EX-10.2






Exhibit 10.2




AGREEMENT AND PLAN OF MERGER




by and among




TRANSCAT, INC.,




TRANSCAT ACQUISITION CORP.,




WESTCON, INC.




and




DAVID GOODHEAD




Dated as of August 14, 2008




 









 







     Upon
request, Transcat, Inc. will furnish supplementally a copy of
any schedule or exhibit to this Agreement and Plan of Merger to the
Securities and Exchange Commission.


AGREEMENT AND PLAN OF MERGER




     This AGREEMENT AND PLAN OF MERGER (this “Agreement”) has been made as of August 14, 2008, by and
among TRANSCAT, INC., an Ohio corporation (“Transcat”), TRANSCAT ACQUISITION CORP., an Oregon
corporation and a direct wholly-owned Subsidiary of Transcat (“Merger Sub”), WESTCON, INC., an
Oregon corporation (“Westcon”) and David Goodhead (the “Selling Shareholder”). Transcat, Merger
Sub, Westcon and Selling Shareholder are collectively referred to herein as the “Parties”, and each
is a “Party”.



     WHEREAS, the Board of Directors of Transcat, the respective boards of directors of Merger Sub and
Westcon, and Transcat acting as the sole stockholder of Merger Sub, have approved the merger,
pursuant and subject to the terms and conditions of this Agreement, of Westcon with and into Merger
Sub (the “Merger”), whereby all of the issued and outstanding shares of the Westcon Common Stock
(as defined below), will be converted into the right to receive, a combination of (i) a specified
number of shares of the Common Stock, par value $.50 per share, of Transcat (the “Transcat Common
Stock”), and (ii) a specified amount of cash;



     WHEREAS, the Boards of Directors of Transcat, Merger Sub and Westcon have each determined that it
is the best interests of their respective corporations and stockholders that Transcat, Merger Sub
and Westcon enter into a business combination transaction pursuant to the terms and conditions of
this Agreement (and the ancillary agreements delivered in connection herewith); and



     WHEREAS, the Selling Shareholder is the sole shareholder of Westcon and will benefit from the
transactions contemplated herein;



     NOW, THEREFORE, in consideration of the premises and the representations, warranties and covenants
herein contained, the Parties agree to effect the Merger on the terms and subject to the conditions
herein provided and further agree as follows:



ARTICLE 1.




DEFINITIONS




     1.1 Definitions.



     In addition to the other definitions contained in this Agreement, the following terms will, when
used in this Agreement, have the following respective meanings:



     “Actual Wind Energy Calibration Revenue” means the actual calibration revenue generated from wind
energy calibration customers for the 12 month period following the Closing, measured consistently
with Fiscal 2008.



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     “Actual Wind Energy Equipment Gross Profit” means the actual equipment gross profit generated from
wind energy customers for the 12 month period following the Closing, measured consistently with
Fiscal 2008.



     “Affiliate” means a Person which, directly or indirectly, controls, is controlled by, or is under
common control with, the referenced party.



     “Business” means the business conducted by Westcon as of the date hereof, that being principally
the distribution, repair and calibration of test and measurement equipment.



     “Capital Expenditure” means any expenditures by Westcon for the acquisition, lease, repair or
improvement of fixed or capital assets, including any and all improvements or repairs to equipment.



     “Certifying Officers” means: (a) in the case of Westcon, its President; and (b) in the case of
Transcat, any one of its duly elected executive officers.



     “Claim” means any contest, claim, demand, assessment, action, suit, cause of action, complaint,
litigation, proceeding, hearing, arbitration, investigation or notice involving any Person.



     “Closing” means the consummation of the Merger.



     “Code” means the Internal Revenue Code of 1986, as amended, together with all rules and regulations
promulgated thereunder.



     “Competition Laws” means and includes the Sherman Act, as amended, the Clayton Act, as amended, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the Federal Trade Commission Act,
as amended, national competition Laws, European Union competition Laws and all other U.S. or
non-U.S. Laws that are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.



     “Constituent Corporations” means Westcon and Merger Sub, as the constituent corporations of the
Merger.



     “Contracts” means and includes all contracts, subcontracts, agreements, leases, licenses,
sublicenses, options, notes, bonds, mortgages, indentures, deeds of trust, collateral assignments,
obligations, instruments, concessions, guarantees, franchises, purchase orders, arrangements,
commitments, undertakings and understandings of any kind, whether written or oral.



     “Encumbrances” means and includes all liens, charges, encumbrances, mortgages, pledges, security
interests, options and any other restrictions or third party rights, including without limitation
guarantees.



     “Environmental Laws” means, collectively, all U.S. and non-U.S. federal, national, state and local
statutes, regulations, ordinances, codes, published guidelines and policies, directives and orders
(including all amendments thereto) pertaining to environmental matters (which includes air, water
vapor, surface water, groundwater, soil, natural resources, chemical use,



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health, safety and
sanitation), including the Comprehensive Environmental Response, Compensation and Liability Act,
the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control
Act, the Safe Water Drinking Act, the Toxic Substance Control Act and the Occupational Safety and
Health Act.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, together with all
rules and regulations promulgated thereunder.



     “Estimated Net Working Capital” means the Net Working Capital, as set forth on the Estimated
Working Capital Schedule.



     “Estimated Working Capital Schedule” means the draft schedule of the Net Working Capital as of the
Closing Date, prepared and delivered by Westcon, Selling Shareholder and Transcat at the Closing.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended, together with all rules and
regulations promulgated thereunder.



     “Final Working Capital Schedule” means the schedule of the Net Working Capital as of the Closing
Date, which shall be in the same format as the Estimated Working Capital Schedule and include a
calculation of the Net Working Capital, as finally determined by Transcat pursuant to Section
3.2(b), and the Working Capital Deficit or Working Capital Surplus, if any.



     “Fiscal 2008” means Westcon’s fiscal tear beginning on July 1, 2007 and ending on June 30, 2008.



     “GAAP” means United States generally accepted accounting principles as in effect from
time to time.



     “Governmental Entity” means any U.S. or non-U.S. federal, national, state or local court,
legislative body, governmental or quasi-governmental body, municipality, political subdivision,
department, commission, board, bureau, tribunal, department, administration, council, agency,
arbitrator, authority or other instrumentality.



     “Hazardous Substances” means and includes: (a) any hazardous materials, hazardous wastes,
hazardous substances and toxic substances as those or similar terms are defined under any
Environmental Law; (b) any asbestos or any material that contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether
friable or non-friable; (c) any polychlorinated biphenyls or polychlorinated biphenyl-containing
materials or fluids; (d) radon; (e) any other hazardous, radioactive, toxic or noxious substance,
material, pollutant, contaminant or solid, liquid or gaseous waste; (f) any petroleum, petroleum
hydrocarbons, petroleum products, crude oil or any fractions thereof, natural gas or synthetic gas;
and (h) any substance that, whether by its nature or its use, is or becomes subject to regulation
under any Environmental Laws or with respect to which any Environmental Laws or Governmental Entity
requires or will require environmental investigation, monitoring or remediation.



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     “Improvements” means all buildings, structures, fixtures, building systems and equipment, and
all components thereof, including the roof, foundation, load-bearing walls and other structural
elements thereof, heating, ventilation, air conditioning, mechanical, electrical, plumbing and
other building systems, environmental control, remediation and abatement systems, sewer, storm and
waste water systems, irrigation and other water distribution systems, parking facilities, fire
protection, security and surveillance systems, and telecommunications, computer, wiring and cable
installations, included in any Leased Real Property (as defined below).



     “Intellectual Property” means all of the following in any jurisdiction throughout the
world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, internet domain names, and rights in telephone numbers, together with all
translations, adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in connection therewith;
(c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith; (d) all mask works and all applications, registrations, and renewals in
connection therewith; (e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and production processes
and techniques, technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals); (f) all computer
software (including source code, executable code, data, databases and related documentation); (g)
all advertising and promotional materials; (h) all other proprietary rights; and (i) all copies and
tangible embodiments thereof (in whatever form or medium).



     “IRS” means the U.S. Internal Revenue Service.



     “Laws” means, collectively, all U.S. and non-U.S. laws, statutes, rulings, rules, regulations,
judgments, orders, decrees, awards, injunctions, writs, requirements, permits, certificates and
ordinances of any Governmental Entity, as in effect from time to time.



     “Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties and other agreements
with respect thereto, pursuant to which Westcon holds any real property, including the right to all
security deposits and other amounts and instruments deposited by or on behalf of Westcon
thereunder.



     “Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for Taxes.



     “Loss” or “Losses” means any and all judgments, losses, Liabilities, amounts paid in
settlement, damages, fees, fines, penalties, deficiencies, costs and expenses (including interest,
court costs, reasonable fees and expenses of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim, default or assessment).



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     “Market Price” means the average of the closing sales price per share of the Transcat Common Stock
as reported on the Nasdaq’s Web Site.



     “Material Adverse Effect” or “Material Adverse Change” means, with respect to any entity any
occurrence, incident, action, failure to act, event, change or effect that is or could reasonably
be expected to be, materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, results of operations, or prospects of such entity and its
subsidiaries in excess of $35,000, taken as a whole, or to the enforcement of this Agreement and
any agreement contemplated herein, except changes solely to the extent resulting from (a) the
announcement or other disclosure of this Agreement, or (b) changes in general business conditions,
hostilities involving the United States or in general financial market conditions.



     “Merger Consideration” means collectively the Stock Merger Consideration and the Cash Merger
Consideration.



     “Nasdaq” means the Nasdaq Capital Market.



     “Net Working Capital” means the current tangible assets less the current liabilities of Westcon as
of the close of business on the Closing Date less debt paid as of the Closing Date, mutually agreed
to by the parties and in accordance with GAAP consistently applied and the other terms and
conditions set forth herein.



     “OPCL” means the Oregon Private Corporations Law.



     “Ordinary Course of Business” means, when used with respect to any Person, the
ordinary course of business of such Person, consistent with past custom and practice of such Person
(including with respect to quantity and frequency).



     “Pay-Off Letter” has the meaning ascribed to such term in Section 8.2.



     “Permitted Encumbrance” has the meaning set forth in Section 4.8.



     “Person” means and includes any individual, partnership, corporation, trust, company,
unincorporated organization, joint venture or other entity, and any Governmental Entity.



     “Projected Wind Energy Calibration Revenue” means $305,000 in calibration service revenue for the
wind energy calibration customers for the 12 month period following the Closing, measured
consistently with Fiscal 2008.



     “Projected Wind Energy Equipment Gross Profit” means $869,000 in equipment gross profit for the
wind energy customers for the 12 month period following the Closing, measured consistently with
Fiscal 2008.



     “Release” has the same meaning as given it by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the regulations promulgated thereunder.



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     “Representatives” means, when used with respect to any Person, such Person’s attorneys, accountants
and other advisors.



     “SEC” means the U.S. Securities and Exchange Commission.



     “Securities Act” means the Securities Act of 1933, as amended, together with all rules and
regulations promulgated thereunder.



     “Shareholder Approval” means adoption of this Agreement by the Selling Shareholder.



     “Stock Rights” means, collectively, options, warrants, calls, rights, Claims (asserted or
threatened), commitments or Contracts to which Westcon is a party or by which any of them is bound
obligating Westcon to issue, deliver or sell, or cause to be issued, delivered or sold, any shares
of capital stock of Westcon, or obligating Westcon to grant, extend or enter into any such option,
warrant, call, right or Contract. As used herein, “Stock Rights” includes stock appreciation
rights and similar rights payable in cash but having reference to shares of capital stock of
Westcon.



     “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, trust
or other entity of which such Person, directly or indirectly through an Affiliate, owns an amount
of voting securities, or possesses other ownership interests, having the power, direct or indirect,
to elect a majority of the board of directors or other governing body thereof.



     “Surviving Corporation” means Merger Sub, as the surviving corporation of the Merger.



     “Target Working Capital” means an amount equal to zero.



     “Taxes” means, collectively, U.S. and non-U.S. federal, national, state and local income, payroll,
withholding, employment, excise, sales, use, real and personal property, use and occupancy,
business and occupation, gross receipts, mercantile, real estate, capital stock and franchise or
other taxes, duties or assessments of any nature whatsoever, including all penalties and interest
thereon and estimated taxes.



     “Trading Day” means any day on which Nasdaq is open for trading.



     “U.S.” means the United States of America.



     “Violation” means that the referenced fact or event: (a) conflicts with, or results in any
violation of, or a default (with or without notice or lapse of time, or both) under, or gives rise
to a right of termination, cancellation or acceleration of any obligation or the loss of a material
benefit under, or the creation of an Encumbrance (other than a Permitted Encumbrance) on assets in
connection with, the referenced Contract or other document; or (b) conflicts with, or results in
any violation (with or without notice or lapse of time, or both) under, or gives rise to any
damages, penalty or remedial action under, the referenced Law.



