,G&A, partially offset by
increased sales.

      Other Expense, net. Other expense, net was $264,000 in Q-3 2003 compared
to $417,000 in Q-3 2002 and is comprised of miscellaneous non-operating income
and expenses, interest expense and equity in income of affiliates ("equity
income") as follows: (In thousands)

                                                             Third  Quarter
                                                          2003            2002
                                                        -----------------------

Other non-operating (income) expenses, net              $     8         $    23
Interest expense, net                                       392             459
Equity (income) in affiliates                              (136)            (65)
                                                        -------         -------
                                                        $   264         $   417

      Other expense, net was $600,000 in 2003 compared to $1,232,000 in 2002 as
follows: (in thousands)

                                                               Nine Months
                                                          2003            2002
                                                        -----------------------

Other non-operating (income) expenses, net              $   (33)        $    78
Interest expense, net                                       954           1,287
Equity (income) in affiliates                              (321)           (133)
                                                        -------         -------
                                                        $   600         $ 1,232

Pursuant to requirements imposed in 1993 by the United States Office of Foreign
Assets Control ("OFAC"), at the end of 2002 the Company carried a net payable
("IKL payable") to General IKL Corp., an affiliate. The requirement arose out of
sanctions imposed by the U.S. government on the countries comprising the former
Republic of Yugoslavia, "freezing" certain assets in the United States. In
February 2003, OFAC "unfroze" assets affected by the sanctions and the Company
reduced a significant portion of the IKL payable which the Company disputed,
resulting in a $238,000 reduction in interest expense.


                                                                              10
<PAGE>

      Income Tax. The Company's effective income tax rate was 36.9% in Q-3 2003
compared to 19.0% in Q-3 2002. The Q-3 2002 rate is reflective of income taxes
not being provided for on certain foreign income that was originally intended to
be permanently reinvested. The Company's effective income tax rate was 34.8% in
2003 compared to 22.2% in 2002. The 2003 effective tax rate reflects a normal
rate of taxation. The 2002 effective tax rate is reflective of income taxes not
being provided for on certain foreign income that was originally intended to be
permanently reinvested.

      Discontinued Operations. In the Machine Tools segment, the Company
produces and distributes a variety of machine tools used for boring, turning,
milling and grinding metal work pieces. The Company's product lines include
horizontal boring mills, bridge and gantry mills, vertical turning lathes, heavy
duty lathes, roll grinders, belt grinders and vertical grinders. Machine tool
sales of $2,171,000 in Q-3 2003 were 31.0% lower than Q-3 2002 primarily due to
lower sales in the United States due to softness in the machine tool market. GP%
for machine tools was 40.9% in Q-3 2003 compared to 24.9% in Q-3 2002. Q-3 2003
gross profit includes a benefit of $522,000 due to the reduction of inventory
reserves. S,G&A for machine tools increased by $14,000 in Q-3 2003 compared to
Q-3 2002. Operating loss in Q-3 2003 for machine tools was $94,000 compared to
an operating loss of $185,000 in Q-3 2002 due to the reduction in inventory
reserves, partially offset by lower sales and increased S,G&A. Other expense,
net was $30,000 in Q-3 2003 compared to $85,000 in Q-3 2002. The reduction in
other expense, net in Q-3 2003 is primarily due to reduced interest expense in
Romania. The net loss for machine tools was $215,000 in Q-3 2003 compared to a
net loss of $26,000 in Q-3 2002 due to the factors mentioned above.

      Machine tool sales of $5,042,000 in 2003 were 27.7% lower than 2002 due to
softness in the machine tool market. GP% for machine tools was 22.3% in 2003
compared to 32.2% in 2002 mainly due to lower sales volume and product mix.
S,G&A for machine tools increased by $35,000 in 2003 compared to 2002 mainly due
to an increase in insurance expense. Operating loss for machine tools was
$1,666,000 in 2003 compared to an operating loss of $506,000 in 2002 primarily
due to lower sales volume and lower GP%. Other income, net was $212,000 in 2003
compared to other expense, net of $310,000 in 2002. The increase in other
income, net in 2003 is mainly due to income generated from the sale of an unused
parcel of land by World Machinery Works in the second quarter. The net loss for
machine tools was $929,000 in 2003 compared to a net loss of $233,000 in 2002
mainly due to reduced sales and lower GP%, partially offset by the gain
recognized from the sale of land and the reduction in inventory reserves.

      Net Income. Net income for Q-3 2003 decreased by 56.8% to $236,000 or $.06
per basic and diluted share, from $546,000 or $.14 per basic and diluted share
in Q-3 2002. The decrease is primarily due to the lower sales volume, lower GP%
and an increase in the effective tax rate, partially offset by reduced Other
expenses, net. Net income for 2003 increased 14.1% from 2002 to $1,836,000 or
$.48 per basic and diluted share, from $1,609,000 or $.41 per basic and diluted
share in 2002 mainly due to the higher sales volume and reduction in Other
expense, net.

Financial Condition, Liquidity and Capital Resources

      During the periods presented, the Company's primary sources of capital
have been short term loans and a revolving credit facility. At September 27,
2003 and December 28, 2002, the Company had working capital of $25,789,000 and
$14,201,000, respectively. The increase in working capital as of September 27,
2003 is attributable to the revolving credit facility being


                                                                              11
<PAGE>

classified as long-term debt since the Company renewed and amended its existing
revolving credit facility (see exhibit 10.25). The revolving credit facility
expires on July 31, 2006.

      Cash provided by operating activities in 2003 was $3,780,000. Cash
provided by net income before depreciation and amortization, inventory
reductions, and higher accounts payable and accrued expenses was partially
offset by increased accounts receivable and due from affiliates.

      Cash used in investing activities in 2003 was $2,344,000. The Company
invested $281,000 in Shanghai General Bearing Company, Ltd., one of it's
existing unconsolidated joint ventures in China. Cash used in investing
activities in 2003 also includes $2,063,000 for capital expenditures compared to
$2,748,000 in 2002.

      Cash used in financing activities in 2003 was $2,411,000. During 2003, net
decreases in debt under its Revolving Credit Facility of $2,374,000, stock
repurchases of $476,000 under the Company's Stock Repurchase Program ("the
Program"), and $158,000 in payments under its capital lease facility were
partially offset by a $597,000 increase in Notes Payable - Banks. The majority
of the increase in Notes Payable - Banks was used to finance capital equipment
purchases.

      At September 27, 2003, the Company had outstanding debt of $12,084,000
under its Revolving Credit Facility and had further availability of
approximately $8.6 million.

      During 2003, the Company repurchased 125,408 shares of its common stock
for a cost of $476,000 under its Program. The Company has purchased 410,228
shares for a cost of $1,472,000 since the inception of the Program on January
11, 2000.

      The Company believes that funds generated from continuing operations,
capital lease financing and borrowing under the existing and any future
revolving credit facilities will be sufficient to finance the Company's
investment commitments, anticipated working capital and capital expenditure
requirements for at least the next 24 months. The Company's operating cash flow
could be adversely affected if there was a decrease in demand for the Company's
products or if the Company was unable to continue to reduce its inventory.


