AMENDMENT NUMBER ONE TO CREDIT AGREEMENT dated as of August 14, 2008 between TRANSCAT, INC. and JPMORGAN CHASE BANK, N.A.
Exhibit 10.1
AMENDMENT NUMBER ONE TO CREDIT AGREEMENT
dated as of August 14, 2008
between
TRANSCAT, INC.
and
JPMORGAN CHASE BANK, N.A.
Upon
request, Transcat, Inc. will furnish supplementally a copy of the
amended Schedules to the Credit Agreement referenced in paragraph
2.G. of this Amendment Number One to Credit Agreement to the
Securities and Exchange Commission.
AMENDMENT NUMBER ONE TO CREDIT AGREEMENT
This Amendment Number One to Credit Agreement (“Amendment”), dated as of August 14,
2008, is made by and between TRANSCAT, INC. (the “Borrower”) and JPMORGAN CHASE BANK, N.A.
(the “Lender”).
Statement of the Premises
The Borrower and the Lender have previously entered into, among other agreements, a Credit
Agreement, dated as of November 21, 2006 (the “Credit Agreement”). Borrower has advised
the Lender that Borrower is in active negotiations regarding the acquisition by Borrower, through a
newly formed wholly-owned subsidiary, Transcat Acquisition Corp. (the “Acquisition Sub”),
of Westcon, Inc. (“Westcon”) for a purchase price of up to $8,000,000.00, which may be paid
by a combination of cash (which may include a holdback or earnout) and the common stock of the
Borrower (the “Westcon Acquisition”). The Borrower and the Lender desire to amend the
Credit Agreement in contemplation of such acquisition as referenced herein.
Statement of Consideration
Accordingly, in consideration of the premises and under the authority of Section 5-1103 of the
New York General Obligations Law, the parties agree as follows:
Agreement
1. Defined Terms. The terms “this Agreement”, “hereunder” and similar
references in the Credit Agreement shall be deemed to refer to the Credit Agreement as amended by
this Amendment. Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.
2. Amendment. Effective upon the satisfaction of all conditions specified in Section 4
hereof, the Credit Agreement is hereby amended as follows:
A. The grid contained in the Definition of “Applicable Rate”, as set forth in Section
1.01 of the Credit Agreement, is hereby superseded and replaced in its entirety and amended to read
as follows:
| ABR Plus ABR | Eurodollar Plus | Commitment Fee | ||||||||||
| Leverage Ratio | Spread of | Eurodollar Spread of | Rate | |||||||||
Category 1 >= 2.5 x |
0 | 2.40 | % | .35 | % | |||||||
Category 2 > = 2.0 x and < 2.5 x |
0 | 2.15 | % | .35 | % | |||||||
Category 3 > = 1.5 x and < 2.0 x |
0 | 1.60 | % | .30 | % | |||||||
Category 4 > = 1.0 x and < 1.5 x |
0 | 1.25 | % | .20 | % | |||||||
Category 5 Less than 1.0 x |
-.45 | % | .90 | % | .20 | % | ||||||
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B. The Definition of “Commitment” as set forth in Section 1.01 of the Credit Agreement
is hereby amended so that the figure “$10,000,000” contained therein is superseded and replaced in
its entirety with “$15,000,000”.
C. The Definition of “Maturity Date” as set forth in Section 1.01 of the Credit
Agreement is hereby amended so that the date “November 21, 2009” contained therein is superseded
and replaced in its entirety with “August 14, 2011”.
D. The following Definitions are hereby added to Section 1.01 of the Credit Agreement in the
appropriate alphabetical order:
“Amendment No. 1” means that certain Amendment Number One to Credit
Agreement dated as of August 14, 2008 between Borrower and Lender.
“Westcon Acquisition” means the acquisition by Borrower, through its
subsidiary, Transcat Acquisition Corp. (“Westcon Acquisition Sub”) of Westcon, Inc.
for a purchase price of up to $8,000,000, which may be paid in a combination of cash
(which may include a holdback or earnout) and common stock of the Borrower pursuant
to that certain Agreement and Plan of Merger dated as of August 14, 2008 by and
among Westcon, Inc., the Borrower, Westcon Acquisition Sub and Xxxxx Xxxxxxxx (the
“Merger Agreement”).