     “Westcon Debt” means all indebtedness of Westcon on which interest accrues (including both the
current and long-term portions of any long-term indebtedness), as identified on Schedule 1.1 of the
Westcon Disclosure Schedules.



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     “Westcon Disclosure Schedules” means the disclosure schedules, in the form approved by Transcat and
delivered by Westcon to Transcat concurrently with the execution and delivery of this Agreement,
including subsequent amendments thereto contemplated and approved pursuant to Section 11.3 of this
Agreement.



     “Working Capital Deficit” means the amount, if any, by which the Net Working Capital reflected on
the Final Working Capital Schedule is less than the Estimated Net Working Capital.



     “Working Capital Surplus” means the amount, if any, by which the Net Working Capital reflected on
the Final Working Capital Schedule is more than the Estimated Net Working Capital.



     1.2 Interpretation.



     In this Agreement, unless the express context otherwise requires:



          (a) the words “herein,” “hereof” and “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement;




          (b) references to “Article” or “Section” are to the respective Articles and Sections of this
Agreement, and references to “Exhibit” are to the respective Exhibits annexed hereto;




          (c) references to a “party” means a party to this Agreement and include references to such
party’s successors and permitted assigns;




          (d) references to a “third party” means a Person that is neither a party to this Agreement nor
an Affiliate thereof;




          (e) the terms “dollars” and “$” means U.S. dollars;




          (f) the terms “knowledge” means those facts or things of which a party has actual information
or those matters to which a reasonably diligent person would have a basis to discover with
reasonable inquiry;




          (g) terms defined in the singular have a comparable meaning when used in the plural, and vice
versa;




          (h) the masculine pronoun includes the feminine and the neuter, and vice versa, as appropriate
in the context; and




          (i) wherever the word “include,” “includes” or “including” is used in this Agreement, it will
be deemed to be followed by the words “without limitation.”




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ARTICLE 2.


THE MERGER




     2.1 Effective Time of the Merger.



     Subject to the provisions of this Agreement, the Merger will be consummated by the filing by
the Secretary of State of the State of Oregon of a certificate of merger, in such form as required
by, and signed and attested in accordance with, the relevant provisions of the OPCL (the time of
such filing or such later time and date as is specified in such filing being the “Effective Time”).
Transcat will deliver the Stock Merger Consideration to the Selling Shareholder in accordance with
Section 3 below.



     2.2 Closing.



     The Closing will take place at 10:00 a.m., local time, on the earliest Trading Day practicable
after all of the conditions set forth in Article 9 are satisfied or waived by the appropriate Party
(the “Closing Date”), at the offices of Harter Secrest & Emery LLP, 1600 Bausch & Lomb Place,
Rochester, New York 14604, unless another time, date or place is agreed to in writing by the
parties.



     2.3 General Effects of the Merger.



     By virtue of the Merger and without the necessity of any action by or on behalf of the
Constituent Corporations, or either of them:



          (a) at the Effective Time, (i) the separate existence of Merger Sub and Westcon will cease and
Westcon will be merged with and into Merger Sub, (ii) the articles of incorporation and bylaws of
Merger Sub as in effect immediately prior to the Effective Time will be the articles of
incorporation and bylaws of the Surviving Corporation until thereafter amended, and (iii) the
directors and officers of Merger Sub in office immediately prior to the Effective Time will become
the only directors and officers, respectively, of the Surviving Corporation; and




          (b) at and after the Effective Time, the Surviving Corporation will possess all the rights,
privileges, powers and franchises of a public as well as of a private nature, and be subject to all
the restrictions and duties, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations on whatever
account, as all other things in action or belonging to each of the Constituent Corporations will be
vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises,
and all and every other interest will be thereafter as effectually the property of the Surviving
Corporation as they were of the respective Constituent Corporations, and the title to any real
estate vested by deed or otherwise, in either of the Constituent Corporations, will not revert or
be in any way impaired; but (except as otherwise provided herein) all rights of creditors and all
Encumbrances upon any property of either of the Constituent Corporations will be preserved
unimpaired, and all debts, liabilities and duties of the respective Constituent Corporations will
thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent
as if such debts, liabilities and duties had been incurred or contracted by it.




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ARTICLE 3.




EFFECT OF MERGER ON CAPITAL STOCK




     3.1 Effect of Merger on Company Common Stock; Merger Consideration.



          (a) At the Effective Time (subject to provisions below), all 525 shares of common stock, no
par value per share, of Westcon (the “Exchanged Shares”) being the only shares of capital stock of
Westcon issued and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger, automatically without any action on the part of the Selling Shareholder, as the sole
shareholder thereof, be converted, upon surrender of the certificates representing each such
shares, into the right to receive 150,000 shares of Transcat Common Stock, which will be valued as
the average closing price per share of the common stock over the thirty (30) trading days for the
common stock ending on the second to last trading day prior to the Closing (the “Stock Merger
Consideration”).




          (b) At the Effective Time, all shares of Westcon Common Stock and certificate which previously
represented any such share of Westcon Common Stock (each, a “Westcon Certificate” and,
collectively, the “Westcon Certificates”) shall automatically be cancelled and shall cease to
exist, and the Selling Shareholder shall cease to have any rights with respect thereto other than
the right to receive the Merger Consideration which Selling Shareholder is entitled to receive
pursuant to this Section 3.1, to be issued or paid in consideration therefore upon surrender of
such certificate(s) in accordance with the procedures set forth below.




          (c) At the Effective Time, all shares of Westcon Common Stock held by Westcon as treasury
stock, if any, immediately prior to the Effective Time shall automatically be cancelled and shall
cease to exist, and Westcon shall cease to have any rights with respect thereto.




          (d) The Stock Merger Consideration shall be allocated to and distributed wholly to the Selling
Shareholder as the sole shareholder of the Company. For the avoidance of doubt, and notwithstanding
anything herein to the contrary, the securities issuable to the Selling Shareholder under this
Agreement, including, without limitation, the Stock Merger Consideration, shall be unregistered
shares of Transcat Common Stock issued in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”) and bearing a
restrictive legend in form set forth on Exhibit A (the “Transcat Stock Restrictions”).




          (e) Subject to the post-Closing adjustments described below, the Selling Shareholder shall
receive cash consideration in an amount equal to $6,106,000 (the “Cash Merger Consideration”) which
shall be distributed and paid in accordance with Section 3.2(a)(i), (ii) and (iii) below.




     3.2 Payment of Cash Merger Consideration; Adjustments



          (a) The Cash Merger Consideration shall be paid and distributed by Transcat in accordance with
subsections (i), (ii) and (iii) below as follows:




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	 	(i)	 	On the Closing Date, Transcat will pay to the holder of the
Westcon Debt an amount equal to the Westcon Debt contemplated to be paid in
cash in accordance with the instructions set forth in the Pay-Off Letter;
	 
	 	(ii)	 	On the Closing Date, Transcat shall pay to the Selling
Shareholder a cash payment in an amount equal to $4,216,096.55, less the
amount, if any, by which the Target Working Capital exceeds the Estimated Net
Working Capital (the “Initial Cash Payment”); and
	 
	 	(iii)	 	Subject to adjustment, offset or acceleration as provided
herein, Transcat will pay Selling Shareholder cash payments on October 1, 2009
unless Selling Shareholder has exercised the Holdback Audit Right as set forth
in Section 3.2(d) below of (i) $1,195,000 (“Wind Energy Equipment Gross Profit
Holdback Payment”) and $229,000 (“Wind Energy Calibration Service Holdback
Payment” and collectively with the Wind Energy Equipment Gross Profit Holdback
Payment the “Holdback Cash Payments”).





          (b) By way of illustration only, Section 3.2(b) of the Westcon Disclosure Schedules sets forth
a hypothetical example of the payment of the Merger Consideration, including the issuance of the
Stock Merger Consideration and the adjustment to and distribution of the Cash Merger Consideration.




          (c) Transcat shall prepare and within seventy-five (75) days following the Closing deliver to
Selling Shareholder the Final Working Capital Schedule. The Final Working Capital Schedule, as
determined by Transcat, shall be conclusive, final and binding on the Parties for purposes of
determining the Net Working Capital, Working Capital Surplus and Working Capital Deficit but shall
not affect any of Transcat’s or Merger Sub’s rights under this Agreement, including without
limitation under Article 10. To the extent there is a Working Capital Surplus, Transcat will pay
Selling Shareholder an amount equal to such Working Capital Surplus within fifteen (15) days of
delivery of the Final Working Capital Schedule.




          (d) To the extent there is a Working Capital Deficit, within fifteen (15) days following the
delivery of the Final Working Capital Schedule, the Selling Shareholder agrees to pay to Transcat
in cash (by wire transfer of immediately available funds to an account designated by Transcat) the
amount of the Working Capital Deficit. If such Working Capital Deficit is not paid within such
fifteen (15) day period, then interest shall accrue and be due and payable from the Selling
Shareholder on the Working Capital Deficit from and including the Closing through and including the
date of payment at the rate of 5.0% per annum.




          (e) Transcat shall prepare and within thirty (30) days following the first anniversary of the
Closing deliver to Selling Shareholder a determination of the Actual Wind Energy Equipment Gross
Profit and the Actual Wind Energy Calibration Revenue (which will include a calculation of the
decrease in the Holdback Cash Payment, if applicable). In the absence of any objections from the
Selling Shareholder, Transcat’s determination of the Actual Wind Energy Calibration Revenue and
Actual Wind Energy Equipment Gross Profit shall be final and binding upon the parties for purposes
thereof, and the Holdback Cash Payment shall,




11









 







immediately following the expiration of such thirty
(30) day period, be paid to the Selling Shareholder entitled to receive it as provided above. If
any objection is so made, the parties shall negotiate in good faith with a view to agreeing upon
the matters in dispute. If such negotiations fail to resolve all disputed items within ten (10)
days after such objections are made, the remaining disputed items shall be submitted for resolution
to a nationally recognized firm of independent public accountants designated jointly by Selling
Shareholder’s Accountants and Transcat’s Accountants. After affording each of the parties and their
respective accountants the opportunity to present their positions as to such determination (which
opportunity shall not extend for more than then (10) days), the accounting firm so selected shall
determine the disputed items and such determination shall be binding for purposes of the Holdback
Payment (the “Holdback Audit Right”). The fees, costs and expenses of the accounting firm so
selected shall be borne equally by Transcat and Selling Shareholder. To the extent that the Actual
Wind Energy Equipment Gross Profit is less than the Projected Wind Energy Equipment Gross Profit,
the Wind Energy Equipment Gross Profit Holdback Payment shall be reduced in a dollar amount equal
to (i) the amount in which the Actual Wind Energy Equipment Gross Profit is less than the Projected
Wind Energy Equipment Gross Profit, multiplied by (ii) 2.75. To the extent that the Actual Wind
Energy Calibration Revenue is less than the Projected Wind Energy Calibration Revenue, the Wind
Energy Equipment Calibration Revenue Holdback Payment shall be reduced in a dollar amount equal to
(i) the amount in which the Actual Wind Energy Calibration Revenue is less than the Projected Wind
Energy Calibration Revenue, multiplied by (ii) 1.50. To the extent the Holdback Cash Payments
require reduction as determined herein, Transcat may immediately exercise its rights with respect
to reimbursement of such amount as set forth in subsection (e) below. Notwithstanding anything
herein to the contrary, if, prior to the first anniversary of the Closing, the Actual Wind Energy
Equipment Gross Profit and the Actual Wind Energy Calibration Revenue exceed the Projected Wind
Energy Equipment Gross Profit and the Projected Wind Energy Calibration Revenue (as determined by
Transcat subject to the Holdback Audit Right), the payment date for the Holdback Cash Payments
shall be accelerated and be payable within ten (10) days of such determination. The Holdback Cash
Payments shall include (i) all accrued interest on such amount from the Closing through the date of
payment at the rate of 4%, and (ii) an amount equal to the increase in capital gains tax liability
realized by Selling Shareholder, if any, resulting directly from the payment of the Holdback Cash
Payments after the Closing instead of at the Closing.




          (f) Delivery of all payments required under this Section 3.1 or any provision hereof shall be
made in cash by the wire transfer of immediately available funds to such bank account as designated
in writing by the recipient. Westcon and Selling Shareholder acknowledge and agree that Transcat
and Merger Sub may, in their sole discretion subject to the Holdback Audit Right, reimburse
themselves from or otherwise offset against the Holdback Cash Payments (and/or any other future
payments due and owing to Selling Shareholder) for amounts owing from Selling Shareholder and
Westcon to Transcat and Merger Sub (including without limitation a payment for Working Capital
Deficit) under this Agreement or any other documents or agreements delivered in connection with the
Merger (and this Agreement) in accordance with Article 10.




