Uponrequest, Transcat, Inc. will furnish supplementally a copy of theamended Schedules to the Credit  Agreement referenced in paragraph2.G. of this Amendment Number One to Credit Agreement to theSecurities 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 CreditAgreement, dated as of November 21, 2006 (the “Credit Agreement”). Borrower has advisedthe Lender that Borrower is in active negotiations regarding the acquisition by Borrower, through anewly 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 paidby a combination of cash (which may include a holdback or earnout) and the common stock of theBorrower (the “Westcon Acquisition”). The Borrower and the Lender desire to amend theCredit 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 theNew York General Obligations Law, the parties agree as follows:**Agreement**     1. **Defined Terms**. The terms “this Agreement”, “hereunder” and similarreferences in the Credit Agreement shall be deemed to refer to the Credit Agreement as amended bythis Amendment. Capitalized terms used and not otherwise defined herein shall have the meaningsascribed to such terms in the Credit Agreement.     2. **Amendment**. Effective upon the satisfaction of all conditions specified in Section 4hereof, the Credit Agreement is hereby amended as follows:          A. The grid contained in the Definition of “Applicable Rate”, as set forth in Section1.01 of the Credit Agreement, is hereby superseded and replaced in its entirety and amended to readas follows:               **ABR Plus ABR** **Eurodollar Plus** **Commitment Fee****Leverage Ratio** **Spread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 5Less than 1.0 x  -.45%  .90%  .20%

 

 2          B. The Definition of “Commitment” as set forth in Section 1.01 of the Credit Agreementis hereby amended so that the figure “$10,000,000” contained therein is superseded and replaced inits entirety with “$15,000,000”.          C. The Definition of “Maturity Date” as set forth in Section 1.01 of the CreditAgreement is hereby amended so that the date “November 21, 2009” contained therein is supersededand replaced in its entirety with “August 14, 2011”.          D. The following Definitions are hereby added to Section 1.01 of the Credit Agreement in theappropriate alphabetical order:“Amendment No. 1” means that certain Amendment Number One to CreditAgreement dated as of August 14, 2008 between Borrower and Lender.“Westcon Acquisition” means the acquisition by Borrower, through itssubsidiary, 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 pursuantto that certain Agreement and Plan of Merger dated as of August 14, 2008 by andamong Westcon, Inc., the Borrower, Westcon Acquisition Sub and David Goodhead (the“Merger Agreement”).          E. Section 6.01 of the Credit Agreement, entitled “Indebtedness”, is hereby amended sothat the following subsection (i) is added to the end thereof:     (i) Indebtedness of Borrower or Westcon Acquisition Sub consisting ofHoldback Cash Payments or other adjustments to the Cash Merger Considerationpursuant to the terms of the Merger Agreement and/or earnout payments as setforth in that certain Earnout Agreement between Borrower and David Goodhead,all in connection with the Westcon Acquisition, provided such Indebtednessis fully subordinate to the Indebtedness owed to the Lender on termssatisfactory 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) isadded 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 andreplaced 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 andcorrect on and as of the date of execution hereof as if made on and as of said date and as if eachreference therein to the Credit Agreement were a reference to the Credit Agreement as amended bythis Amendment; (ii) no Default or Event of Default specified in the Credit Agreement has occurredand is continuing, (iii) since the date of the Credit Agreement, there has been no material adversechange in the financial condition or business operations of the Borrower which has not beendisclosed to Lender; (iv) the making and performance by the Borrower of this Amendment have beenduly authorized by all necessary corporate action, and do not, and will not, (a) contravene theBorrower’s certificate of incorporation or by-laws, (b) violate any law, including withoutlimitation the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, asamended, or any rule, regulation (including Regulations T, U or X of the Board

 

