SECOND AMENDMENT TO
CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second
Amendment") dated as of March 12, 2009 made by and among A.T. CROSS
COMPANY, a Rhode Island corporation (the "Borrower"), A.T. CROSS
LIMITED, a corporation organized under the laws of England and
Wales ("Cross UK"), BANK OF AMERICA N.A., as Administrative Agent
("Agent") L/C Issuer and Lender, and BANK OF AMERICA, N.A. ("London
Branch) ("UK Lender").
Background
The Borrower, Cross UK, the Agent and the UK Lender entered into
a credit agreement dated as of March 24, 2008, which credit
agreement was amended by first amendment to credit agreement dated
March 24, 2008 (such credit agreement, as amended by such first
amendment the "Original Credit Agreement"). The Borrower and Cross
UK have requested that the Agent and the UK Lender, among other
things, change the definition of Consolidated EBITDA to account for
certain restructuring charges, change the Tangible Net Worth
financial covenant with respect to the level and the frequency of
the test, increase the permitted amount of stock repurchases and
provide time for one of the Borrower '
s Subsidiaries to move its deposit accounts to the Agent.
NOW, THEREFORE, in consideration of the promises and the
agreements, provisions and covenants herein contained, the
Borrower, the Agent and the Lender hereby agree as follows:
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1.
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Amendment . Subject to the terms and conditions herein
contained and in reliance on the representations and warranties of
the Borrower herein contained, effective upon satisfaction of the
conditions precedent contained in section 2 below, the following
amendment shall be incorporated into the Original Credit
Agreement:
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(A)
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Section 1.01 of the Original Credit Agreement is hereby amended
to delete the definition of "Applicable Margin" in its entirety and
to insert the following in lieu thereof:
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" Applicable Margin " shall mean, for each category
below, the percentage set forth under the relevant column heading
below:
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Level
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Total Funded
Debt / EBITDA Ratio
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Commitment Fee
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Applicable Margin for
LIBOR Loans
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Letter of
Credit Fee
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Applicable
Margin for Base
Rate Loans
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I
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Greater than or equal to 1.75x
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0.875%
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3.00%
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3.00%
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1.25%
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II
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Greater than or equal to 1.50x
but less than 1.75x
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0.875%
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2.75%
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2.75%
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1.25%
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III
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Greater than or equal to 1.25x but less than 1.50x
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0.750%
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2.50%
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2.50%
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1.00%
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IV
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Less than 1.25x
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0.750%
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2.25%
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2.25%
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1.00%
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For the period commencing on the Closing Date and ending on the
third (3 rd ) Business Day after the Administrative
Agent '
s receipt, pursuant to Section 6.01(b), of the Officer '
s Certificate for the Borrower '
s fiscal quarter ending March 31, 2009, a per annum percentage
equal to that specified for Level II above, and thereafter as of
any date, so long as no Default or Event of Default exists and is
continuing and subject to the terms of this definition, the
applicable per annum percentage set forth above; provided ,
that if any Default or Event of Default exists and is continuing
the applicable per annum percentage shall be that specified for
Level I above. Changes in the Applicable Margin resulting from
changes in the Consolidated Leverage Ratio shall become effective
on the date (the " Adjustment Date ") that is three (3)
Business Days after the date on which financial statements are
delivered to the Administrative Agent pursuant to Section 6.01(b)
and shall remain in effect until the next change to be effected
pursuant to this paragraph; provided that interest rate
reductions shall become final only on the basis of the Borrower
'
s annual audited financial statements and (a) in the event that
such annual audited financial statements establish that the
Borrower was not entitled to a rate reduction which was previously
granted, the Borrower shall, upon written demand by the
Administrative Agent, repay to the Administrative Agent an amount
equal to the excess of (i) interest at the rate which should have
been charged based on such annual audited financial statement(s)
and (ii) the rate actually charged on the basis of the Borrower
'
s quarterly financial statement(s) and (b) in the event that such
annual audited financial statements establish the Borrower was
entitled to a rate reduction which was previously not granted, the
Agent shall, upon written demand by the Borrower, apply the excess
of (i) the rate actually charged on the basis of the Borrower
'
s quarterly financial statement(s) and (ii) interest at the rate
which should have been charged based on such annual audited
financial statement(s), to the payment of principal outstanding;
provided , that in the event that the Borrower fails to
provide any financial statements or Officer '
s Certificate on a timely basis in accordance with Section 6.01(b),
the per annum percentage shall be that specified for Level I above
until delivered, and any interest rate increase payable as a result
thereof shall be retroactively effective to the date on which the
financial statements or Officer '
s Certificate, as the case may be, should have been received by the
Administrative Agent in accordance with Section 6.01(b) and the
Borrower shall pay any amount due as a result thereof upon written
demand from the Administrative Agent. In addition, at all times
while an Event of Default shall have occurred and be continuing,
the per annum percentage specified in Level I above shall apply.
Each determination of the Consolidated Leverage Ratio pursuant to
the grid above shall be made in a manner consistent with the
determination thereof pursuant to Section 6.01(b).
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(B)
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Section 1.01 of the Original Credit Agreement is hereby amended
to delete the definition of " Consolidated EBITDA " in its
entirety and to insert the following in lieu thereof:
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" Consolidated EBITDA " means, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, an amount
equal to Consolidated Net Income for such period plus (a)
the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Interest Charges for such
period, (ii) the provision for Federal, state, local and foreign
income taxes payable by the Borrower and its Subsidiaries for such
period, (iii) depreciation and amortization expense, (iv) any
extraordinary losses, (v) all non-cash expenses associated with the
LIFO treatment of Inventory, (vii) non-cash charges related to
compensation expense, (viii) restructuring charges, up to
$1,500,000 in cumulative aggregate for the Borrower '
s fiscal years ending December 31, 2008 and December 31, 2009,
incurred by the Borrower and its Subsidiaries for such period with
respect to moving their manufacturing operations to Cross China
(provided any add back for any restructuring charge shall be taken
in the quarter during which such restructuring charge is assessed),
(ix) restructuring charges of up to $2,500,000 in the cumulative
aggregate for use only in the Borrower '
s test period ending December 31, 2008 incurred by the Borrower and
its Subsidiari
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