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     3.3 Effect of Merger on Common Stock of Merger Sub.



     At the Effective Time, each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holders thereof, be converted into and become one share of validly issued, fully
paid and non-assessable share of common stock of the Surviving Corporation.



     3.4 Delivery of Certificates.



     At and after the Effective Time and subject to the Transcat Stock Restrictions set forth on
Exhibit A, Transcat will make available, and the Selling Shareholder shall be entitled to receive,
(i) upon surrender to Transcat or its Representatives of the Westcon Certificate(s) for
cancellation and an assignment separate from certificate in the form approved by Transcat (the
“Stock Power”), the Stock Merger Consideration, and upon such surrender of the Westcon
Certificate(s), and delivery by Transcat of the aggregate Stock Merger Consideration in exchange
therefore, such shares shall be deemed cancelled. Until surrendered or delivered as contemplated by
this Section, each Westcon Certificate will be deemed at any time after the Effective Time for all
purposes to evidence only the right to receive upon such surrender the Stock Merger Consideration.



     3.5 No Fractional Shares.



     No certificate or scrip representing fractional shares of Transcat Common Stock shall be
issued upon the surrender of Westcon Certificates for exchange, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a stockholder of Transcat.



     3.6 Lost, Stolen or Destroyed Certificates.



     In the event any Westcon Certificates are lost, stolen or destroyed, Transcat will issue in
exchange for such lost, stolen or destroyed Westcon Certificate(s), upon the making of an affidavit
of that fact by the Selling Shareholder and the other deliveries required above, the applicable
Merger Consideration; provided, however, that the Surviving Corporation may, in its sole discretion
and as a condition precedent to the issuance thereof, require the Selling Shareholder deliver an
indemnity or bond in such sum as it may reasonably direct as indemnity against any claim that may
be made against it with respect to the Westcon Certificate(s) alleged to have been lost, stolen or
destroyed.



     3.7 Taking of Necessary Action; Further Action.



     Each of Transcat, Merger Sub, Westcon and Selling Shareholder will take all such reasonable
lawful action as may be necessary or appropriate in order to effect the Merger in accordance with
this Agreement as promptly as practicable. If, at any time after the Effective Time, any such
further action is necessary or desirable to carry out the purposes of this Agreement and to vest



13









 







the Surviving Corporation with full right, title and possession to all the property, rights,
privileges, power and franchises of Westcon and Merger Sub, the officers and directors of Westcon
and Merger Sub immediately prior to the Effective Time are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and necessary action.



     3.8 Dividends and Distributions on Stock Merger Consideration.



     In the case of the Stock Merger Consideration: (i) Selling Shareholder will not be entitled
to dividends or other distributions with respect to Transcat Common Stock prior to the Effective
Time; (ii) no dividends or other distributions with respect to Transcat Common Stock having a
record date on or after the Effective Time will be paid to Selling Shareholder until surrender of
such Westcon Certificates (or upon providing the affidavit and indemnity referred to above); and
(iii) subject to the effect of applicable Laws, following surrender of any such Westcon
Certificates (or provision of such affidavit and indemnity), there will be paid to Selling
Shareholder shares of Transcat Common Stock issued in exchange therefor: (A) at the time of such
surrender, the amount of any dividends or other distributions having a record date on or after the
Effective Time theretofore paid with respect to such shares of Transcat Common Stock, without
interest; and (B) at the appropriate payment date, the amount of any dividends or other
distributions having a record date on or after the Effective Time but prior to surrender, and a
payment date subsequent to surrender, payable with respect to such shares of Transcat Common Stock,
without interest.



     3.9 No Further Ownership Rights in Westcon Common Stock; Stock Transfer Books.



     All Merger Consideration issued upon the surrender for exchange of shares of Westcon Common
Stock in accordance with the terms hereof (including, in the case of the Stock Merger
Consideration, any cash paid pursuant to Sections 3.1(c) or 3.1(d)) will be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Westcon Common Stock, and
there will be no further registration of transfers of the shares of Westcon Common Stock after the
Effective Time. If, after the Effective Time, Westcon Certificates are presented to the Surviving
Corporation or its transfer agent for any reason, such Westcon Certificates will be cancelled.



     3.10 No Liability.



     Neither Transcat, Westcon nor the Surviving Corporation will be liable to any holder of shares
of Westcon Common Stock or Transcat Common Stock, as the case may be, for the Merger Consideration
(and, in the case of the Stock Merger Consideration, cash in lieu of fractional shares and
dividends or distributions with respect thereto, if any) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.



14









 





ARTICLE 4.




REPRESENTATIONS AND WARRANTIES OF WESTCON AND SELLING

SHAREHOLDER




     Westcon and Selling Shareholder jointly and severally represent and warrant to Transcat and Merger
Sub that the statements contained in this Section are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement throughout this Article),
except as set forth in the Disclosure Schedules. Disclosure made in a specific section or
subsection of the Westcon Disclosure Schedules shall not be deemed to have been disclosed with
respect to any other section or subsection herein unless an explicit cross-reference appears to
that effect.



     4.1 Organization, Standing and Power.



          (a) Westcon is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Oregon. Westcon has no Subsidiaries and does not own an equity interest in
any Person. Westcon is a corporation duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its organization. Westcon has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being conducted and,
except as could not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, is duly qualified and in good standing to do business in each other jurisdiction in
which the nature of its business or the ownership or leasing of its properties makes such
qualification necessary. Westcon has heretofore made available to Transcat true, correct and
complete copies of the certificate of incorporation and bylaws, as currently in effect, of Westcon
and has made available to Transcat true, correct and complete minute books and stock records of
Westcon. The stock records fairly and accurately reflect the ownership of all of outstanding
shares of capital stock of Westcon. The minute books contain accurate records of the proceedings
of all actions formally taken by the shareholders, the board of directors and each committee of the
board of directors of Westcon. The other books and records of Westcon, including financial records
and books of account, are complete and accurate in all material respects to fairly represent the
operations of Westcon and have been maintained in accordance with reasonable business practices.
Westcon is not in default under or in violation of any provision of its charter or bylaws.




     4.2 Capital Structure.



          (a) The authorized capital stock of Westcon consists entirely of 1,000 shares of no par value,
common stock (the “Westcon Common Stock”).




          (b) As of August 14, 2008, (i) 525 shares of Westcon Common Stock, are issued and outstanding;
and (ii) no shares of Westcon Common Stock, are issued and held in the treasury of Westcon.




          (c) All shares of Westcon Common Stock have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other contracts or




15









 







commitments
that could require Westcon to issue, sell, or otherwise cause to become outstanding any additional
shares of the Westcon capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Westcon. There are no
voting trusts, proxies, or other agreements or understandings with respect to the voting of the
capital stock of Westcon.




          (d) The Selling Shareholder holds of record and beneficially owns all of the Westcon Common
Stock, free and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. The Selling Shareholder is not a
party to any option, warrant, purchase right, or other agreement, contract or commitment involving
the Westcon Common Stock, including any agreement, contract or commitment that would require the
Selling Shareholder to sell, transfer, or otherwise dispose of any capital stock of Westcon (other
than this Agreement). Selling Shareholder has full voting power over the Westcon Common Stock and
is not a party to any voting trust, proxy, or other agreement or understanding with respect to the
voting of any shares of Westcon Common Stock. Other than this Agreement, there is no agreement
between Selling Shareholder and any other Person with respect to the disposition of the Westcon
Common Stock.




     4.3 Authority; Binding Effect.



     Westcon has all requisite corporate power and authority to enter into this Agreement and,
subject to the approval of Selling Shareholder (which is evidenced by the execution and delivery of
this Agreement), to consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Westcon, including without limitation
the approval of Selling Shareholder. The board of directors and Selling Shareholder of Westcon
has, as of the date of this Agreement, duly adopted resolutions which unanimously approve and adopt
this Agreement and the consummation of the Merger. This Agreement has been duly executed and
delivered by Westcon and Selling Shareholder and, assuming the due execution and delivery hereof by
Transcat and Merger Sub, constitutes the valid and binding obligation of Westcon and Selling
Shareholder, enforceable against Westcon and Selling Shareholder in accordance with its terms,
except as the enforceability hereof may be limited by (i) bankruptcy, insolvency or other Laws
relating to or affecting creditors’ rights generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).



     4.4 No Conflict.



     The execution and delivery of this Agreement by Westcon and Selling Shareholder does not, and
the consummation of the transactions contemplated hereby and the fulfillment of its obligations and
undertakings hereunder will not, result in any Violation (other than Violations, if any, arising
solely out of the failure to obtain a Required Approval as described below and as set forth on the
Westcon Disclosure Schedules) of any provision of: (a) the articles of incorporation or bylaws of
Westcon; (b) any Contract applicable to Westcon, Selling Shareholder or any of their respective
assets; or (c) any Law applicable to Westcon or any of their respective assets; except, in the case
of Contracts and Laws, for Violations which could not reasonably be expected



16









 




to have, individually
or in the aggregate, any adverse effect on the validity or enforceability of this Agreement or an
Material Adverse Effect. Except as set forth in Section 4.4 of the Westcon Disclosure Schedules,
to Westcon’s and Selling Shareholder’s knowledge no consent, approval, order or authorization of,
or registration, declaration or filing with, or notice to, any Governmental Entity or other third
party is required by or with respect to Westcon in connection with the execution and delivery of
this Agreement by Westcon or the Selling Shareholder or the consummation by Westcon and Selling
Shareholder of the transactions contemplated hereby (each, a “Required Approval”), except for: (i)
filings and notices required under Competition Laws, as necessary; (ii) the filing by the Secretary
of State of the State of Oregon contemplated by Section 2.1; and (iii) filings required under the
Exchange Act.




     4.5 Westcon Financial Statements; Internal Accounting Controls.



          (a) Attached to the Westcon Disclosure Schedules are the unaudited balance sheets, statements
of stockholders’ equity, statements of income and statements of cash flows for Westcon as of and
for the fiscal year ended June 30, 2008 and June 30, 2007 (the “Financial Statements”).
The Financial Statements (including the notes thereto) are complete and accurate in all material
respects and have been applied on a consistent basis throughout the periods covered thereby, and
present fairly the financial condition of Westcon as of such dates and the results of operations
and cash flows of Westcon for such periods, are correct and complete in all material respects.




          (b) The books and records of Westcon accurately and fairly reflect their income, expenses,
assets and liabilities and Westcon maintains internal accounting controls which provide reasonable
assurances that: (A) transactions are executed in accordance with the general or specific
authorization of their respective boards of directors and executive officers, and (B) transactions
are recorded as necessary to permit preparation of such financial statements.




     4.6 No Additional Material Liabilities.



     Except as set forth in the Financial Statements or in Section 4.6 of the Westcon Disclosure
Schedules: (a) Westcon has not had, as of August 14, 2008, any material liabilities or accrued
expenses, whether accrued, absolute, contingent or otherwise, of a kind or character that would be
required (in accordance with GAAP) to be reflected in the consolidated balance sheet of Westcon as
of June 30, 2008; (b) since June 30, 2008, except for trade payables and accrued expenses incurred
in the Ordinary Course of Business, Westcon has not incurred any such liabilities; and (c) since
June 30, 2008, Westcon has not drawn down on any line of credit. All liabilities of Westcon
incurred since June 30, 2008 have been properly recorded in their books and records. Schedule 1.1
of the Westcon Disclosure sets a complete and accurate list of all the Westcon Debt.



     4.7 Westcon Permits; Compliance with Laws.



          (a) Section 4.7(a) of the Westcon Disclosure Schedules contains a complete and accurate list,
as of the date hereof, of all licenses, permits, certificates, registrations, accreditations,
orders, franchises, authorizations, approvals, consents, variances and exemptions




17









 







of any
Governmental Entity which are necessary for the operation of the Business as currently operated and
which are held by Westcon (collectively, the “Westcon Permits”), including the respective
termination dates thereof. Except as could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect: (i) Westcon duly hold all Westcon Permits; (ii) all of
the Westcon Permits are in full force and effect; (iii) Westcon is in compliance with the terms of
each of the Westcon Permits; and (iv) no action is pending or threatened or recommended by any
Governmental Entity to revoke, condition, withdraw or suspend any Westcon Permit.




          (b) The businesses of Westcon is being, and since June 30, 2000 have been, conducted in
compliance with all Laws, except for such Violations that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to Westcon is pending or threatened nor has any Governmental
Entity indicated an intention to conduct the same.