                                                                              12
<PAGE>

The table and notes below describe the Company's contractual obligations related
to its liquidity. (In Thousands)

<TABLE>
<CAPTION>
                                                            Payments Due by Period
                                             ---------------------------------------------------
                                                          Less
                                                         than 1     1 - 3      4 - 5     After 5
                                              Total       year      years      years      years
                                             -------    -------    -------    -------    -------
<S>                                          <C>        <C>        <C>        <C>        <C>
Contractual Obligations:

Bank revolving line of credit                $12,084    $    --    $12,084    $    --    $    --

Notes payable - banks                         11,974      8,254      3,116        604         --

Capital lease obligations                        309        191        118         --         --

Other long - term liabilities - affiliate        608         --        608         --         --

Note payable - other                           3,105        200      2,905         --         --
                                             -------    -------    -------    -------    -------

Total obligations - per Balance Sheet         28,080      8,645     18,831        604         --

Off Balance Sheet items:

Operating leases                               6,337      1,361      3,701      1,275         --

Equity investment obligations                  1,000      1,000         --         --         --
                                             -------    -------    -------    -------    -------

Total contractual cash obligations           $35,417    $11,006    $22,532    $ 1,879    $     0
                                             =======    =======    =======    =======    =======
</TABLE>

Pursuant to requirements imposed in 1993 by OFAC, at the end of 2002 the Company
also carried on its books a $619,000 net payable to General IKL Corp., an
affiliate. The requirement arose out of sanctions imposed by the U.S. government
on the countries comprising the former Republic of Yugoslavia, "freezing"
certain assets in the United States. In February, 2003, OFAC "unfroze" assets
affected by the sanctions and the Company reduced a significant portion of the
IKL payable which the Company disputed. As a result, the Company now carries on
its books a net payable in the amount of $180,000 to General IKL Corp. as of
September 27, 2003.

The Company uses letters of credit to support certain advance payments received
from customers in the normal course of business.

Inflation

      The effect of inflation on the Company has not been significant during the
last two fiscal years.


                                                                              13
<PAGE>

Item 3. Quantitative and Qualitative Disclosure about Market Risk

      The Company is subject to market risk primarily associated with changes in
interest rates and foreign currency exchange rates. In order to manage the
volatility relating to interest rates, the Company has entered into an interest
rate swap agreement. In order to manage the volatility relating to foreign
currency exchange rates the Company denominates substantially all purchase and
sale transactions in U.S. dollars. The Company does not anticipate any material
changes in its primary market risk exposures in the near future.

The Company does not execute transactions or hold derivative financial
instruments for trading purposes.

Interest Rate Risk

      The Company's primary market risks are fluctuations in interest rates and
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
on its bank debt and interest rate swap. As of September 27, 2003, the Company
had $6,525,000 outstanding subject to an interest rate swap. This swap is used
to convert floating rate debt relating to the Company's revolving credit
agreement to fixed rate debt to reduce the Company's exposure to interest rate
fluctuations. The net result was to substitute a fixed interest rate of 9.17%
for the variable rate. The swap amortizes by $75,000 per month and terminates in
December 2007. Under the interest rate environment during the thirty-nine weeks
ended September 27, 2003, the Company's interest rate swap agreement resulted in
additional expense of approximately $311,000.

      The following table provides information about the Company's interest rate
swap agreement that is sensitive to changes in interest rates. The table
presents average notional amounts and weighted average interest rates by fiscal
year. Notional amounts are used to calculate the contractual cash flows to be
exchanged under the swap contract.

<TABLE>
<CAPTION>
                                                                                                              Fair
                              2003         2004         2005         2006         2007        Total           Value
In Thousands
<S>                           <C>          <C>          <C>          <C>          <C>          <C>            <C>
Interest Rate Swaps
Variable to Fixed (US$)       6,712        5,812        4,912        4,012        3,112        6,525          916
  Average Pay Rate             9.17%        9.17%        9.17%        9.17%        9.17%        9.17%
  Average Receive Rate         3.35%        3.86%        4.40%        4.82%        5.17%
</TABLE>

The following table provides information about the Company's variable rate debt.

<TABLE>
<CAPTION>
                                                                                                               Fair
                              2003          2004          2005          2006          2007          Total      Value
In Thousands
<S>                           <C>           <C>           <C>           <C>           <C>           <C>        <C>
Debt:
Variable Rate (US$)           15,009        14,718        12,794        13,300        13,800        12,084     12,084
  Average Interest Rate         3.75%         4.25%         4.75%         5.25%         6.25%         3.75%
</TABLE>

The Company's management believes that fluctuations in interest rates in the
near term would not materially affect the Company's consolidated operating
results, financial position or cash flows as the Company has limited risks
related to interest rate fluctuations.


                                                                              14
<PAGE>

Foreign Currency Risk

      The Company does not use foreign currency forward exchange contracts or
purchased currency options to hedge local currency cash flows or for trading
purposes. All sales arrangements from domestic companies with international
customers are denominated in U.S. dollars. Only a small fraction of the
Company's purchases are denominated in foreign currency. The Company purchases
approximately $2,000,000 of product monthly from its Chinese joint ventures,
which use proceeds thereof, to satisfy locally incurred liabilities in Renminbi
(RMB). Had there been an adverse 10% fluctuation between the exchange rate of
the U.S. dollar and the RMB, it would have resulted in a potential loss of
earnings of approximately $1,800,000 for the thirty-nine weeks ended September
27, 2003. However, based upon minimal historical volatility between the RMB and
the U.S. dollar, the Company believes the likelihood of a significant potential
loss in future earnings from changes in the foreign currency exchange rate to be
minimal.

Item 4. Controls and Procedures

(a) An evaluation was performed under the supervision and with the participation
of the Company's management, including its President and Controller, of the
effectiveness of the Company's disclosure controls and procedures, as such term
is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") as of September 27, 2003. Based on the
evaluation, the Company's management, including the President and Controller,
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act, is recorded, processed, summarized
and reported as specified in Securities and Exchange Commission rules and forms.

(b) There were no significant changes in the Company's internal control over
financial reporting that occurred during the Company's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.


                                                                              15
<PAGE>

                                     PART II

Item 1. Legal Proceedings

        Arbitration proceeding against World Machinery Company ("World")

The Company's 10-K dated April 9, 2003, for fiscal year ending December 28,
2002, disclosed an arbitration proceeding filed against World, (a wholly owned
subsidiary of the Company and parent of the companies comprising the machine
tool segment) by the Romanian Authority for Privatization and Management of
State Ownership ("APAPS"), arising out of the contract under which World
acquired a majority interest in World Machinery Works (formerly "Masini Unelte,
Bacau, S.A.") from the Romanian government in 1998.

On October 13, 2003, World and APAPS agreed to a 6 month suspension of the
arbitration proceedings in order to explore settlement of the matter.

While the Company is confident that it will prevail in the arbitration, an
adverse ruling could be materially adverse to World's operations and financial
condition.

Item 6. Exhibits and Reports on Form 8-K

      (a) Exhibits

      31.1 Certification of the President required by Rule 13a - 14(a) or 15d -
      14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
      2002.

      31.2 Certification of the Controller required by Rule 13a - 14(a) or 15d -
      14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
      2002.

      32. Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes Oxley Act of 2002.

      10.25 Amendment number 3 to the Credit Agreement between KeyBank National
      Association and the Company

      (b) Current reports on Form 8-K

      The Company did not file any reports on Form 8-K for the quarter ended
      September 27, 2003.


                                                                              16
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: November 11, 2003.