E. Section 6.01 of the Credit Agreement, entitled “Indebtedness”, is hereby amended so
that the following subsection (i) is added to the end thereof:
(i) Indebtedness of Borrower or Westcon Acquisition Sub consisting of
Holdback Cash Payments or other adjustments to the Cash Merger Consideration
pursuant to the terms of the Merger Agreement and/or earnout payments as set
forth in that certain Earnout Agreement between Borrower and Xxxxx Xxxxxxxx,
all in connection with the Westcon Acquisition, provided such Indebtedness
is fully subordinate to the Indebtedness owed to the Lender on terms
satisfactory to the Lender.
F. Section 6.04 of the Credit Agreement, entitled “Investments, Loans, Advances,
Guarantees and Acquisitions”, is hereby further amended so that the following subsection (m) is
added to the end thereof:
(m) The Westcon Acquisition, subject to the terms, covenants and conditions of Amendment No.
1.
G. The Schedules to the Credit Agreement are hereby amended so that they are deleted and
replaced in their entirety with the Schedules attached to this Amendment.
3. Representations. The Borrower hereby represents and warrants to the Lender that:
(i) the covenants, representations and warranties set forth in the Credit Agreement are true and
correct on and as of the date of execution hereof as if made on and as of said date and as if each
reference therein to the Credit Agreement were a reference to the Credit Agreement as amended by
this Amendment; (ii) no Default or Event of Default specified in the Credit Agreement has occurred
and is continuing, (iii) since the date of the Credit Agreement, there has been no material adverse
change in the financial condition or business operations of the Borrower which has not been
disclosed to Lender; (iv) the making and performance by the Borrower of this Amendment have been
duly authorized by all necessary corporate action, and do not, and will not, (a) contravene the
Borrower’s certificate of incorporation or by-laws, (b) violate any law, including without
limitation the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, or any rule, regulation (including Regulations T, U or X of the Board
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of Governors of the Federal Reserve System) order, writ, judgment, injunction, decree,
determination or award, and (c) conflict with or result in the breach of, or constitute a default
under, any material contract, loan agreement, indenture, note, mortgage, deed of trust or any other
material instrument or agreement binding on the Borrower or any Subsidiary or any of their
properties or result in or require the creation or imposition of any lien upon or with respect to
any of their properties; (v) this Amendment has been duly executed and delivered by the Borrower
and is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms; (vi) no authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other third party is required
for (a) the due execution, delivery or performance by the Borrower of this Amendment or any other
agreement or document related hereto or contemplated hereby to which the Borrower is or is to be a
party or otherwise bound except for required filings and approvals under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 and the rules and regulations thereunder, or (b) to the best of
the Borrower’s knowledge, the exercise by Lender of its rights under the Credit Agreement as
modified by this Amendment; and (vii) the security interests and charges granted by the Borrower
and its Subsidiary pursuant to the Security Agreements continue to constitute valid, binding and
enforceable, first in priority Liens on the Collateral, subject only to Liens permitted under the
terms of the Security Agreements and Credit Agreement.
4. Conditions of Effectiveness. The effectiveness of each and all of the modifications
contained in the Amendment is subject to the satisfaction, in form and substance satisfactory to
the Lender, of each of the following conditions precedent:
A. Lender shall have received 4 duplicate original counterparts of this Amendment executed by
Borrower and Lender.
B. Lender shall have received 1 original Replacement Revolving Credit Note in form
satisfactory to Lender.
C. Lender shall have received a secretarial certificate of the Borrower in a form reasonably
acceptable to Lender, certifying as true and accurate, copies of the organizational documents and
the incumbency of officers of the Borrower, and attaching authorizing resolutions for the Westcon
Acquisition and the incurrence of additional indebtedness under the Credit Agreement.
D. Lender shall have received a true, correct and complete copy of the Merger Agreement
covering the Westcon Acquisition and all Westcon Disclosure Schedules, which Merger Agreement shall
be satisfactory to the Lender.
E. Lender shall have received an amendment to Borrower’s pledge security agreement with
respect to the stock of Westcon Acquisition Sub, together with the original stock certificate
accompanied by an executed stock power in blank.
F. Lender shall have received appropriate UCC searches against Westcon.
G. Lender shall have received (i) a guaranty from Westcon Acquisition Sub, (ii) a security
agreement from Westcon Acquisition Sub, and (iii) an officer’s certificate from Westcon Acquisition
Sub evidencing the authorization of the guaranty and security agreements, all in form satisfactory
to Lender.