          (c) Westcon has delivered true, correct and complete copies of its calibration manuals used by
Westcon which have been delivered to Transcat and Merger Sub prior to the date hereof. To
Westcon’s and Selling Shareholder’s knowledge, Westcon has, at all times, performed all calibration
services in accordance with such calibration manuals, Westcon’s books and records of all
maintenance and calibration services performed, calibration certifications, in-process results and
parameters, test results and other matters related to the services provided by Westcon are complete
and accurate in all respects and have been maintained and retained in accordance with all
applicable Laws. Westcon has, at all times, performed all services (including without limitation
calibration services) in accordance with all applicable Laws.




     4.8 Assets; Title; Absence of Liens and Encumbrances.



     Except with respect to Intellectual Property (which is instead the subject of Section 4.10),
Westcon owns or validly leases all properties and assets, real, personal and mixed, tangible and
intangible, comprising and employed in the operation of or associated with the Business. Except
for leased assets, Westcon has good and marketable title to any of their respective assets,
including those reflected in the balance sheet of Westcon as of June 30, 2008, free and clear of
all asserted and threatened title defects, Claims and Encumbrances except, with respect to all such
assets, the following Encumbrances (collectively, “Permitted Encumbrances”): (a) Encumbrances
securing debt reflected as liabilities in the Financial Statements, which Encumbrances are listed
in Section 4.8 of the Westcon Disclosure Schedules; (b) mechanics’, carriers’, workers’,
repairmen’s, statutory or common law liens being contested in good faith and by appropriate
proceedings, which contested liens are listed in Section 4.8 of the Westcon Disclosure Schedules;
(c) liens for current Taxes not yet due and payable which have been fully reserved against, or
which, if due, are being contested in good faith and by appropriate proceedings, which contested
liens are listed in Section 4.8 of the Westcon Disclosure Schedules; (d) such imperfections of
title, easements and Encumbrances, if any, against the Real Property as are set forth in the Leases
or which are not, individually or in the aggregate, substantial in character, amount or extent, and
do not, individually or in the aggregate, materially detract from the value, or interfere with the
present use of the Real Property or otherwise have an Material Adverse Effect; and (e) those
additional Encumbrances listed in Section 4.8 of the Westcon Disclosure Schedules.



18









 





     4.9 Real Property.



     (a) Westcon does not own any real property. Section 4.9(a) of the Westcon Disclosure
Schedules is a true, correct and complete list of all real property leased, operated or used by
Westcon (collectively, the “Leased Real Property”). Westcon has delivered to Transcat a true and
complete copy of each such Leases for the Leased Real Property.



     (b) Except as set forth in Section 4.9(b) of the Disclosure Schedules, with respect to each of
the Leases:



               (i) assuming the due execution by lessor and enforceability against the lessor, such Lease is
legal, valid, binding, enforceable and in full force and effect;



               (ii) the transaction contemplated by this Agreement does not require the consent of any other
party to such Lease, will not result in a breach of or default under such Lease, and will not
otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;



               (iii) Westcon’s possession and quiet enjoyment of the Leased Real Property under such Lease
has not been disturbed and there are no disputes with respect to such Lease;



               (iv) neither Westcon or any other party to the Lease is in breach or default under such Lease,
and no event has occurred or circumstance exists which, with the delivery of notice, the passage of
time or both, would constitute such a breach or default, or permit the termination, modification or
acceleration of rent under such Lease;



               (v) the other party to such Lease is not an affiliate of, and otherwise does not have any
economic interest in Westcon;



               (vi) Westcon has not assigned, subleased, licensed or otherwise granted any Person the right
to use or occupy such Leased Real Property or any portion thereof; and



               (vii) Westcon has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any leasehold or subleasehold interest under any such Lease.



               (viii) the Leased Real Property, comprise all of the real property used or intended to be used
in, or otherwise related to the Business; and Westcon is not a party to any agreement or option to
purchase any real property or interest therein.



     (c) Except as set forth in Section 4.9(c) of the Westcon Disclosure Schedules, to Westcon’s
and Selling Shareholder’s knowledge, all Improvements are in reasonably good condition and
repair, have been appropriately and routinely maintained, and are sufficient for the operation of
the Business. There are no structural deficiencies or latent defects affecting any of the
Improvements and there are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any respect with the use or occupancy of the
Improvements or any portion thereof in the operation of the Business as currently conducted
thereon.



19









 






     (d) There is no written notice of a condemnation, expropriation or other proceeding in eminent
domain, pending or threatened, affecting any parcel of Leased Real Property or any portion thereof
or interest therein. There is no injunction, decree, order, writ or judgment outstanding, nor any
claims, litigation, administrative actions or similar proceedings, pending or threatened, relating
to the ownership, lease, use or occupancy of the Leased Real Property or any portion thereof, or
the operation of the Business as currently conducted thereon.



     (e) To Westcon’s and Selling Shareholder’s knowledge, the Leased Real Property is in
compliance with all applicable building, zoning, subdivision, Environmental, Health and Safety
Requirements and other land use laws, including The Americans with Disabilities Act of 1990, as
amended, and all insurance requirements affecting the Leased Real Property (collectively, the
“Real Property Laws”), and the current use and occupancy of the Leased Real Property and
operation of the Business thereon does not violate any Real Property Laws. Westcon has not
received any notice of violation of any Real Property Law and there is no basis for the issuance of
any such notice or the taking of any action for such violation.



     (f) None of the Improvements or any portion thereof is dependent for its access, use or
operation on any land, building, improvement or other real property interest which is not included
in the Leased Real Property.



     (g) To Westcon’s and Selling Shareholder’s knowledge, all water, oil, gas, electrical, steam,
compressed air, telecommunications, sewer, storm and waste water systems and other utility services
or systems for the Leased Real Property have been installed and are operational and sufficient for
the operation of the Business as currently conducted thereon.



     (h) All certificates of occupancy, permits, licenses, franchises, approvals and authorizations
(collectively, the “Real Property Permits”) of all governmental authorities, board of fire
underwriters, association or any other entity having jurisdiction over the Leased Real Property,
which are required or appropriate to use or occupy the Leased Real Property or operate the Business
as currently conducted thereon, have been issued and are in full force and effect. Section 4.9(h)
of the Westcon Disclosure Schedules lists all Real Property Permits held by Westcon with respect to
each parcel of Leased Real Property. Westcon has not received any notice from any governmental
authority or other entity having jurisdiction over the Leased Real Property threatening a
suspension, revocation, modification or cancellation of any Real Property Permit and there is no
basis for the issuance of any such notice or the taking of any such action.



     (i) The classification of each parcel of Leased Real Property under applicable zoning laws,
ordinances and regulations permits the use and occupancy of such parcel and the operation of the
Business as currently conducted thereon, and permits the Improvements located thereon as currently
constructed, used and occupied. There are sufficient parking spaces, loading docks and other
facilities at such parcel to comply with such zoning laws, ordinances and regulations.



     (j) To Westcon’s and Selling Shareholder’s knowledge, the current use and occupancy of the
Leased Real Property and the operation of the Business as currently conducted thereon do not
violate any easement, covenant, condition, restriction or similar provision in any



20









 







instrument of
record or other unrecorded agreement affecting such Leased Real Property. Neither of the Selling
Shareholder or Westcon has received any notice of violation of any such documents, and there is no
basis for the issuance of any such notice or the taking of any action for such violation.



     (k) There are no taxes, assessments, fees, charges or similar costs or expenses imposed by any
Governmental Authority, association or other entity having jurisdiction over the Leased Real
Property with respect to any Leased Real Property or portion thereof which are delinquent.



     (l) None of the Leased Real Property or any portion thereof is located in a flood hazard area
(as defined by the Federal Emergency Management Agency).



     (m) Westcon does not occupy or possess any real property pursuant to an oral lease.



     4.10 Intellectual Property.



          (a) “Westcon Intellectual Property” means all Intellectual Property used or held for use in,
related to or which arise out of the Business or its products or services including, without
limitation, the following:




               (i) all trademarks, service marks, trade names, trade dress, product names, product
configurations, slogans and logos, applications and registrations, including those listed in
Section 4.10(a)(i) of the Westcon Disclosure Schedules, and corresponding foreign applications,
registrations and rights thereto, whether or not registered (collectively, the “Trademarks”);



               (ii) all source code, object code, design documentation and procedures for product generation
and testing of all computer software and firmware, including the software and firmware listed in
Section 4.10(a)(ii) of the Westcon Disclosure Schedules and including the software rules and
algorithms, flowcharts, trade secrets, know-how, inventions, patents, copyrights, designs,
technical processes, works of authorship and technical data included in or relating to the same
(collectively, the “Software”); provided, however, that the terms “Software” and “Westcon
Intellectual Property” do not include: (A) “shrink wrap” and “click wrap” software; (B) shareware
and freeware software not incorporated in any of the Products or any of Westcon’s business systems;
and (C) software and firmware that is owned by a third party and is the subject of a License to
Westcon;



               (iii) all product development projects planned as of the date of this Agreement, as listed in
Section 4.10(a)(iv) of the Westcon Disclosure Schedules;



               (iv) all Contracts by which: (i) Westcon uses Intellectual Property owned by a third party
(other than (A) supply Contracts providing for the license solely of Intellectual Property not
incorporated in any of the Products or any of Westcon’s business systems and (B) Contracts relating
solely to “shrink wrap” or “click wrap” software); or (ii) a third party uses Intellectual Property
owned by Westcon (other than Contracts relating solely to



21









 







“shrink wrap” or “click wrap” software);
all as listed in Section 4.10(a)(v) of the Westcon Disclosure Schedules (collectively, the
“Licenses”); and



               (v) all internet, intranet and World Wide Web content, sites and pages, and all HTML and other
code related thereto.



          (b) Westcon does not own or license any patents or patent applications (or any division,
continuation, continuation-in-part, continuing prosecution application, continued examination
application, reinstatement, reexamination, revival, reissue, extension or substitution of any
thereof) (collectively, the “Patents”). To Westcon’s and Selling Shareholder’s knowledge, Westcon
owns or has the right to use (pursuant to written License) all of the Westcon Intellectual
Property. Subject to the receipt or making of all Required Approvals specifically identified for
this purpose in Section 4.4 of the Westcon Disclosure Schedules, each item of Westcon Intellectual
Property will be owned or available for continued use by the Surviving Corporation immediately
after the Effective Time, without the payment of any additional amounts to any third party (except
as may be required subsequent to the Effective Time by the express terms of any License). Without
making ay representation or warranty as to the substantive patentability of the Intellectual
Property, at the Effective Time and except as set forth in Section 4.10(b) of the Westcon
Disclosure Schedules, all available Patent rights (other than Patents that are the subject of a
License to Westcon) that may encompass any of the Software or any of the Products may be pursued
exclusively by the Surviving Corporation, other than non-exclusive rights to third party software
included within the Software or the Products.




          (c) Westcon owns and the Surviving Corporation will continue to own immediately after the
Effective Time, free and clear of all Encumbrances (other than Permitted Encumbrances), all
Intellectual Property and other proprietary information, processes and formulae used in, related to
or arising from the Business or otherwise necessary for the ownership, maintenance and use of the
Products and the conduct of the Business, other than Intellectual Property that is owned by a third
party and is the subject of a License to Westcon.




          (d) To Westcon’s and Selling Shareholder’s knowledge, Westcon has not interfered with,
infringed upon, misappropriated or otherwise violated (whether through the use of the Westcon
Intellectual Property or otherwise) any Intellectual Property rights of any third party, and no
Claim has been asserted (and is currently pending) or threatened by any Person as to the use of the
Westcon Intellectual Property by Westcon or alleging any such interference, infringement,
misappropriation or violation (including any such Claim that Westcon must license or refrain from
using any Intellectual Property rights of any third party), and there is no valid basis for any
such Claim, except for those Claims listed in Section 4.17 of the Westcon Disclosure Schedules.
Except as set forth in Section 4.10(d) of the Westcon Disclosure Schedules, to Westcon’s and
Selling Shareholder’s knowledge no third party has interfered with, infringed upon, misappropriated
or otherwise violated any rights of Westcon with respect to the Westcon Intellectual Property.
Westcon has made available to Transcat all infringement studies, including opinions of counsel,
prepared by or on behalf of Westcon.