GENERAL BEARING CORPORATION
------------------------------------
(Registrant)


/s/ David L. Gussack
------------------------------------
David L. Gussack
President


/s/ Rocky Cambrea
------------------------------------
Rocky Cambrea
Controller


                                                                              17

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>e300746_ex31-1.txt
<DESCRIPTION>CERTIFICATION OF THE PRESIDENT
<TEXT>

Exhibit 31.1

                         CERTIFICATION OF THE PRESIDENT

I, David L. Gussack, President of General Bearing Corporation, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of General Bearing
      Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

            a.    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c.    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent functions):


                                                                              18
<PAGE>

            a.    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b.    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: November 11, 2003


/s/ David L. Gussack
--------------------
David L. Gussack
President


                                                                              19

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>e300746_ex31-2.txt
<DESCRIPTION>CERTIFICATION OF THE CONTROLLER
<TEXT>

Exhibit 31.2

                         CERTIFICATION OF THE CONTROLLER

I, Rocky Cambrea, Controller of General Bearing Corporation, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of General Bearing
      Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

            a.    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c.    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent functions):


                                                                              20
<PAGE>

            a.    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b.    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: November 11, 2003


/s/ Rocky Cambrea
-----------------
Rocky Cambrea
Controller


                                                                              21

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>e300746_ex32.txt
<DESCRIPTION>CERTIFICATION PURSUANT TO SECTION 906
<TEXT>

Exhibit 32.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES - OXLEY ACT OF 2002

In connection with the quarterly report of General Bearing Corporation and
Subsidiaries (the "Company") on Form 10-Q for the period ending September 27,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), the undersigned President and Controller of the Company hereby
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002 that based on their knowledge and belief: 1) the
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, and 2) the information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company as of and for the periods covered in the Report.

Date: November 11, 2003.


/s/ David L. Gussack
---------------------------------
David L. Gussack
President


/s/ Rocky Cambrea
---------------------------------
Rocky Cambrea
Controller


                                                                              22

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>6
<FILENAME>e300746_ex10-25.txt
<DESCRIPTION>AMENDMENT NO. 3 TO CREDIT AGREEMENT
<TEXT>

                                  Exhibit 10.25

                       AMENDMENT NO. 3 TO CREDIT AGREEMENT

      AMENDMENT NO. 3 to Credit Agreement (this "Amendment") entered into as of
October 1, 2003 among GENERAL BEARING CORPORATION (the "Borrower"), the Lenders
party hereto and KEYBANK NATIONAL ASSOCIATION, as Administrative Agent (the
"Administrative Agent").

      WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to the Credit Agreement dated as of December 20, 1999 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"); and

      WHEREAS, the obligations of the Borrower under the Credit Agreement are
guaranteed by the Subsidiary Guarantors party to the Guarantee and Collateral
Agreement dated as of December 20, 1999 (the "Guarantee Agreement") between the
Subsidiary Guarantors and the Administrative Agent; and

      WHEREAS, the Borrower has requested that the Lenders and the
Administrative Agent amend certain provisions of the Credit Agreement, and the
Lenders and the Administrative Agent have agreed to make such amendments subject
to the terms and conditions set forth herein; and

      WHEREAS, terms not otherwise defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement.

      NOW, THEREFORE, the parties hereto hereby agree as follows:

      1. Amendments to Credit Agreement.

      (a) Additional Definitions. Section 1.1 of the Credit Agreement is hereby
amended by adding the following new definitions in the appropriate alphabetical
order:

            "Account Receivable" means any right of the Borrower to payment for
      goods sold or services rendered, whether now existing or hereafter
      arising.

            "Amendment No. 3" means Amendment No. 3 to Credit Agreement, dated
      as of October 1, 2003, by and among the Borrower, the Lenders and the
      Administrative Agent.

            "Appraised Value" means the value of the Designated Machinery and
      Equipment as determined pursuant to the appraisal of the Designated
      Machinery and Equipment to be delivered to the Administrative Agent.

<PAGE>

            "Borrowing Base Amount" means, as of any date of determination, a
      sum equal to (a) the Borrowing Base Percentage of the book value of
      Eligible Receivables (less reserves with respect to such Eligible
      Receivables which the Administrative Agent may deem necessary in its sole
      discretion from time to time) based upon the Borrowing Base Certificate
      most recently delivered to the Administrative Agent under Section 6.2(i)
      plus (b) the Borrowing Base Percentage of the value (determined at the
      lower of cost (on a first-in, first-out basis in accordance with GAAP) or
      market value) of Eligible Inventory based upon the Borrowing Base
      Certificate most recently delivered to the Administrative Agent under
      Section 6.2(i) plus (c) the Borrowing Base Percentage of the Appraised
      Value of the Designated Machinery and Equipment. Notwithstanding anything
      to the contrary in this definition, (i) if the Borrower shall fail to
      deliver to the Administrative Agent a Borrowing Base Certificate on or
      prior to any date required hereby, the Borrowing Base Amount shall be
      deemed to be zero ($0.00) from and including such date to the date of
      delivery to the Administrative Agent of such Borrowing Base Certificate
      and (ii) each of the Borrower and each other Obligor acknowledges and
      agrees that the Administrative Agent reserves the right, in its sole
      discretion, to amend the percentages set forth in the definition of
      "Borrowing Base Percentage" and the eligibility requirements set forth in
      the definitions of "Eligible Inventory" and "Eligible Receivables" based
      on the results of the Collateral audits to be conducted pursuant to
      Section 6.12.

            "Borrowing Base Certificate" means a certificate, duly executed by a
      Responsible Officer of the Borrower and in the form of Exhibit A to
      Amendment No. 3.

            "Borrowing Base Commencement Date" means the second consecutive date
      on which the Consolidated Funded Debt Ratio shall have exceeded 2.75 to 1,
      provided the Administrative Agent, in its sole discretion, shall require
      such date to constitute the Borrowing Base Commencement Date.

            "Borrowing Base Percentage" means (a) with respect to Eligible
      Receivables, initially 80%, (b) with respect to Eligible Inventory,
      initially 60%, and (c) with respect to the Designated Machinery and
      Equipment, initially 40%, or, in each case, such percentage as the
      Administrative Agent shall determine from time to time.

            "Designated Machinery and Equipment" means the machinery and
      equipment of the Borrower subject to a fully perfected first priority


                                      -2-
<PAGE>

      security interest in favor of the Administrative Agent for the ratable
      benefit of the Lenders pursuant to the Guarantee and Collateral Agreement
      which is described on Exhibit B to Amendment No. 3.