H. As of the effective date of this Amendment, no Default or Event of Default shall have
occurred and be continuing.
I. The representation and warranties contained in Section 3 hereof and in the Credit Agreement
shall be true, correct and complete as of the effective date of this Amendment as though made on
such date.
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J. The Lender shall have received such other approvals or documents as the Lender may
reasonably request, and all legal matters incident to the foregoing shall be satisfactory to the
Lender and its counsel.
5. Covenants.
A. Borrower covenants to deliver to Lender, promptly upon Lender’s request, copies of any
documents and agreements related to the Merger Agreement as Lender may reasonably request, upon the
closing of the Westcon Acquisition.
B. Borrower hereby covenants and agrees to cooperate with Lender in any manner reasonably
necessary in order to promptly continue, or in the case of after-acquired property, create a first
lien in favor of Lender, in all personal property assets acquired by Borrower or its Subsidiaries
in connection with the Westcon Acquisition, including without limitation, (i) delivering to Lender
evidence of termination of any and all material liens (as determined by Lender in its sole
discretion) on the assets to be acquired by Borrower or its Subsidiaries upon or prior to the date
the Westcon Acquisition is closed; (ii) upon the closing of the Westcon Acquisition, causing the
Selling Shareholder (as defined in the Merger Agreement) to execute and deliver to Lender a
Subordination Agreement with respect to future payments owed under the Merger Agreement or Earnout
Agreement, upon request of Lender; (iii) obtaining appropriate landlord waivers as requested by
Lender within 30 days after the date the Westcon Acquisition is closed, or such later date as
consented to by Lender; and (iv) upon the change of name of Westcon Acquisition Sub to Westcon,
Inc., causing Westcon Acquisition Sub to deliver to Lender the Certificate of Name Change, UCC-3
name change amendments and any replacement stock certificates and stock powers with respect thereto
as requested by Lender.
C. Borrower agrees to pay all out-of-pocket expenses and fees of Lender in connection with the
negotiation, preparation and execution of this Amendment and any related document, including the
reasonable fees and disbursements of counsel to Lender whether or not the Westcon Acquisition
closes.
6. Reference to and Effect on Loan Documents.
A. Upon the effectiveness hereof, each reference in the Credit Agreement to “this Agreement,”
“hereunder,’ “hereof,” “herein,” or words of like import, and each reference in the other Loan
Documents to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended
hereby.
B. Except as specifically amended above, the Credit Agreement, and all other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed. By signing below,
Borrower hereby acknowledges and reaffirms the execution and delivery of certain security and
pledge documents in connection with the Credit Agreement (the “Security Agreements”) and
the granting of the security thereunder and acknowledges, reaffirms and agrees that the Security
Agreements secure repayment of all existing and future indebtedness, liabilities and obligations of
the Borrower to Lender, including without limitation, all indebtedness of the Borrower evidenced by
the Replacement Revolving Credit Note.
C. The amendments set forth in Section 2 hereto are only applicable and shall only be
effective in the specific instance and for the specific purpose for which made, are expressly
limited to the facts and circumstances referred to herein, and shall not operate as (i) a waiver
of, or consent to non-compliance with any other provision of the Credit Agreement or any other Loan
Document, (ii) a waiver or modification of any right, power or remedy of Lender under the Credit
Agreement or any Loan Document, or (iii) a waiver or modification of, or consent to, any Event of
Default or Default under the Credit Agreement or any Loan Document.
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7. Governing Law. This Amendment shall be governed and construed in accordance with
the laws of the State of New York without regard to any conflicts-of-laws rules which would require
the application of the laws of any other jurisdiction.
8. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.
9. Execution in Counterparts. This Amendment 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 or which taken together shall
constitute but one and the same instrument.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective representatives thereunto duly authorized as of the date first above written.
| BORROWER: | TRANSCAT, INC. |
|||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx X. Xxxxxx | ||||
| President, Chief Executive Officer and Chief Operating Officer | ||||
[Signature Page to Amendment Number One to Credit Agreement]
| LENDER: | JPMORGAN CHASE BANK, N.A. |
|||
| By: | /s/ Xxxxxx X. Xxxxxxxxxxxx | |||
| Xxxxxx X. Xxxxxxxxxxxx | ||||
| Vice President | ||||
[Signature Page to Amendment Number One to Credit Agreement]