          (e) Sections 4.10(a)(i) of the Westcon Disclosure Schedules identifies each trademark, service
mark, trade name, trade dress, product name, slogan and logo currently used or held for use by
Westcon in, related to or arising out of the Business. Westcon has made




22









 







available to Transcat
correct and complete copies of all Trademarks, as amended to date, and correct and complete copies
of all other written documentation evidencing ownership and prosecution (if applicable) of each
Trademark. Except as set forth in Section 4.10(e) of the Westcon Disclosure Schedules, with
respect to each Trademark:




               (i) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or
charge nor is any of the foregoing threatened;



               (ii) no Claim is pending or threatened which challenges the legality, validity,
enforceability, use or ownership of the item;



               (iii) except for standard terms and conditions contained in the ordinary course in Contracts
with original equipment manufacturers, Westcon has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other violation with respect to the
item; and



               (iv) Westcon has not taken, or is aware of, any actions, including a sale or offer for sale,
the disclosure of which could lead to the invalidity of any resulting Patent.



          (f) Sections 4.10(a)(ii) and 4.10(a)(iv) of the Westcon Disclosure Schedules identifies all
software, firmware (other than “shrink wrap” and “click wrap” software and shareware and freeware
software not incorporated in any of the Products or any of Westcon’s business systems) and
components thereof used or held for use by Westcon. Except as set forth in Section 4.10(f) of the
Westcon Disclosure Schedules, with respect to each item of the Software:




               (i) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or
charge nor is any of the foregoing threatened;



               (ii) no Claim is pending or threatened in writing which challenges the legality, validity,
enforceability, use or ownership of the item;



               (iii) except for standard terms and conditions contained in the ordinary course in Contracts
with original equipment manufacturers, Westcon has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other violation with respect to the
item;



               (iv) Westcon has, and the Surviving Corporation will continue to have, the full and exclusive
right to claim all copyrights, trademarks and patent rights in the Software and to transfer all
rights, title and interest thereto, including good will and the right to all damages and remedies
for any past infringement;



               (v) the Software as used by Westcon or its licensees does not infringe any copyright, patent,
trademark, trade secret or other Intellectual Property rights of any third party; and there are no
copyright, trademark, trade secret or patent Claims, asserted or threatened, by any third party, or
any acts of Westcon upon the basis of which Westcon has any reason to believe that the Software
will infringe any proprietary rights, including patent, copyright, trademark or trade secret of any
third party;



23









 





               (vi) no third party that is not duly authorized by Westcon is engaged in any activity which
would constitute an infringement or misappropriation of any proprietary rights in the Software;



               (vii) none of the Software contains any “back door,” “time bomb,” “Trojan Horse,” “worm,”
“drop dead device,” “virus,” “trap” or other software routines designed to permit unauthorized
access, to disable or erase software, hardware or data, or perform any other similar actions.



     4.11 Tangible Assets.



          (a) To Westcon’s and Selling Shareholder’s knowledge, all of the tangible assets owned or
leased by Westcon (i) are free from defects (patent and latent), (ii) have been maintained in
accordance with normal industry practice, is in good operating condition and repair, and (iii) are
suitable for the purposes for which it presently is used and presently is proposed to be used.




          (b) Section 4.11(b) of the Westcon Disclosure Schedules is a true, correct and complete
listing of: (i) all material equipment, computer equipment and hardware, furniture, fixtures,
vehicles, machinery, apparatus, media, tools, appliances, implements, supplies and other tangible
personal property of Westcon as of June 30, 2008, together with the cost and depreciation recorded
therefor; and (ii) all additions to and dispositions of the foregoing made between June 30, 2008
and the date hereof. Except as set forth in Section 4.11(b) of the Westcon Disclosure Schedules,
to Westcon’s and Selling Shareholder’s knowledge, such assets are in a good state of repair and
condition, ordinary wear and tear excepted.




          (c) Section 4.11(c) of the Westcon Disclosure Schedules is a true, correct and complete
listing as of the date hereof of all products of the Business, including all approved development
projects (collectively, the “Products”).




     4.12 Inventory.



          (a) Westcon’s inventories consist of a quantity and quality historically useable or saleable
in the Ordinary Course of Business. Westcon’s inventories in its balance sheet for the period
ended June 30, 2008 and in its books and records are in material accordance with GAAP, with
inventory recorded at a lower cost (determined on a first-in, first-out basis) or market.




          (b) Westcon has provided to Transcat a list all suppliers, purchasing agents and third party
manufacturers from or through whom Westcon has purchased inventory during the previous fiscal year
and the current fiscal year. Westcon is not a party to any minimum purchase order arrangements
with such suppliers, purchasing agents and third party manufacturers.




          (c) Westcon has made available to Transcat a true and complete list of all purchase orders or
commitments placed as of June 30, 2008 by it with suppliers, purchasing agents or manufacturers for
the purchase of inventory and an accurate and complete breakdown and aging of Westcon’s accounts
payable, in each case as of June 30, 2008.




24









 








          (d) Neither Selling Shareholder nor Westcon has received notice that and neither Selling
Shareholder nor Westcon have a basis for believing that any suppliers, purchasing agents or
manufacturers listed in Section 4.12(d) of the Westcon Disclosure Schedules will or plans to
terminate or cancel its relationship with Westcon at any time, including after the Closing.




          (e) Section 4.12(e) of the Westcon Disclosure Schedules is a true, correct and complete
listing, by category and volume level as of June 30, 2008, of all of Westcon’s inventories of (i)
Products and (ii) all other unused or reusable materials and supplies. All of such inventories
have been properly costed and valued or properly reserved for, and properly presented in the
Financial Statements, in all material respects. All of such inventories of Products, materials,
stores and supplies are usable and fit for their intended purpose.




     4.13 Environmental Matters.



     Except as disclosed in Section 4.13 of the Westcon Disclosure Schedules, to Westcon’s and
Selling Shareholder’s knowledge (a) none of the Real Property is in Violation of any Environmental
Laws; (b) Westcon has not Released any Hazardous Substances in a manner that has resulted in a
Violation of any Environmental Laws and there has been no such Release by any previous owner or
operator of any of the Real Property; (c) none of the Real Property has (i) ever had any
underground storage tanks, as defined in 42 U.S.C. section 6991(1)(A)(i), whether empty, filled or
partially filled with any substance, or (ii) any asbestos or any material that contains any
hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite
and/or actinolite, whether friable or non-friable; (d) Westcon has not received any request for
information, notice or order alleging that it may be a potentially responsible party under any
Environmental Laws for the investigation or remediation of a Release or threatened Release of
Hazardous Substances; (e) no event has occurred with respect to any of the Real Property which,
with the passage of time or the giving of notice, or both, would constitute a Violation of or
non-compliance with any applicable Environmental Law or Westcon Permit; (f) there is no Encumbrance
(other than a Permitted Encumbrance), Claim or threat thereof relating to an alleged unauthorized
Release of any Hazardous Substance on, about or beneath the Real Property (or any portion thereof),
or the migration of any Hazardous Substance to or from property adjoining or in the vicinity of the
Real Property, or alleging any obligation under Environmental Laws; and (g) Westcon holds all
Westcon Permits required under any Environmental Law in connection with its use of the Real
Property or the operation of the Business.



     4.14 Employee Plans.



          (a) Section 4.14(a) of the Westcon Disclosure Schedules lists: (i) all employment agreements,
all employee benefit plans, and all other arrangements or understandings reduced to writing; and
(ii) all employment agreements, all employee benefit plans, and all other arrangements or
understandings explicit, implied or oral; in each case which Westcon has ever sponsored, maintained
for the benefit of its employees, former employees, directors, officers, agents or, to which
Westcon is a party or is or may be obligated to contribute, or by which Westcon is bound,
including, without limitation: (A) all employee benefit plans within the meaning of section 3(3)
of ERISA; (B) all profit sharing, deferred compensation,




25









 







bonus, stock option, stock purchase, stock
incentive, stock appreciation rights, restricted stock, severance or incentive compensation plans,
agreements or arrangements; (C) all plans, agreements or arrangements providing for “fringe
benefits” or perquisites to employees, officers, directors or agents; and (D) all employment,
consulting, termination or indemnification agreements (collectively, “Employee Plans”). Westcon
has delivered to Transcat true, correct and complete copies of all Employee Plans, all related
summary plan descriptions, the most recent determination letters received from the IRS, Form 5500
Annual Reports for the last five years (including all schedules and attachments thereto), all
communications received from or sent to the IRS or the U.S. Department of Labor within the last
five years (including any Forms 5330) with respect to any Employee Plan, the most recent financial
reports and summary annual reports and, where applicable, summary descriptions of any Employee
Plans not otherwise reduced to writing. Except as set forth in Section 4.14(a) of the Westcon
Disclosure Schedules, there are no negotiations, demands or proposals that are pending or have been
made since the respective dates of the Employee Plans which concern matters now covered, or that
would be covered, by any Employee Plan. Westcon has maintained all employee data necessary to
administer each Employee Plan, including all data required to be maintained under Sections 107 and
209 of ERISA, and such data are true and correct and are maintained in usable form.




          (b) Except as set forth in Section 4.14(b) of the Westcon Disclosure Schedules, Westcon and
each of the Employee Plans have complied and are in compliance in all respects with the applicable
provisions of the Code, ERISA and all other applicable Laws. Westcon has performed in all respects
all of their obligations under all of the Employee Plans, including the full payment when
originally due of all amounts required to be made as contributions thereto or otherwise and the
payment of all applicable Taxes.




          (c) With respect to each Employee Plan that is an “employee benefit plan” within the meaning
of section 3(3) of ERISA, or a “plan” within the meaning of section 4975(e)(1) of the Code, no
transaction has occurred which is prohibited by section 406 of ERISA or which could give rise to
liability under section 4975 of the Code or sections 502(i) or 409 of ERISA. None of the Employee
Plans, nor any fiduciary thereof, has been the direct or indirect subject of an audit,
investigation or examination by any Governmental Entity within the last five years. There are no
Claims (other than routine undisputed Claims for benefits) pending or threatened against or arising
out of any of the Employee Plans or the respective assets thereof and no facts exist which could
give rise to any such Claims which could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on any Employee Plan, or a Material Adverse Effect.




          (d) To Westcon’s and Selling Shareholder’s knowledge, each Employee Plan that is intended to
qualify under section 401(a) of the Code is so qualified and has received a favorable determination
letter from the IRS and such determination letter considers the Uruguay Round Agreements Act, the
Small Business Job Protection Act of 1996, the Uniformed Services Employment and Reemployment
Rights Act of 1994, the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and
Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000. Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code has been timely amended to reflect the
provisions of




26









 







the Economic Growth & Tax Relief Reconciliation Act of 2001 and any other statutory
or regulatory changes requiring amendments, and has been timely submitted for a determination
letter regarding the provisions of the Economic Growth & Tax Relief Reconciliation Act of 2001 if
the deadline for such submission has passed. No event has occurred that will or could give rise to
the revocation of any applicable determination letter or the disqualification or loss of tax-exempt
status of any such Employee Plan or trust under Sections 401(a) or 501(a) of the Code.




          (e) Westcon does not maintain and has not at any time maintained, and does not and could not
have any liability with respect to, any Employee Plan subject to Title IV of ERISA or Section 412
of the Code. No Employee Plan is or ever has been a “multiemployer plan” within the meaning of
section 3(37) of ERISA. Westcon does not have or could have any liability with respect to a
“multiemployer plan” as defined under section 3(37) of ERISA. No Employee Plan now holds or has
heretofore held any stock or other securities issued by Westcon. Westcon has not established or
contributed to, is required to contribute to or has or could have any liability with respect to any
“voluntary employees’ beneficiary association” within the meaning of section 501(c)(9) of the Code,
any “welfare benefit fund” within the meaning of section 419 of the Code, any “qualified asset
account” within the meaning of section 419A of the Code, or any “multiple employer welfare
arrangement” within the meaning of section 3(40) of ERISA.




          (f) All group health plans of Westcon have been operated in compliance in all material
respects with the group health plan continuation coverage requirements of sections 601 through 608
of ERISA and section 4980B of the Code, Title XXII of the Public Health Service Act, the Health
Insurance Portability and Accountability Act of 1996, the Medicare Part D requirements of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the provisions of the
Social Security Act, to the extent such requirements are applicable. Except to the extent required
under section 4980B of the Code, Westcon does not provide health or welfare benefits (through the
purchase of insurance or otherwise) for or to any retired employee, any former employee or any
other individual who is not an employee, and there has been no communication to any employee,
retired employee, former employee or other individual that could reasonably be expected to promise
or guarantee any such benefits.




          (g) Except with respect to statutory post-termination benefits arising under non-U.S. Laws and
except as set forth in Section 4.14(g) of the Westcon Disclosure Schedules, no provision of any
Employee Plan restricts the ability of Transcat or the Surviving Corporation to terminate the
future accruals of obligations thereunder after the Effective Time; provided, however, that no such
representation or warranty is made with respect to liabilities already accrued at the time of such
termination.