            "Eligible Inventory" means Inventory subject to a fully perfected
      first priority security interest in favor of the Administrative Agent for
      the ratable benefit of the Lenders pursuant to the Guarantee and
      Collateral Agreement which is not on consignment from any third party and
      which conforms to the representations and warranties contained in herein,
      other than (a) obsolete or damaged Inventory, (b) Inventory consisting of
      samples, prototypes, demonstrators or otherwise not of a type held for
      sale in the ordinary course of the Borrower's business, (c) Inventory
      which in the reasonable judgment of the Administrative Agent is considered
      to be slow moving or otherwise not merchantable, (d) Inventory to be
      returned to suppliers, (e) except as approved in writing by the
      Administrative Agent, Inventory held by, or in transit to, third parties
      (including to warehouses), except for those locations set forth on
      Schedule 5 of the Guaranty and Collateral Agreement between Borrower and
      Administrative Agent, dated December 20, 1999, as amended, subject to
      Administrative Agent's receipt of such third party waivers or consents as
      the Administrative Agent may reasonably require, (f) any reserves
      reasonably required by the Administrative Agent for special order goods,
      market value declines, bill and hold (deferred shipment) sales, and any
      other matters in the reasonable determination of the Administrative Agent,
      (g) except as otherwise provided for herein, as approved in writing by the
      Administrative Agent, and for Inventory in transit to Borrower, Inventory
      which is not located on the Borrower's owned or leased premises in the
      United States, (h) Inventory not produced in compliance with the
      requirements of the Fair Labor Standards Act and (i) Inventory which has
      given rise to any Account Receivable which, at the time of determination
      of Eligible Inventory, constituted an Eligible Receivable.

            "Eligible Receivable" means an Account Receivable which conforms to
      the representations and warranties contained in herein and as to which the
      following requirements have been fulfilled to the reasonable satisfaction
      of the Administrative Agent: (a) the Borrower has lawful title to such
      Account Receivable, subject to the Lien granted to the Administrative
      Agent for the ratable benefit of the Lender pursuant to the Guarantee and
      Collateral Agreement; (b) such Account Receivable arose through the sale
      of finished goods or merchandise or the rendition of services by the
      Borrower; (c) the goods or merchandise, the sale of which gave rise to
      such Account Receivable, have been shipped, or the services, the rendition
      of which gave rise to such Account Receivable, have been performed; (d)
      such Account Receivable shall have had excluded


                                      -3-
<PAGE>

      therefrom (i) any portion that is subject to any dispute, offset,
      counterclaim or other claim or defense on the part of the account debtor
      or to any claim on the part of the account debtor denying liability with
      respect to such Account Receivable, and (ii) any returns, discounts,
      claims, credits and allowances; (e) no return, rejection or repossession
      of the merchandise in respect of such Account Receivable has occurred; (f)
      the Borrower has the full and unqualified right to assign and grant a
      security interest in such Account Receivable under and pursuant to the
      Guarantee and Collateral Agreement; (g) such Account Receivable is
      evidenced by an invoice rendered to the account debtor and no portion of
      such Account Receivable is evidenced by any chattel paper, promissory note
      or other instrument, unless each such chattel paper, promissory note or
      other instrument is delivered to the Administrative Agent, duly endorsed
      if necessary; (h) such Account Receivable is subject to a fully perfected
      first priority security interest in favor of the Administrative Agent for
      the ratable benefit of the Lenders pursuant to the Guarantee and
      Collateral Agreement; (i) no portion of such Account Receivable is subject
      to any security interest or Lien in favor of any Person other than the
      Lien granted to the Administrative Agent for the ratable benefit of the
      Lender pursuant to the Guarantee and Collateral Agreement or a Lien
      described in clause (e), (f), (g), (h) or (i) of Section 7.3; (j) such
      Account Receivable did not arise out of a transaction with a Subsidiary or
      any employee, officer, agent, director, shareholder or Affiliate of the
      Borrower; (k) the Borrower is not aware and has no reason to be aware of
      any reorganization, bankruptcy, receivership, custodianship, insolvency or
      other like condition in respect of the account debtor of such Account
      Receivable; (l) the account debtor with respect to such Account Receivable
      is not any foreign government, the United States of America, any State,
      political subdivision, department, agency or instrumentality thereof, (m)
      the Administrative Agent is, and continues to be, reasonably satisfied
      with the credit standing of the account debtor in relation to the amount
      of credit extended; (n) such Account Receivable is from an account debtor
      resident of the United States, Canada or Puerto Rico or (ii) such other
      jurisdiction as may be consented to by the Administrative Agent; and (o)
      such Account Receivable was not purchased or otherwise acquired by the
      Borrower other than through the sale of finished goods and merchandise or
      through the rendition of services by the Borrower. Notwithstanding
      anything to the contrary set forth in the loan documents, neither the
      Administrative Agent nor any Lender shall have a lien on, and Borrower
      shall be free to transfer, encumber or otherwise dispose of, with any
      third party, any Account Receivable from any entity in a foreign
      jurisdiction, which is not an Eligible Receivable.


                                      -4-
<PAGE>

            "Inventory" means all finished goods and other merchandise of the
      Borrower, whether now owned or hereafter acquired, held for sale,
      excluding, to the extent included therein, raw materials, intermediates,
      work-in-process, semi-finished inventory (other than work-in-process,
      semi-finished inventory and raw materials that solely require light
      assembly and packaging to complete), packaging materials, scrap inventory,
      manufacturing supplies and spare parts.

            "Responsible Officer" means, with respect to any Person, the
      president, chief financial officer, principal accounting officer,
      treasurer or controller of such Person.

            "Revolving Loan Commitment Amount" means, (a) for the period from
      October 1, 2003 to September 30, 2004, $23,000,000, and (b) for the period
      commencing on October 1, 2004 and ending on the Scheduled Revolving
      Termination Date, $21,000,000, in each case as the same may be reduced
      pursuant to Section 2.4.3 or 2.4.4.

      (b) Pricing Grid. Section 1.1 of the Credit Agreement is hereby amended by
deleting the definition of "Pricing Grid" and substituting the following
therefor:

            "Pricing Grid" means the pricing grid attached to Amendment No. 3 as
      Exhibit C.

      (c) Scheduled Revolving Termination Date. Section 1.1 of the Credit
Agreement is hereby amended by deleting the definition of "Scheduled Revolving
Termination Date" and substituting the following therefor:

            "Scheduled Revolving Termination Date" means July 31, 2006.

      (d) Revolving Commitments. Section 2.1.1 of the Credit Agreement is hereby
deleted in its entirety and the following substituted therefor:

            2.1.1. Revolving Commitments.

            From time to time on any Business Day occurring during the Revolving
      Commitment Period, each Revolving Lender will make revolving credit loans
      (relative to such Lender, its "Revolving Loans") to the Borrower in a
      principal amount equal to such Lender's Revolving Percentage of the
      aggregate amount of each Borrowing of Revolving Loans requested by the
      Borrower to be made on such day; provided, however, that no Revolving
      Lender shall be required to make any Revolving Loan if, after giving
      effect thereto, (x) the aggregate outstanding principal amount of such
      Lender's Revolving Extensions of Credit would exceed such Lender's
      Revolving Commitment or (y) the


                                      -5-
<PAGE>

      aggregate outstanding Revolving Extensions of Credit of all Lenders would
      exceed the Revolving Loan Commitment Amount as then in effect; and
      provided, further, that from and after Borrowing Base Commencement Date,
      in the sole discretion of the Administrative Agent and upon notice to the
      Borrower, no Lender shall be permitted or required to make any Revolving
      Loan if, after giving effect thereto, (x) the aggregate outstanding
      principal amount of such Lender's Revolving Extensions of Credit would
      exceed such Lender's Revolving Commitment or (y) the aggregate outstanding
      Revolving Extensions of Credit of all Lenders would exceed the lesser of
      (i) the Borrowing Base Amount and (ii) the Revolving Loan Commitment
      Amount as then in effect. During the Revolving Commitment Period the
      Borrower may use the Revolving Commitments by borrowing, prepaying the
      Revolving Loans in whole or in part, and reborrowing, all in accordance
      with the terms and conditions hereof. The Revolving Loans may from time to
      time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
      notified to the Administrative Agent in accordance with Sections 2.3 and
      2.5.