3of 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 defaultunder, any material contract, loan agreement, indenture, note, mortgage, deed of trust or any othermaterial instrument or agreement binding on the Borrower or any Subsidiary or any of theirproperties or result in or require the creation or imposition of any lien upon or with respect toany of their properties; (v) this Amendment has been duly executed and delivered by the Borrowerand is the legal, valid and binding obligation of the Borrower enforceable against the Borrower inaccordance with its terms; (vi) no authorization or approval or other action by, and no notice toor filing with, any governmental authority or regulatory body or any other third party is requiredfor (a) the due execution, delivery or performance by the Borrower of this Amendment or any otheragreement or document related hereto or contemplated hereby to which the Borrower is or is to be aparty or otherwise bound except for required filings and approvals under the Hart-Scott-RodinoAntitrust Improvements Act of 1976 and the rules and regulations thereunder, or (b) to the best ofthe Borrower’s knowledge, the exercise by Lender of its rights under the Credit Agreement asmodified by this Amendment; and (vii) the security interests and charges granted by the Borrowerand its Subsidiary pursuant to the Security Agreements continue to constitute valid, binding andenforceable, first in priority Liens on the Collateral, subject only to Liens permitted under theterms of the Security Agreements and Credit Agreement.     4. **Conditions of Effectiveness**. The effectiveness of each and all of the modificationscontained in the Amendment is subject to the satisfaction, in form and substance satisfactory tothe Lender, of each of the following conditions precedent:          A. Lender shall have received 4 duplicate original counterparts of this Amendment executed byBorrower and Lender.          B. Lender shall have received 1 original Replacement Revolving Credit Note in formsatisfactory to Lender.          C. Lender shall have received a secretarial certificate of the Borrower in a form reasonablyacceptable to Lender, certifying as true and accurate, copies of the organizational documents andthe incumbency of officers of the Borrower, and attaching authorizing resolutions for the WestconAcquisition and the incurrence of additional indebtedness under the Credit Agreement.          D. Lender shall have received a true, correct and complete copy of the Merger Agreementcovering the Westcon Acquisition and all Westcon Disclosure Schedules, which Merger Agreement shallbe satisfactory to the Lender.          E. Lender shall have received an amendment to Borrower’s pledge security agreement withrespect to the stock of Westcon Acquisition Sub, together with the original stock certificateaccompanied 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 securityagreement from Westcon Acquisition Sub, and (iii) an officer’s certificate from Westcon AcquisitionSub evidencing the authorization of the guaranty and security agreements, all in form satisfactoryto Lender.          H. As of the effective date of this Amendment, no Default or Event of Default shall haveoccurred and be continuing.          I. The representation and warranties contained in Section 3 hereof and in the Credit Agreementshall be true, correct and complete as of the effective date of this Amendment as though made onsuch date.

 

4          J. The Lender shall have received such other approvals or documents as the Lender mayreasonably request, and all legal matters incident to the foregoing shall be satisfactory to theLender and its counsel.     5. **Covenants**.          A. Borrower covenants to deliver to Lender, promptly upon Lender’s request, copies of anydocuments and agreements related to the Merger Agreement as Lender may reasonably request, upon theclosing of the Westcon Acquisition.          B. Borrower hereby covenants and agrees to cooperate with Lender in any manner reasonablynecessary in order to promptly continue, or in the case of after-acquired property, create a firstlien in favor of Lender, in all personal property assets acquired by Borrower or its Subsidiariesin connection with the Westcon Acquisition, including without limitation, (i) delivering to Lenderevidence of termination of any and all material liens (as determined by Lender in its solediscretion) on the assets to be acquired by Borrower or its Subsidiaries upon or prior to the datethe Westcon Acquisition is closed; (ii) upon the closing of the Westcon Acquisition, causing theSelling Shareholder (as defined in the Merger Agreement) to execute and deliver to Lender aSubordination Agreement with respect to future payments owed under the Merger Agreement or EarnoutAgreement, upon request of Lender; (iii) obtaining appropriate landlord waivers as requested byLender within 30 days after the date the Westcon Acquisition is closed, or such later date asconsented 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-3name change amendments and any replacement stock certificates and stock powers with respect theretoas requested by Lender.          C. Borrower agrees to pay all out-of-pocket expenses and fees of Lender in connection with thenegotiation, preparation and execution of this Amendment and any related document, including thereasonable fees and disbursements of counsel to Lender whether or not the Westcon Acquisitioncloses.     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 LoanDocuments to the Credit Agreement shall mean and be a reference to the Credit Agreement as amendedhereby.          B. Except as specifically amended above, the Credit Agreement, and all other Loan Documentsshall 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 andpledge documents in connection with the Credit Agreement (the “Security Agreements”) andthe granting of the security thereunder and acknowledges, reaffirms and agrees that the SecurityAgreements secure repayment of all existing and future indebtedness, liabilities and obligations ofthe Borrower to Lender, including without limitation, all indebtedness of the Borrower evidenced bythe Replacement Revolving Credit Note.          C. The amendments set forth in Section 2 hereto are only applicable and shall only beeffective in the specific instance and for the specific purpose for which made, are expresslylimited to the facts and circumstances referred to herein, and shall not operate as (i) a waiverof, or consent to non-compliance with any other provision of the Credit Agreement or any other LoanDocument, (ii) a waiver or modification of any right, power or remedy of Lender under the CreditAgreement or any Loan Document, or (iii) a waiver or modification of, or consent to, any Event ofDefault or Default under the Credit Agreement or any Loan Document.

 

5     7. **Governing Law**. This Amendment shall be governed and construed in accordance withthe laws of the State of New York without regard to any conflicts-of-laws rules which would requirethe application of the laws of any other jurisdiction.     8. **Headings**. Section headings in this Amendment are included herein for convenienceof 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 ofcounterparts and by different parties hereto in separate counterparts, each of which when soexecuted and delivered shall be deemed to be an original and all or which taken together shallconstitute but one and the same instrument.[Signature Pages Follow]

 

     **IN WITNESS WHEREOF**, the parties hereto have caused this Amendment to be executed by theirrespective representatives thereunto duly authorized as of the date first above written.     **BORROWER:** **TRANSCAT, INC.**