          (h) All reports, returns and similar documents with respect to each Employee Plan required to
be filed with any Governmental Entity or distributed to any participant of any Employee Plan
(including each Form 5500 required to be filed by Westcon) have been duly and timely filed or
distributed in accordance with all applicable Laws.




          (i) There has been no act or omission by Westcon with respect to any Employee Plan that has
given rise or may give rise to fines, penalties, Taxes or related charges under the Code or ERISA
or other applicable law, including but not limited to Sections 511, 4971, 4972, 4975, 4976, 4977,
4979, 4980B, 4980D, 4980E, 4980F or 6652 of the Code, or to any fine or civil penalty under
Sections 502, 4069 or 4071 of ERISA.




27









 








          (j) No condition exists as a result of which Westcon would have any liability, whether
absolute or contingent, including any obligations under any Employee Plan, with respect to any
misclassification of a Person performing services for Westcon as an independent contractor rather
than as an employee.




          (k) Except as described in Section 4.14(k) of the Westcon Disclosure Schedules, the
consummation of the transactions contemplated by this Agreement will not entitle any Person to
severance pay, and will not accelerate the time of payment or vesting, or increase the amount, of
compensation due to any Person. Section 4.14(k) of the Westcon Disclosure Schedules lists all
severance obligations of Westcon owed to any Person.




          (l) Employee Plans which constitute “nonqualified deferred compensation plans” as defined by
§409A of the Code have been administered in compliance with §409A or an exemption therefrom since
January 1, 2005.




          (m) Solely for purposes of this Section 4.14, all references to Westcon includes any Person
which, together with Westcon, is considered an affiliated organization within the meaning of
sections 414(b), 414(c), 414(m) or 414(o) of the Code or sections 3(5) or 4001(b)(1) of ERISA.




          (n) Except as described in Section 4.14(n) of the Westcon Disclosure Schedules, Westcon does
not provide to any of its non-U.S. employees any termination, severance, pension, healthcare or
other benefits in excess of statutory requirements.




          (o) Notwithstanding anything in this Agreement to the contrary, prior to Closing Westcon shall
terminate the Westcon, Inc. 401(k) Profit Sharing Plan (the “401(k) Plan”) and any other Employee
Plan intended to be qualified under Code Section 401(a) or 403(a).




     4.15 Employment Matters.



     Except as disclosed in Section 4.15 of the Westcon Disclosure Schedules, (a) Westcon is, and
since June 30, 2000 has been, in compliance in all material respects with all Laws relating to
affirmative action, employment, equal employment opportunity, nondiscrimination, immigration,
wages, fringe benefits, wage supplements, hours or work, benefits, collective bargaining, the
payment of social security and similar Taxes, occupational safety and health, employment
termination, reductions in force or plant closings (collectively, “Employment Laws”) and with any
contract or subcontract with any Governmental Entity or other Person; (b) Westcon has not
experienced any strikes, grievances or asserted or threatened Claims of unfair labor practice; (c)
Westcon has no knowledge of any organizational effort being made or threatened by or on behalf of
any labor union with respect to any employees of Westcon; (d) there has not been, and there is not
pending or existing or threatened, any strike, work stoppage, labor arbitration or proceeding in
respect of the grievance of any employee, any application, complaint or unfair labor practice
charge filed by an employee, union or works council with the National Labor Relations Board or any
comparable Governmental Entity, organizational activity or other labor dispute against Westcon and
the knowledge of Westcon and Goodhead, there is no basis for any such grievance, charge or
complaint; (e) no application for certification of a




28












 




collective bargaining agent is pending or threatened; (f) there is no lockout of any employees by
Westcon; (g) Westcon has withheld from the wages and salaries of its employees as is required by
law and is not liable for any arrears of wages or any tax or penalty in connection therewith; (h)
there are no Claims currently pending or to Westcon’s and Selling Shareholder’s knowledge
threatened, against Westcon alleging the violation of any Employment Laws, or any other asserted or
to Westcon’s and Selling Shareholder’s knowledge threatened Claim whatsoever, whether based in
tort, contract or Law, arising out of or relating in any way to any Person’s employment (actual or
alleged), application for employment or termination of employment with Westcon and to the knowledge
of Westcon, there is no basis for any such Claim; (i) no current or former employee of Westcon is
owed by Westcon overtime pay (other than overtime pay for the current payroll period), wages or
salary for any period other than the current payroll period, vacation, holiday or other time off or
pay in lieu thereof (other than time off or pay in lieu thereof earned in respect to the current
year); (j) Westcon is not, nor immediately after the Closing will be, liable for severance pay or
any other payment of monies to any employee of Westcon as a result of the execution of this
Agreement or Westcon’s performance of its terms, or for any other reason in any way related to the
consummation of the transactions contemplated hereby, including any change of ownership of Westcon;
and (k) no Governmental Entity has found Westcon to be liable for the payment of Taxes, fines,
penalties or other amounts, however designated, for failure to comply with any of Employment Laws.




     4.16 Material Agreements.



          (a) The term “Material Agreements” means all Contracts to which Westcon is a party which are,
or contain provisions relating to, any of the following:



               (i) any Contracts which are Leases of personal property to or from any Person;



               (ii) any Contract (or group of related Contracts) for the purchase or sale of products, or
other personal property, or for the furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a loss to any of Westcon, or involve
consideration in excess of $25,000 per annum;



               (iii) any Contract concerning a partnership or joint venture;



               (iv) any Contract (or group of related Contracts) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or any
capitalized lease obligation, in excess of $25,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;



               (v) any Contract with any officer or director of the Westcon and/or its Affiliates, or any
entity in which any officer or director of Westcon, Selling Shareholder or any trustee or
beneficiary of Selling Shareholder holds equity or any other economic interest;



               (vi) any Contract concerning confidentiality or noncompetition;



               (vii) collective bargaining agreements or other Contracts to or with any labor unions or other
employee representatives, groups of employees, works councils or the like;



29









 






               (viii) employment Contracts or other Contracts to or with individual current or prospective
employees, consultants or agents (other than Contracts with Westcon’s attorneys, accountants or
advertising agencies that are cancelable without material penalty, cost or expense upon advance
notice of 90 days or less);



               (ix) the Leases;



               (x) the Licenses;



               (xi) Contracts by which Westcon indemnifies any Person;



               (xii) Contracts by which Westcon warranties related to any Product;



               (xiii) Contracts providing for the payment of royalties by Westcon based in any manner on the
revenue or profits of Westcon;



               (xiv) Contracts with obligations to supply parts or replacement parts for a period after
termination of the Contract;



               (xv) Contracts guaranteeing the debt of any third party;



               (xvi) Contracts requiring the exclusive use of third party goods or services or containing a
right of first refusal to a third party in the supply of goods or services;



               (xvii) Contracts to acquire stock, merge or consolidate, or to create a joint venture;



               (xviii) Contracts to borrow funds, except for trade payables incurred in the Ordinary Course
of Business;



               (xix) Contracts to lend to officers, employees or other third parties, except for accounts
receivable incurred in the Ordinary Course of Business;



               (xx) Contracts that require Westcon to maintain insurance; and



               (xxi) other Contracts, if any: (A) the default of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or (B) which
require consent or waiver in connection with consummation of the Merger, and the failure to
obtain such consent or waiver could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.



          (b) All of the Material Agreements are listed in the appropriate sections of the Westcon
Disclosure Schedules. Except for the Material Agreements, Westcon is not a party to or bound by
any Contract affecting in any material respect the operation of the Business. Without limiting the
generality of the foregoing, Westcon is not a party to any Contract providing for guaranteed
minimum payments in excess of $10,000 for the 12-month period ending after the Effective Time which
are not listed in the Westcon Disclosure Schedules.




30









 








          (c) Westcon has made available to Transcat true and complete copies of each Material Agreement
that is in written form (or, in the case of Material Agreements that are in standard form, true and
complete samples of such standard forms), and true and complete written summaries of each Material
Agreement that is oral, in each case as amended to date. To Westcon’s and Selling Shareholder’s
knowledge, each of the Material Agreements constitutes the valid and legally binding obligation of
Westcon and the other parties thereto, and is enforceable in accordance with its terms, except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency or other Laws relating to
or affecting creditors’ rights generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law). Each of the
Material Agreements constitutes the entire agreement of the respective parties thereto relating to
the subject matter thereof. Except as could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, and except as set forth in Section 4.16(c) of the Westcon
Disclosure Schedules, all obligations required to be performed under the terms of the Material
Agreements have been performed, no act or omission has occurred or failed to occur which, with the
giving of notice, the lapse of time or both would constitute a default under any of the Material
Agreements or permit termination, modification or acceleration thereunder, and each of the Material
Agreements is in full force and effect without default on the part of Westcon and any of the other
parties thereto. Without limiting the generality of the foregoing, no written or oral notice of
termination or default has been given or received by Westcon with respect to any Material
Agreement.




          (d) Except for the Required Approvals with respect to Material Agreements set forth in Section
4.4 of the Westcon Disclosure Schedules, no Contract to which Westcon is a party requires consent
or waiver in connection with consummation of the Merger.




          (e) With respect to each Lease: (i) there are no disputes, oral agreements or forbearance
programs in effect; (ii) Westcon has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in the leasehold represented by the Lease; and (iii) except as
could not reasonably be expected to have, individually or in the aggregate, an Material Adverse
Effect, Westcon has obtained all authorizations of Governmental Entities (including licenses and
permits) required to be obtained in connection with their operation of the Business at the premises
leased under the Lease, and have operated and maintained such premises in all material respects in
accordance with applicable Laws.




          (f) Section 4.16(f) of the Westcon Disclosure Schedules includes copies of the standard terms
and conditions of sale or lease, purchase orders, contracts or agreements for
Westcon (containing applicable guaranty, warranty, and indemnity provisions) (the “Standard
Westcon Contracts”). All Standard Westcon Contracts are listed on Section 4.16(f) of the Weston
Disclosure Schedules. All Standard Westcon Contracts, in each case as amended to date, and, except
as set forth in Section 4.16(f) of the Westcon Disclosure Schedules, the actual Standard Westcon
Contracts do not, individually or in the aggregate, differ in any material respect from such
samples with respect to limitations of liability, disclaimers of warranties and indemnities. Each
of the Standard Westcon Contracts contains terms and conditions with respect to limitations of
liability, disclaimers of warranties and indemnities which are standard and customary within the
industry of the Business. To Westcon’s and Selling Shareholder’s knowledge, each of the Standard
Westcon Contracts constitutes the valid and legally binding obligation of Westcon and the other
parties thereto, and is enforceable in accordance with its



31









 







terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency or other Laws relating to or affecting
creditors’ rights generally, and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each of the Standard Westcon
Contracts constitutes the entire agreement of the respective parties thereto relating to the
subject matter thereof. All material obligations required to be performed under the terms of the
Standard Westcon Contracts have been performed, no act or omission has occurred or failed to occur
which, with the giving of notice, the lapse of time or both would constitute a default under any of
the Standard Westcon Contracts or permit termination, modification or acceleration thereunder, and
each of the Standard Westcon Contracts is in full force and effect without default on the part of
Westcon and any of the other parties thereto. Without limiting the generality of the foregoing, no
written or oral notice of termination or default has been given or received by Westcon with respect
to any Standard Westcon Contract.



     4.17 Warranties.



     All Products sold and services performed by the Business on or before the date hereof have
been in conformity with written warranties and commitments and express and implied warranties of
Westcon. As of June 30, 2008, the Business had no obligation or liability for replacement of any
Products or other damages in connection therewith the result of which would have a Material Adverse
Effect on the Business. As of the Closing Date, the Business will have no liability for
replacement of any Products (or other damages in connection therewith) or for the performance of
any services. No Product sold or services performed by the Business are subject to any contractual
guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale.
Westcon has made available to Transcat copies of the standard terms and conditions of sale and for
services performed used by the Business, which contain all applicable guaranty, warranty and
indemnity provisions.



     4.18 Litigation.



     Except as set forth on Section 4.18 of the Westcon Disclosure Schedules, there is no Claim
pending or threatened against or affecting Westcon (or any of their respective officers or
directors in connection with the Business), which if adversely determined could reasonably be
expected to have, individually or in the aggregate, an adverse effect on the consummation of the
Merger, or a Material Adverse Effect, nor is there any judgment, injunction, decree, rule or order
of any Governmental Entity outstanding against Westcon which could reasonably be expected to have,
individually or in the aggregate, any such effect.