      (e) Letter of Credit Commitment. Clause (b) of Section 2.1.2 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:

                  (b) extend the Stated Expiry Date of an existing Letter of
      Credit previously issued hereunder, provided, however, that the Issuer
      will have no obligation to issue any Letter of Credit if, after giving
      effect to such issuance, (i) the Letter of Credit Outstandings would
      exceed the L/C Commitment Amount, (ii) the outstanding Acceptance
      Obligations would exceed the Acceptance Commitment Amount, or (iii) the
      aggregate outstanding Revolving Extensions of Credit of all Lenders would
      exceed the Revolving Loan Commitment Amount as then in effect provided,
      further, however, from and after Borrowing Base Commencement Date, in the
      sole discretion of the Administrative Agent and upon notice to the
      Borrower, the Issuer will have no obligation to issue any Letter of Credit
      if, after giving effect to such issuance, (i) the Letter of Credit
      Outstandings would exceed the L/C Commitment Amount, (ii) the outstanding
      Acceptance Obligations would exceed the Acceptance Commitment Amount, or
      (iii) the aggregate outstanding Revolving Extensions of Credit of all
      Lenders would exceed the lesser of (A) the Borrowing Base Amount and (B)
      the Revolving Loan Commitment Amount as then in effect. Furthermore, the
      Issuer shall not at any time be obligated to issue any Letter of Credit
      hereunder if such issuance would conflict with, or cause the Issuer or any
      L/C Participant to exceed any limits imposed by, any applicable
      Requirement of Law. Each Letter of Credit shall be denominated in Dollars.


                                      -6-
<PAGE>

      (f) Acceptance Commitments. Section 2.1.3 of the Credit Agreement is
hereby amended by deleting the further proviso set forth therein in its entirety
and substituting the following therefor:

      provided further that the Issuer will have no obligation to create any
      Acceptances if, after giving effect to such creation, (i) the Acceptance
      Obligations would exceed the Acceptance Commitment Amount or (ii) the
      aggregate outstanding Revolving Extensions of Credit of all Lenders would
      exceed (x) prior to the Borrowing Base Commencement Date, the Revolving
      Loan Commitment Amount as then in effect and (y) from and after Borrowing
      Base Commencement Date, in the sole discretion of the Administrative Agent
      and upon notice to the Borrower, the lesser of (A) the Borrowing Base
      Amount and (B) the Revolving Loan Commitment Amount as then in effect or
      (iii) the aggregate outstanding Revolving Extensions of Credit of all
      Lenders would exceed the Aggregate Available Revolving Commitment of all
      Lenders.

      (g) Mandatory Payments. Clause (a) of Section 2.4.3 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:

                  (a) Mandatory Prepayment of Revolving Loans. etc. If on any
      date (after giving effect to any other payments on such date) (i) the
      aggregate outstanding amount of all Revolving Extensions of Credit of all
      Lenders exceeds the Revolving Loan Commitment Amount as then in effect or
      (ii) if such date is on or after the Borrowing Base Commencement Date, the
      aggregate Revolving Extensions of Credit of all Lenders exceeds the
      Borrowing Base Amount as then in effect, the Borrower will make a
      mandatory prepayment on such date of Revolving Loans and, if necessary,
      cash collateralize the Letter of Credit Outstandings and the Acceptance
      Obligations in an aggregate amount equal to such excess. Notwithstanding
      the foregoing, if the excess described in clause (ii) of this paragraph
      2.4.3(a) existed immediately prior to the Borrowing Base Commencement
      Date, then Borrower shall have 120 days from the Borrowing Base
      Commencement Date to make the prepayment of such excess as required in
      this paragraph.

      (h) Certain Representations and Warranties. Article IV of the Credit
Agreement is hereby amended by adding the following new Section 4.25 to read in
its entirety as follows:

                SECTION 4.25 Accounts Receivables and Inventory.

                  (a) With respect to each Account Receivable: (i) no
      transaction giving rise to such Account Receivable violated or will
      violate any applicable federal, state or local law, rule or ordinance, the
      violation


                                      -7-
<PAGE>

      of which could reasonably be expected to have a Material Adverse Effect,
      (ii) each such Account Receivable is not subject to terms prohibiting the
      assignment thereof or requiring notice or consent to such assignment,
      except for notices and consents that have been obtained and (iii) each
      such Account Receivable represents a bona fide transaction which requires
      no further act on the Borrower's part to make such Account Receivable
      payable by the account debtor with respect thereto, and, to the Borrower's
      knowledge, such Account Receivable is not subject to any offsets or
      deductions other than credits to customers in the ordinary course of
      business and does not represent any inventory being held on consignment,
      guaranteed sale, sale or return or other similar understanding or any
      obligation of any Affiliate of the Borrower.

                  (b) With respect to all Inventory: Except as otherwise
      provided for herein or authorized by the Administrative Agent, (i) such
      Inventory is located at the premises of the Borrower set forth on Exhibit
      D to Amendment No. 3, (ii) no such Inventory is subject to any Lien other
      than Liens permitted by clause (e), (f), (g), (h) or (i) of Section 7.3,
      and (iii) except as permitted hereby, no such Inventory is on consignment
      or is now stored or shall be stored any time with a bailee, warehouseman
      or similar Person.

      (i) Conditions to Credit Extensions. Section 5.2 of the Credit Agreement
is hereby amended by adding a new clause (d) thereto to read in its entirety as
follows:

                  (d) At the time of and immediately after giving effect to such
      Credit Extension, the aggregate outstanding Revolving Extensions of Credit
      of all Lenders shall not exceed (i) if such Credit Extension shall occur
      prior to the Borrowing Base Commencement Date, the sum of the Revolving
      Loan Commitment Amount as then in effect, and (ii) if such Credit
      Extension shall occur on or after the Borrowing Base Commencement Date,
      the lesser of (x) the Borrowing Base Amount and (y) the sum of the
      Revolving Loan Commitment Amount as then in effect.

      (j) Quarterly Financial Statements. Section 6.1 of the Credit Agreement is
hereby amended by deleting clauses (a) and (b) thereof in their entirety and
substituting the following therefor:

            (a) Annual Financial Statements. As soon as available, but in any
      event within 90 days after the end of each Fiscal Year of the Borrower, a
      copy of the (i) audited consolidated statement of cash flow and (ii)
      audited consolidated and unaudited internally-prepared consolidating
      balance sheets and income statements of the Borrower and its consolidated
      Subsidiaries, as at the end of such year, setting forth in each case in
      comparative form the figures for the previous year, reported


                                      -8-
<PAGE>

      on without a "going concern" or like qualification or exception, or
      qualification arising out of the scope of the audit, by Urbach, Kahn &
      Werlin, LP or another firm of independent certified public accountants
      satisfactory to the Administrative Agent.

            (b) Quarterly Financial Statements. As soon as available, but in any
      event not later than 45 days after the end of each Fiscal Quarter of the
      Borrower, (i) unaudited consolidated statement of cash flow, (ii) the
      unaudited consolidated and consolidating balance sheets of the Borrower
      and its consolidated Subsidiaries, as at the end of such quarter and (iii)
      the related unaudited consolidated and consolidating statement of income
      for such quarter and the portion of the Fiscal Year through the end of
      such Fiscal Quarter, setting forth in each case in comparative form the
      figures for the previous Fiscal Year, certified as to Borrower only by a
      Responsible Officer as being fairly stated in all material respects
      (subject to normal year-end audit adjustments).

      (k) Borrowing Base Certificate. Section 6.2 of the Credit Agreement is
hereby amended by (i) deleting clause (a) thereof in its entirety and
substituting the following therefor:

            (a) Annual Certificate of Certified Public Accountants. Concurrently
      with the delivery of the financial statements referred to in Section
      6.1(a), a certificate of the independent certified public accountants
      reporting on such financial statements stating that (i) in making the
      examination necessary therefor no knowledge was obtained of any Default or
      Event of Default, except as specified in such certificate and (ii) the
      consolidating balance sheet and related consolidating statements of income
      and cash flows delivered with such financial statements were subjected to
      the auditing procedures applied in such accountants' audit of the
      consolidated balance sheet and related statements of income and cash flows
      and that the information set forth in such consolidating financial
      statements is fairly stated in all material respects in relation to such
      consolidated financial statements taken as a whole.

and (ii) adding a new clause (i) thereto to read in its entirety as follows:

                  (i) Borrowing Base Certificate. Commencing with the month in
      which the Borrowing Base Commencement Date occurs, within 10 Business Days
      after the last day of each fiscal month, a Borrowing Base Certificate duly
      completed and setting forth the calculations required thereby, as of such
      last day.

      (l) Certain Covenants. Article VI is hereby amended by adding new Sections
6.11 and 6.12 thereto to read in their entirety as follows:


                                      -9-
<PAGE>

                 SECTION 6.11 Information Regarding Collateral.

                  The Borrower will furnish to the Administrative Agent prompt
      written notice of any change in (i) the legal name of any Obligor, (ii)
      the jurisdiction of organization of any Obligor, (iii) the location of the
      chief executive office of any Obligor, its principal place of business,
      any office in which it maintains books or records relating to Collateral
      owned or held by it or on its behalf or any office or facility at which
      Collateral owned or held by it or on its behalf is located (including the
      establishment of any such new office or facility), (iv) the identity or
      organizational structure of any Obligor such that a filed financing
      statement becomes misleading or (v) the organizational identification
      number or the Federal Taxpayer Identification Number of any Obligor. The
      Borrower shall not effect or permit any change referred to in the
      preceding sentence unless all filings have been made under the Uniform
      Commercial Code or otherwise that are required in order for the
      Administrative Agent to continue at all times following such change to
      have a valid, legal and perfected security interest in all the Collateral.
      The Borrower shall promptly notify the Administrative Agent if any
      material portion of the Collateral is damaged or destroyed.

                       SECTION 6.12 Collateral Monitoring.

                  The Borrower shall permit the Administrative Agent or any
      agent of the Administrative Agent to perform, with such frequency as the
      Administrative Agent may determine in its reasonable discretion or as the
      Required Lenders may require, any field examination, Collateral analysis,
      Collateral audit or other business analysis or audit relating to the
      Borrower and the Subsidiaries, provided that the first such Collateral
      audit shall be completed on or before September 19, 2003 and the second
      such Collateral audit shall be completed on or before June 19, 2004. The
      Borrower shall pay to the Administrative Agent, promptly after demand
      therefor, (i) all reasonable out-of-pocket costs and expenses incurred by
      the Administrative Agent in connection with any such examination, analysis
      or audit and (ii) in the event that any such examination, analysis or
      audit is conducted by the Administrative Agent, any Affiliate of the
      Administrative Agent or any officer, employee, agent or advisor of the
      Administrative Agent or such Affiliate, a reasonable fee per day for each
      person employed in connection with such examination, analysis or audit.

      (m) Financial Covenants. Section 7.1 of the Credit Agreement is hereby
deleted in its entirety and the following substituted therefor:

                   SECTION 7.1 Financial Condition Covenants.


                                      -10-
<PAGE>

                  (a) Consolidated Funded Debt Ratio. The Borrower shall not
      permit the Consolidated Funded Debt Ratio as of the last day of any Fiscal
      Quarter occurring during any period set forth below to be greater than the
      ratio set forth opposite such period:

<TABLE>
<CAPTION>
                                                                                      Consolidated
                                 Period                                             Funded Debt Ratio
                                 ------                                             -----------------

<S>                                                                                     <C>
      The Fiscal Quarter beginning on or closest to October 1, 2002 through (and
      including) the Fiscal Quarter ending on or closest to June 30, 2003               4.00 to 1

      The Fiscal Quarter beginning on or closest to July 1, 2003 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2003          3.25 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2005          3.00 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2005 and
      thereafter                                                                        2.75 to 1
</TABLE>

      provided, however, in determining the Consolidated Funded Debt Ratio for
      each Fiscal Quarter commencing with the Fiscal Quarter beginning on or
      closest to October 1, 2001, "Consolidated Funded Debt" and "Consolidated
      EBITDA" (including, without limitation, "Consolidated Net Income") shall
      be calculated solely in respect of the Borrower on a non-consolidated
      basis.

                  (b) Consolidated Fixed Charge Coverage Ratio. The Borrower
      shall not permit the Consolidated Fixed Charge Coverage Ratio as of the
      last day of any Fiscal Quarter occurring during any period set forth below
      to be less than the ratio set forth below opposite such period:


                                      -11-
<PAGE>

<TABLE>
<CAPTION>
                                                                                   Consolidated Fixed
                                 Period                                          Charge Coverage Ratio
                                 ------                                          ---------------------
<S>                                                                                     <C>
      The Fiscal Quarter beginning on or closest to October 1, 2001 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2003          1.20 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2004          2.00 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2004 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2005          2.50 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2005 and
      thereafter                                                                        3.00 to 1
</TABLE>

      provided, however, in determining the Consolidated Fixed Charge Coverage
      Ratio for each Fiscal Quarter commencing with the Fiscal Quarter beginning
      on or closest to October 1, 2001, "Consolidated EBITDA" (including,
      without limitation, "Consolidated Net Income"), income tax expense and
      "Consolidated Fixed Charges" (including, without limitation, "Consolidated
      Interest Expense") shall be calculated solely in respect of the Borrower
      on a non-consolidated basis.

                  (c) Consolidated Interest Coverage Ratio. The Borrower shall
      not permit the Consolidated Interest Coverage Ratio as of the last day of
      any Fiscal Quarter occurring during any period set forth below to be less
      than the ratio set forth below opposite such period:

<TABLE>
<CAPTION>
                                                                                   Consolidated Interest
                                 Period                                                Coverage Ratio
                                 ------                                                --------------
<S>                                                                                       <C>
      The Fiscal Quarter beginning on or closest to October 1, 2001 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2003            2.00 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2003 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2004            3.50 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2004 through (and
      including) the Fiscal Quarter ending on or closest to September 30, 2005            4.00 to 1

      The Fiscal Quarter beginning on or closest to October 1, 2005 and
      thereafter                                                                          4.50 to 1
</TABLE>


                                      -12-
<PAGE>

      provided, however, in determining the Consolidated Interest Coverage Ratio
      for each Fiscal Quarter commencing with the Fiscal Quarter beginning on or
      closest to October 1, 2001, "Consolidated EBIT" (including, without
      limitation, "Consolidated Net Income") and "Consolidated Interest Expense"
      shall be calculated solely in respect of the Borrower on a
      non-consolidated basis.