     4.19 Tax Matters.



     Except as set forth in Section 4.19 of the Westcon Disclosure Schedules:



          (a) Westcon (or affiliated, unitary or combined group of which Westcon is or has been a
member) has timely filed all federal, state, local and foreign income and franchise Tax returns,
and all other material Tax returns that are required to be filed by it on or before the date hereof
have been filed and all Taxes due shown on such returns have been paid; and the Financial
Statements reflect an adequate accrual in accordance with GAAP, based on the facts



32









 






and
circumstances existing as of the respective dates thereof, for all Taxes payable by Westcon through
the respective dates thereof;




          (b) as of the date hereof, there are no deficiencies for any Taxes proposed, asserted or
assessed against Westcon, no requests for waivers of the time to assess any Taxes are pending;



          (c) each of Westcon has complied with all Laws relating to the payment and withholding of
Taxes and has withheld and paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor or other Person;



          (d) to the extent that the Tax returns of Westcon has been examined by and settled with the
IRS or other relevant taxing authority (or the applicable statue of limitations has expired), all
assessments for Taxes due with respect to such completed and settled examinations or any concluded
litigation have been fully paid;



          (e) as of the date hereof, there are no Encumbrances for Taxes (other than for current Taxes
not yet due and payable) on the assets of Westcon;



          (f) Westcon is not bound by any Contract with any Person with respect to Taxes;



          (g) Westcon has not constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under section 355 of the Code (i) in the two years prior to the
date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan”
or “series of related transactions” (within the meaning of section 355(e) of the Code) in
conjunction with the Merger;



          (h) Westcon has never been a member of an affiliated, unitary or combined group of
corporations (within the meaning of section 1504 of the Code and any analogous provision of Law)
other than an affiliated group in which Westcon was the common parent;



          (i) Westcon has not filed a consent pursuant to the provisions of section 341(f) of the Code
(or any corresponding provision of Law) or agreed to have section 341(f)(2) of the Code (or any
corresponding provision of Law) apply to any disposition of any asset owned by it;



          (j) Westcon has not agreed to make, or is required to make, any adjustment under section
481(a) of the Code or any similar provision of Law by reason of a change in accounting methods or
otherwise;



          (k) no property owned by Westcon is (i) property required to be treated as being owned by
another Person pursuant to the provisions of section 168(f)(8) of the Internal Revenue Code of
1954, as amended, and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) “tax-exempt use property” within the meaning of section 168(h)(1) of the Code,; (iii)
“tax-exempt bond financed property” within the meaning of section 168(g) of the Code; or (iv)
“limited use property” (as that term is used in Rev. Proc. 76-30);



33









 





          (l) as of the date hereof, no audit or other administrative or court proceedings are pending
with respect to Taxes of Westcon and no written notice thereof has been received; and no issue has
been raised by any taxing authority in writing in any presently pending or prior audit, that could
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect for
any period after Closing;



          (m) no asserted or threatened Claim has been made by a taxing authority in a jurisdiction
where Westcon does not file Tax returns that Westcon is or may be subject to taxation in that
jurisdiction;



          (n) Westcon is not obligated under any Contract that provides for the payment of any amount
which would not be deductible by reason of section 280G of the Code, nor will Westcon make any
“excess golden parachute payment” under sections 280G or 4999 of the Code; and



          (o) Westcon has delivered or made available to Transcat true and complete copies of (i) all
income Tax returns of Westcon (or the portion of any affiliated, unitary or combined Tax return
relating to Westcon) for the preceding three taxable years, and (ii) any audit report issued within
the last three years (or otherwise with respect to any audit or proceeding in progress) relating to
Taxes of Westcon.



     4.20 Events Subsequent to June 30, 2008.



     Except as disclosed in Section 4.20 of the Westcon Disclosure Schedules, Westcon has conducted
their respective businesses only in the ordinary and usual course of business and no Material
Adverse Effect has occurred with respect to Westcon. Without limiting the generality of the
foregoing, except for as disclosed in Section 4.20 of the Westcon Disclosure Schedules, since June
30, 2008, Westcon has not:



               (i) sold, leased, transferred, or assigned any of its assets, tangible or intangible, other
than for a fair consideration in the Ordinary Course of Business;



               (ii) entered into any Contract outside the Ordinary Course of Business;



               (iii) accelerated, terminated, modified, or cancelled any Contract to which Westcon is a party
or by which any of them is bound;



               (iv) imposed any Security Interest upon any of its assets, tangible or intangible;



               (v) made any Capital Expenditure (or series of related Capital Expenditures) more than $10,000
in the aggregate;



               (vi) made any capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans, and acquisitions)
more than $10,000 in the aggregate;



34









 





               (vii) issued any note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving
more than $5,000 singly or $10,000 in the aggregate;



               (viii) delayed or postponed the payment of accounts payable or any other Liabilities;



               (ix) cancelled, compromised, waived, or released any right or claim (or series of related
rights and claims) more than $10,000 in the aggregate;



               (x) granted any license or sublicense of any rights under or with respect to any Intellectual
Property;



               (xi) made or authorized any change in the charter or bylaws of Westcon;



               (xii) issued, sold, or otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;



               (xiii) declared, set aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;



               (xiv) experienced any damage, destruction, or loss (whether or not covered by insurance) to
its property more than $10,000 in the aggregate;



               (xv) made any loan to, or entered into any other transaction with, Selling Shareholder, any
Affiliate of Selling Shareholder or Westcon, or any of the directors, officers, or employees of
Westcon or any of its Affiliates other than compensation in the Ordinary Course of Business;



               (xvi) entered into any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement;



               (xvii) granted any increase in the base compensation of any of its directors, officers, and
employees in excess of three percent (3%) per annum;



               (xviii) adopted, amended, modified, or terminated any bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);



               (xix) made any other change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;



35









 





               (xx) made any change in its Tax or accounting principles, practices or methodologies
(including, but not limited to, Tax or accounting elections);



               (xxi) disclosed any material Confidential Information to any third party without appropriate
legal protection;



               (xxii) obtained new revolving loans or caused letters of credit to be issued, other than for
the purchase of inventory or other working capital needs in the Ordinary Course of Business; and



               (xxiii) committed to any of the foregoing.



     4.21 Insurance.



     Section 4.21 of the Westcon Disclosure Schedules sets forth the following information with
respect to each insurance policy (including policies providing property, casualty, liability, and
workers’ compensation coverage and bond and surety arrangements) to which Westcon is a party, a
named insured, or otherwise the beneficiary of coverage or under which Westcon has a pending claim
or could make a claim:



               (i) the name, address, and telephone number of the agent;



               (ii) the name of the insurer, the name of the policyholder, and the name of each covered
insured;



               (iii) the policy number and the period of coverage; and



               (iv) a description of any retroactive premium adjustments or other loss-sharing arrangements.



               With respect to each such insurance policy in effect on the date hereof: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect; (B) nothing exists within the
policy or has occurred that would preclude or interfere with the policy continuing after the
consummation of the transactions contemplated hereby to be legal, valid, binding, enforceable, and
in full force and effect on identical terms as exists after the consummation of the transactions
contemplated hereby; (C) neither Westcon nor any other party to the policy is in
breach or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time, would constitute such
a breach or default, or permit termination, modification, or acceleration, under the policy; and
(D) no party to the policy has repudiated any provision thereof. Section 4.21 of the Westcon
Disclosure Schedules describes any self-insurance arrangements affecting Westcon.



     4.22 Notes Receivable and Accounts Receivable.



     All notes receivable and accounts receivable of the Westcon are reflected properly on their
books and records, are valid receivables, and are current and collectible. None of the notes
receivables or accounts receivables of Westcon are subject to setoffs or counterclaim. No facts



36









 







exist which would entitle any Governmental Authority to exercise any rights of setoff or
counterclaim against any notes receivable or accounts receivable of Westcon.



     4.23 Customers; Suppliers; Accounts Payable.



     (i) Westcon has made available to Transcat a listing backlog of all pending customer orders or
commitments placed as of August 14, 2008 with Westcon.



     (ii) Neither Westcon nor Selling Shareholder has any knowledge for believing any single sales
representative, distributor, licensee, licensor, customer or any group of affiliated sales
representatives, distributor, licensee, licensor or customers who represented five (5%) percent or
more of the consolidated revenues of the Westcon during the twelve (12) months ended June 30, 2008,
will or plans to terminate or cancel its relationship with Westcon. To Westcon’s and Selling
Shareholder’s knowledge, there does not exist any condition, state of facts or circumstances that
would cause any of such sales representatives, distributors, licensees, licensors or customers to
terminate their relationships or for any prospective customers to refuse to consider a prospective
relationship with Westcon. None of the business or prospective business of Westcon is in any
manner dependent upon the making or receipt of any payments, discounts or other inducements to any
officers, directors, employees, representatives or agents of any customer.



     (iii) All accepted and unfulfilled orders for the sale of products entered into by Westcon and
all outstanding contracts or commitments for the purchase of inventory, supplies and services by or
from Westcon were made in bona fide transactions in the Ordinary Course of Business. There are no
material claims against Westcon to return products as a result of alleged over-shipments, defective
products or otherwise, or of products in the hands of customers, retailers, distributors or sales
representative under an understanding that such products would be returnable. Section 4.23 of the
Disclosure Schedules sets forth or references the terms of all product and service warranties and
product return, sales credit, discount, warehouse allowance, advertising allowance, demo sales and
credit policies of Westcon.



     (iv) To Westcon’s and Selling Shareholder’s knowledge each product manufactured, sold, leased,
or delivered by Westcon has been in conformity with all applicable contractual commitments and all
express and implied warranties, and Westcon does not have any Liability for replacement or repair
thereof or other damages in connection therewith except as disclosed on Section 4.23 of the
Disclosure Schedules. No product manufactured, sold, leased, or
delivered by Westcon is subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease as set forth in the Standard Westcon Contracts.



37









 





     (v) To Westcon’s and Selling Shareholder’s knowledge Westcon does not have any Liability
arising out of or related to (i) any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or delivered by Westcon,
or (ii) returned products which were manufactured, sold, leased or delivered by Westcon.



     4.24 Guaranties.



     Except as set forth on Section 4.24 of the Westcon Disclosure Schedules, Westcon is not a
guarantor or otherwise is liable for any Liability or obligation (including indebtedness) of any
other Person.



     4.25 Brokers or Finders.



     No agent, broker, investment banker, financial advisor or other Person is or will be entitled
to any broker’s or finder’s fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.



     4.26 Investment Representations.



               (i) Selling Shareholder is acquiring the Stock Merger Consideration for investment for his own
account and not with a view to, or for resale in connection with, the distribution thereof in
contravention of securities laws.



               (ii) Selling Shareholder’s knowledge and experience in financial and business matters are such
that it is capable of evaluating the merits and risks of his acquisition of the Stock Merger
Consideration. Transcat has made available to Selling Shareholder, their legal and tax counsel,
and their advisors, prior to the date hereof, the opportunity to ask questions of, and to receive
answers from, Transcat and its representatives, about Transcat and access to any information,
documents, financial statements, records and books (1) relative to Transcat and its business and an
investment in Transcat, and (2) necessary to verify the accuracy of any information furnished to
Selling Shareholder, including, but not limited to, the risk factors set forth in Transcat’s Annual
Report on Form 10-K for the fiscal year ended March 29, 2008.



               (iii) Selling Shareholder’s financial condition is such that it can afford to bear the
economic risk of holding the Stock Merger Consideration for an indefinite period of time and has
adequate means for providing for its current needs and contingencies and to suffer a complete loss
of his investment in the Stock Merger Consideration.



               (iv) Selling Shareholder is an “accredited investor” as defined in Rule 501 under the
Securities Act.



               (v) Selling Shareholder has been advised that (A) the Stock Merger Consideration has not been
registered under the Securities Act or other applicable securities laws, (B) the Selling
Shareholder must continue to bear the economic risk of the investment in the Stock Merger
Consideration unless they are subsequently registered under the Securities Act or an exemption from
such registration is available, (C) when and if the Stock Merger



38









 







Consideration may be disposed of
without registration in reliance on Rule 144 promulgated under the Securities Act, such disposition
can be made only in limited amounts in accordance with the terms and conditions of such Rule, and
(D) if the Rule 144 exemption is not available, public sale without registration will require
compliance with an exemption under the Securities Act.



               (vi) Selling Shareholder acknowledges that Transcat and its advisors will rely on the
representations and warranties of Selling Shareholder contained in this Section for purposes of
determining whether the issuance of the Stock Merger Consideration is exempt from registration
under the Securities Act and other applicable securities laws.



               (vii) Selling Shareholder is a resident of the State
of Oregon.