                  (d) Net Income. The Borrower shall not permit consolidated net
      income of the Borrower from its consolidated non-U.S. operations and
      Foreign Subsidiaries for any fiscal year (excluding discontinued
      operations), commencing with the fiscal year ending on or closest to
      December 31, 2003, to be less than $1.00.

      (n) Fundamental Changes. Section 7.4 of the Credit Agreement is hereby
amended by adding a new clause (d) thereto to read in its entirety as follows:

                  (d) the Borrower may Dispose of the discontinued operations
      and the related assets of its Subsidiary World Machinery Company, on such
      terms as may be reasonably acceptable to the Administrative Agent.

      (o) Dispositions of Property. Section 7.5 of the Credit Agreement is
hereby amended by deleting clause (c) thereof in its entirety and substituting
the following therefor:

                  (c) Dispositions permitted by Sections 7.4(c) and 7.4(d);

      (p) Investments. Section 7.8 of the Credit Agreement is hereby amended by
(i) deleting clause (e) thereto in its entirety and substituting therefor
"[Intentionally Deleted]" and (ii) deleting clauses (h) and (i) thereto in their
entirety and substituting the following therefor:

                  (h) Investments by the Borrower or any of its Domestic
      Subsidiaries in Foreign Subsidiaries and other Affiliates of the Borrower
      in an aggregate amount not to exceed for any Fiscal Year set forth below
      the amount set forth below opposite such Fiscal Year:


                                      -13-
<PAGE>

                                                              Aggregate Amount
                       Fiscal Year                             of Investment
                       -----------                             -------------

      Fiscal Year 2003                                          $1,750,000

      Fiscal Year 2004 and each Fiscal Year thereafter          $1,000,000

      provided, however, that both before and after giving effect to such
      Investment, no Default shall exist or result therefrom.

                  (i) Investments in an aggregate amount not to exceed
      $2,000,000 consisting of the repurchase of common stock of the Borrower in
      transactions in accordance with all applicable law; provided that, both
      before and after giving effect to each such repurchase, (i) the
      Consolidated Funded Debt Ratio as of the last day of the most recently
      ended Fiscal Quarter (calculated as if such repurchase occurred on such
      last day) shall be less than 2.50 to 1 and (ii) no Default shall exist or
      result therefrom.

      (q) General. All references to "this Agreement" in the Credit Agreement
and to "the Credit Agreement" in the other Loan Documents shall be deemed to
refer to the Credit Agreement as amended by this Amendment.

      2. Effectiveness of Amendment.

      (a) The effectiveness of this Amendment is subject to the satisfaction of
the following conditions:

            (i) The Administrative Agent shall have received a counterpart of
this Amendment executed by the Borrower.

            (ii) The Administrative Agent shall have received counterparts of
the Consent and Acknowledgment of Subsidiary Guarantors annexed hereto by each
of the Subsidiary Guarantors.

            (iii) The Administrative Agent shall have received a certificate
from the secretary, assistant secretary, managing member or general partner of
the Borrower and each Subsidiary Guarantor attaching (A) a true and complete
copy of the resolutions of its board of directors or other managing body and of
all documents evidencing all necessary corporate action (in form and substance
satisfactory to the Administrative Agent) taken by it to authorize this
Amendment and the transactions contemplated hereby, (B) attaching a true and
complete copy of its Organic Documents, (C) setting forth the incumbency of its
officer or officers or other analogous counterpart who may sign this Amendment,
including therein a signature specimen of such officer or officers and (D)
attaching a certificate of good standing of the Secretary of State of the
jurisdiction of its formation and of each other jurisdiction in which it is
qualified to do business.


                                      -14-
<PAGE>

            (iv) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Amendment No. 3 Effective Date) from an attorney satisfactory to the
Administrative Agent, on behalf of the Obligors, covering such matters relating
to this Amendment and the Loan Documents as the Administrative Agent shall
reasonably request. The Borrower hereby requests such counsel to deliver such
opinion.

            (v) The Administrative Agent shall have received a fee, for the
benefit of each Lender executing and delivering a counterpart of this Amendment
to the Administrative Agent, equal to 0.375% of such Lender's Commitment.

            (vi) The Administrative Agent shall have received such other
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Obligor, the authorization of the transactions contemplated by this
Amendment and any other legal matters relating to the Obligors, this Amendment,
the Loan Documents or the transactions contemplated hereby, all in form and
substance satisfactory to the Administrative Agent and its counsel.

      (b) This Amendment shall become effective as of October 1, 2003 (the
"Amendment No. 3 Effective Date") when the conditions set forth in Section 2(a)
hereof have been satisfied.

      3. Acknowledgments and Confirmations. The Borrower and each Subsidiary
Guarantor acknowledges and confirms that the Liens granted pursuant to the Loan
Documents secure, without limitation, the Indebtedness, liabilities and
obligations of the Borrower to the Administrative Agent and the Lenders under
this Amendment, whether or not so stated in the Loan Documents, and that the
term "Obligations" as used in the Loan Documents (or any other term used therein
to refer to the Indebtedness, liabilities and obligations of the Borrower to the
Administrative Agent or any of the Lenders) includes, without limitation, the
Indebtedness, liabilities and obligations to the Administrative Agent and the
Lenders under the Credit Agreement as amended by this Amendment.

      4. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that:

            (a) The representations and warranties set forth in the Loan
Documents (other than the representations and warranties made as of a specific
date) are true and correct in all material respects as of the date hereof and
with the same effect as though made on and as of the date hereof, except for
such matters as are set forth in a certificate of an Authorized Officer of the
Borrower to be delivered to the Administrative Agent within 60 days after the
Amendment No. 3 Effective Date; provided that none of the matters set forth in
such certificate shall disclose any material adverse fact or condition
concerning the business, assets, operations or financial condition of the


                                      -15-
<PAGE>

Borrower and its Subsidiaries occurring since the date of the Credit Agreement
not disclosed to the Administrative Agent in writing prior to the Amendment No.
3 Effective Date.

            (b) No Default or Event of Default and no event or condition which,
with the giving of notice or lapse of time or both, would constitute such a
Default or Event of Default, now exists or would exist.

            (c) (i) The execution, delivery and performance by the Borrower of
this Amendment is within its organizational powers and have been duly authorized
by all necessary action (corporate or otherwise) on the part of the Borrower,
(ii) this Amendment is the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, and (iii) neither
this Amendment nor the execution, delivery and performance by the Borrower
hereof: (A) contravenes the terms of the Borrower's organization documents, (B)
conflicts with or results in any breach or contravention of, or the creation of
any Lien under, any document evidencing any contractual obligation to which the
Borrower is a party or any order, injunction, writ or decree to which the
Borrower or its property is subject, or (C) violates any requirement of law.

      5. Effect; No Waiver. Except as specifically set forth herein, the Credit
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their terms and are hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of the Administrative Agent or the Lenders
under the Credit Agreement, nor constitute a waiver of any provision of the
Credit Agreement, except as specifically set forth herein.

      6. Miscellaneous.

            (a) The Borrower shall pay the Administrative Agent upon demand for
all reasonable expenses, including reasonable attorneys' fees and expenses of
the Administrative Agent, incurred by the Administrative Agent in connection
with the preparation, negotiation and execution of this Amendment.

            (b) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

            (c) This Amendment shall be binding upon the Borrower, the
Administrative Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Administrative
Agent and the Lenders and the respective successors and assigns of the
Administrative Agent and the Lenders.


                                      -16-
<PAGE>

            (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.]


                                      -17-
<PAGE>

      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: President


                                      KEYBANK NATIONAL ASSOCIATION,
                                      as Administrative Agent, Issuer and Lender

                                      By: /s/ Joseph F. Markey
                                          --------------------------------------
                                      Name: Joseph F. Markey
                                      Title: Senior Vice President


                 General Bearing Amendment No. 3 Signature Page
<PAGE>

                           CONSENT AND ACKNOWLEDGMENT
                            OF SUBSIDIARY GUARANTORS

      Each of the undersigned Subsidiary Guarantors hereby (1) consents to the
execution and delivery by the Borrower of the foregoing Amendment; (2) agrees
that the definition of "Obligations" (and any other term referring to the
indebtedness, liabilities and obligations of the Borrower to the Administrative
Agent or any of the Lenders) in the Guarantee Agreement and the other Loan
Documents shall include the Indebtedness of the Borrower under the Amendment;
(3) agrees that the definition of "Credit Agreement" in the Guarantee Agreement
and the other Loan Documents to which it is a party is hereby amended to mean
the Credit Agreement as amended by the foregoing Amendment; (4) reaffirms its
continuing liability under its Guarantee Agreement (as modified hereby); and (5)
confirms and agrees that it is a Subsidiary Guarantor party to the Guarantee
Agreement and that the Guarantee Agreement and the other Loan Documents to which
it is a party are, and shall continue to be, in full force and effect in
accordance with their respective terms.


                                                WORLD MACHINERY COMPANY

                                                By: /s/ David L. Gussack
                                                    ----------------------------
                                                Name: David L. Gussack
                                                Title: Secretary and Treasurer


                                                WMW MACHINERY COMPANY, INC.

                                                By: /s/ David L. Gussack
                                                    ----------------------------
                                                Name: David L. Gussack
                                                Title: Secretary


                                                CHINA BEARING CENTER, INC.

                                                By: /s/ David L. Gussack
                                                    ----------------------------
                                                Name: David  L. Gussack
                                                Title: Vice President


                                                NN GENERAL, LLC

                                                By: /s/ David L. Gussack
                                                    ----------------------------
                                                Name: David L. Gussack
                                                Title: General Manager


                 General Bearing Amendment No. 3 Signature Page
<PAGE>

                                    EXHIBIT A
                                       TO
                                 AMENDMENT NO. 3

                        FORM OF BOROWING BASE CERTIFICATE

                               [SEE ATTACHED FORM]

<PAGE>

                           BORROWING BASE CERTIFICATE

KeyBank National Association, as
Administrative Agent
711 Westchester Avenue
White Plains, New York 10604
Attention: Joseph F. Markey

      Pursuant to the Credit Agreement, dated as of December 20, 1999 (as the
same may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), by and among GENERAL BEARING CORPORATION, (the "Borrower"),
the Lenders party thereto and KEYBANK NATIONAL ASSOCIATION, as Administrative
Agent (in such capacity, the "Administrative Agent"), the undersigned hereby
certifies the truth, accuracy and completeness of the following information as
of the close of business on ___________ __, 200_. All of the terms used herein
without definition have the meanings given them in the Credit Agreement.

         Eligible Receivables                   (in thousands)

         (1)      Total Accounts Receivable
                  (as of the date hereof)                             __________

         (2)      Ineligible Accounts Receivable
         (including all required reserves)                            __________

         (3)      Total Eligible Receivables
         (item (1) minus item (2))                                    __________

         (4)      80% of item (3)                                     __________

         Eligible Inventory

         (5)      Total Inventory excluding (valued at lower
         of cost or market as of the date hereof)                     __________

         (6)      Ineligible Inventory                                __________

         (7)      Total Eligible Inventory (item (5) minus item (6))  __________

         (8)      60% of item (7)                                     __________

         Designated Machinery and Equipment

         (9)      Appraised Value of Designated Machinery
         and Equipment                                                __________

         (10)     40% of item (9)                                     __________

<PAGE>

         Borrowing Base Amount

         (11)     Total (item (4) plus item (8) plus item (10))       __________

         Revolving Loans Outstanding:

         (12)     Aggregate principal amount of Revolving
         Loans outstanding                                            __________

         Letter of Credit Outstandings:

         (13)     Aggregate Letter of Credit Outstandings of
                  all Lenders                                         __________

         Acceptance Obligations:

         (14)     Aggregate Acceptance Obligations of all Lenders     __________

         Excess (Deficit) Borrowing Base:

         (15)     Item (11) minus the sum of: item (12) plus
         item (13) plus item (14)                                     __________

The undersigned has executed this certificate as of the __th day of
_____________, 200_.


                                                     ___________________________
                                                     Name:  ____________________
                                                     Title: ____________________

<PAGE>

                                    EXHIBIT B
                                       TO
                                 AMENDMENT NO. 3

                       DESIGNATED MACHINERY AND EQUIPMENT

2 - Kingsbury Automatic U-Joint Cup Assembly Machines

<PAGE>

                                    EXHIBIT C
                                       TO
                                 AMENDMENT NO. 3

                                  PRICING GRID

<TABLE>
----------------------------------------------------------------------------------------------------------
                                                Applicable Margin for
Consolidated Funded Debt Ratio                     Revolving Loans
                                     --------------------------------------------
                                     Eurodollar      ABR Loans         Revolving         Applicable Margin
                                       Loans                           Commitment           for Bankers
                                                                       Fee Rates            Acceptances
----------------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>               <C>                   <C>
Less than or equal to 2.50 to 1        1.75%           0.50%             0.375%                1.75%

----------------------------------------------------------------------------------------------------------
greater than 2.50 to 1 and less        2.00%           0.75%             0.375%                2.00%
than or equal to 3.00 to 1

----------------------------------------------------------------------------------------------------------
greater than 3.00 to 1 and less        2.25%           1.00%             0.375%                2.25%
than or equal to 3.50 to 1

----------------------------------------------------------------------------------------------------------
greater than 3.50 to 1                 2.75%           1.75%             0.375%                2.27%

----------------------------------------------------------------------------------------------------------
</TABLE>

If any financial statements referred to in Section 6.1 of the Credit Agreement
are not delivered within the time periods specified therein, then, until such
financial statements are delivered, the Consolidated Funded Debt Ratio as at the
end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 3.50 to 1.0. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Funded Debt Ratio shall for the purposes of this
definition be deemed to be greater than 3.50 to 1.0. Each determination of the
Consolidated Funded Debt Ratio pursuant to this Pricing Grid shall be made with
respect to (or, in the case of Consolidated Funded Debt, as at the end on the
period of four consecutive Fiscal Quarters of the Borrower ending at the end of
the period covered by) the relevant financial statements except to the extent
otherwise provided in the Credit Agreement.

<PAGE>

                                    EXHIBIT D
                                       TO
                                 AMENDMENT NO. 3

                              LOCATION OF INVENTORY

General Bearing Corporation
44 High Street
West Nyack, NY 10994

</TEXT>
</DOCUMENT>
</SUBMISSION>