     4.27 Full Disclosure.



               (i) All documents and other papers delivered by or on behalf of the Selling Shareholder or
Westcon in connection with the transactions contemplated by this Agreement are accurate and
complete in all material respects and are authentic. No representation or warranty of the Selling
Shareholder or Westcon contained in this Agreement contains any untrue statement of a material fact
or omits to state a fact necessary in order to make the statements in this Agreement, in light of
the circumstances under which they were made, not misleading in any material respect.



               (ii) All due diligence materials (“Due Diligence”) provided to Transcat by Selling Shareholder
or Westcon were complete, truthful and accurate in all material respects. No representation or
warranty of any Selling Shareholder or Westcon in the Due Diligence contains any material untrue
statement or omits to state a material fact necessary in contained order to make the statements in
this Agreement, in light of the circumstances under which they were made, not misleading.



               (iii) Except as described in this Agreement, there is no fact known to the Selling Shareholder
or Westcon (other than general economic or industry conditions) which Materially Adversely Affects
or, so far as the Selling Shareholder or Westcon can reasonably foresee, materially threatens, the
assets, business, prospects, financial condition or results of operations of Westcon as presently
conducted.



ARTICLE 5.




REPRESENTATIONS AND WARRANTIES OF TRANSCAT




     Transcat represents and warrants to Westcon as follows:



     5.1 Organization, Standing and Power.



     Transcat is a corporation duly organized, validly existing and in good standing under the Laws
of the State of Ohio. Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Oregon. Each of Transcat and Merger Sub has all



39









 







requisite
corporate power and authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, other than in such jurisdictions where the failure so to
qualify could not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.



     5.2 Authority; Binding Effect.



     Each of Transcat and Merger Sub has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of Transcat and Merger Sub. This
Agreement has been duly executed and delivered by each of Transcat and Merger Sub and, assuming the
due execution and delivery hereof by Westcon, constitutes the valid and binding obligation of each
of Transcat and Merger Sub, enforceable against each of them in accordance with its terms, except
as the enforceability hereof may be limited by (a) bankruptcy, insolvency or other Laws relating to
or affecting creditors’ rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law). No vote of any
security holder of Transcat is required in connection with the execution and delivery of this
Agreement by Transcat or Merger Sub or the consummation of the transactions contemplated by this
Agreement. Transcat has adopted this Agreement as the sole stockholder of Merger Sub.



     5.3 No Conflict.



     The execution and delivery of this Agreement by each of Transcat and Merger Sub does not, and
the consummation of the transactions contemplated hereby and the fulfillment of the obligations and
undertakings hereunder will not, result in any Violation of any provision of: (a) the certificate
of incorporation or bylaws of Transcat or of Merger Sub; (b) any material Contract applicable to
Transcat, Merger Sub or any of their respective assets; or (c) any Law applicable to Transcat,
Merger Sub or any of their respective assets; except, in the case of Contracts and Laws, for
Violations which could not reasonably be expected to have, individually or in the aggregate, any
material adverse effect on the validity or enforceability of this Agreement or a Material Adverse
Effect. No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Transcat or Merger Sub in
connection with the execution and delivery of this Agreement by Transcat or Merger Sub or the
consummation by each of Transcat and Merger Sub of the transactions contemplated hereby, except
for: (i) filings and notices required under Competition Laws; (ii) the filing of such documents
with, and the obtaining of such orders from, state authorities, including state securities
authorities, that are required in connection with the transactions contemplated by this Agreement;
(iii) the filing with Nasdaq (iii) the filing by the Secretary of State of the State of
Oregon contemplated by Section 2.1; and (v) such consents, approvals, orders, authorizations
or registrations the failure to obtain which could not reasonably be expected, individually or in
the aggregate, to have any adverse effect on the validity or enforceability of this Agreement or a
Material Adverse Effect.



40









 





     5.4 Transcat SEC Documents.



     Transcat has made available to Westcon a true, correct and complete copy of Transcat’s Annual
Report on Form 10-K for the year ended March 29, 2008, quarterly reports on Form 10-Q for the
quarters ended December 27, 2007, September 29, 2007 and June 30, 2007, current reports on Form 8-K
filed since March 31, 2007, and definitive proxy statement for the annual meeting of stockholders
of Transcat held on August 21, 2007, in each case including all amendments thereof and all as filed
by Transcat with the SEC (collectively, the “Transcat SEC Documents”). As of their respective
dates, the Transcat SEC Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, and none of the Transcat SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Transcat included in the Transcat SEC Documents comply
in all material respects with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except as
may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited statements, to
normal, recurring audit adjustments), in all material respects, the consolidated financial position
of Transcat and its consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.



     5.5 Capital Structure, Merger Consideration.



          (a) The authorized capital stock of Transcat consists of 30,000,000 shares of Transcat Common
Stock.



          (b) The Transcat Common Stock constituting the Stock Merger Consideration has been duly
authorized and, if and when issued and delivered against receipt of the Exchanged Shares pursuant
to this Agreement, will be duly authorized, validly issued, fully paid and non-assessable and not
issued in Violation of any preemptive rights.



          (c) Transcat will have at Closing sufficient cash equivalents to pay the Cash Merger
Consideration and its costs related to this Agreement and the transactions contemplated hereby.



          (d) Except as described in this Agreement or in the Transcat SEC Documents, there is no fact
known to Transcat (other than general economic or industry conditions or other such conditions as
may be outlined in the Transcat SEC Documents) which so far as Transcat can reasonably foresee,
materially threatens, value of the Merger Consideration, the assets, business, prospects, financial
condition or results of operations of Trascat as presently conducted.



     5.6 Litigation.



     Except as disclosed in the Transcat SEC Documents, there is no Claim pending or threatened
against or affecting Transcat or any of its Subsidiaries (or any of their respective officers or
directors in connection with the business of Transcat or any of its Subsidiaries), which



41









 







if
adversely determined could reasonably be expected, individually or in the aggregate, to have an
adverse effect on the consummation of the Merger or a Material Adverse Effect, nor is there any
judgment, injunction, decree, rule or order of any Governmental Entity outstanding against Transcat
or any of its Subsidiaries which could reasonably be expected, individually or in the aggregate, to
have any such effect.



     5.7 Brokers or Finders.



     No agent, broker, investment banker, financial advisor or other Person is or will be entitled
to any broker’s or finder’s fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.



ARTICLE 6.




COVENANTS OF TRANSCAT




     6.1 Stock Exchange Listing.



     In the event that the Merger Consideration is the Stock Merger Consideration, prior to the
Closing Date, Transcat will use commercially reasonable efforts to cause the shares of Transcat
Common Stock to be issued in the Merger, and those required to be reserved for issuance, to be
listed on the Nasdaq.



ARTICLE 7.




ADDITIONAL COVENANTS OF EACH PARTY




     7.1 Additional Agreements; Commercially Reasonable Efforts.



     Subject to the terms and conditions of this Agreement, each of the parties agrees to use
commercially reasonable efforts to take or cause to be taken all action, and to do or cause to be
done all things necessary, proper or advisable under applicable Laws, to consummate and make
effective the transactions contemplated by this Agreement, subject to Shareholder Approval,
including cooperating fully with the other parties, providing information, making all necessary
filings and giving all necessary notices in connection with, among other things, Competition Laws,
the Securities Act, the Exchange Act and state securities Laws. Each of the parties will take or
cause to be taken all reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party, required to be obtained or made by any of them in
connection with the Merger or the taking of any action contemplated by this Agreement. In case at
any time after the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and franchises of either
of the Constituent Corporations, each party will reasonably cooperate to take all such necessary
action.



     7.2 Expenses.



42









 






     Transcat and Westcon will each bear its respective legal, accounting and other expenses in
connection with the transactions contemplated hereby, whether or not the Merger is consummated.



     7.3 Other Actions.



     Neither Westcon nor Transcat will, knowingly take any action that would or is reasonably
likely to cause any of its representations and warranties set forth in this Agreement to be untrue
as of the date made or any of the conditions to the Merger set forth in Article 8 not to be
satisfied. Prior to the Effective Time, each of the parties will use commercially reasonable
efforts to: (a) obtain the satisfaction of its conditions to Closing as set forth in Article 8 as
soon as practicable; (b) facilitate contacts, negotiations and communications with any Persons
reasonably necessary to insure a smooth transition of control of the Business; and (c) assist one
another in obtaining any consents required or desirable from any Person to effect the consummation
of the transactions contemplated hereby.



     7.4 Confidentiality.



     Transcat and Merger Sub (treated as one party for this purpose) and Westcon (each, the
"Receiving Party”) will, and will use commercially reasonable efforts to cause its Affiliates,
employees, representatives and agents to, hold in strict confidence all Confidential Information of
the other party (each, the “Disclosing Party”), unless compelled to disclose the same by judicial
or administrative process or, in the opinion of counsel, by other Laws; provided, however, that in
either such case the Receiving Party will provide the Disclosing Party with prompt prior notice
thereof so that the Disclosing Party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Section. In the event that such protective order or
other remedy is not obtained, or the Disclosing Party waives compliance with the provisions hereof,
the Receiving Party will furnish only that portion of Confidential Information which, in the
written advice of the Receiving Party’s counsel, is required, and the Receiving Party will exercise
commercially reasonable efforts to obtain reliable assurance that confidential treatment will be
accorded such of the disclosed Confidential Information as the Disclosing Party so designates. The
Receiving Party will not otherwise disclose Confidential Information to any Person, except with the
consent of the Disclosing Party. In the event that the Merger is not consummated, the Receiving
Party will promptly return all Confidential Information to the Disclosing Party. For the purposes
hereof, “Confidential Information” means all information of any kind concerning the Disclosing
Party or any of its Affiliates, obtained directly or indirectly from the Disclosing Party or any of
its Affiliates, employees, representatives or agents in connection with the transactions
contemplated hereby, except information (a) ascertainable or obtained from public or published
sources, (b) received from a third party not known by the Receiving Party to be under an obligation
to keep such information confidential, (c) which is or becomes known to the public (other than
through a breach of this Agreement), or (d) which was in the Receiving
Party’s possession prior to disclosure thereof to the Receiving Party and which was not
subject to any obligation to keep such information confidential. The Receiving Party recognizes
that any breach of the provisions of this Section would result in irreparable harm to the
Disclosing Party and its Affiliates and, therefore, that the Disclosing Party will be entitled to
an injunction to prohibit any such breach or



43









 







anticipated breach, without the necessity of posting a
bond, cash or otherwise, in addition to all of its other legal and equitable remedies.



     7.5 Publicity.



     Neither Westcon nor Selling Shareholder shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior written approval of
Transcat. In addition, Westcon and Selling Shareholder covenant and agree to cooperate with
Transcat in connection with the preparation and making of any public disclosure by Transcat which
Transcat elects to or is required to make by applicable Law or any listing or trading requirement
concerning Transcat’s publicly-traded securities.



     7.6 Cooperation in Preparation of Audited Financial Statements and SEC Reports.



     Westcon will cause its accounting firm to cooperate with Transcat and its independent public
accounting firm in the preparation of audited financial statements required to be prepared and
filed pursuant to the regulations promulgated under the Exchange Act. Westcon and Selling
Shareholder agree to cooperate with Transcat in the preparation of all filings with the SEC in
connection with this Agreement and the consummation of the Merger.



     7.7 Restrictions on Certain Activities.



          (a) Selling Shareholder shall not, during the period of time in which he is employed by
Transcat or any Subsidiary of Transcat and for a period of five (5) years after the termination of
his employment (for whatever reason), anywhere in the United States, Canada or Mexico, directly or
indirectly, as a partner, joint venturer, investor, lender, manager, licensor, manufacturer,
retailer or otherwise, engage in any business that engages in any activity which is competitive
with the Business or the businesses operated by Transcat or its Subsidiaries, or own stock or
otherwise have an ownership interest in any person, corporation, firm, partnership or other entity
engaged in any such business.



          (b) Selling Shareholder will not, during the period of time in which he is employed by
Transcat or any Subsidiary of Transcat and for a period of five (5) years after the termination of
his employment (for whatever reason), hire or offer to hire (as an employee, independent contractor
or otherwise) any person who on the date hereof is a director, officer or employee of Transcat or
any of its Subsidiaries, including Merger Sub.



          (c) Selling Shareholder agrees that a violation of Section 7.7(a) or 7.7(b) will cause
irreparable injury to Transcat and Merger Sub, and Transcat and Merger will be entitled, in
addition to any other rights and remedies it may have at law or in equity, to apply for an
injunction enjoining and restraining Selling Shareholder, as the case may be, from doing or
continuing to do any such act and any other violations or threatened violations of Section 7.7
hereof without the necessity of posting a bond or undertaking.



          (d) Selling Shareholder agrees that a violation of this Section 7.7 will cause irreparable
injury to Transcat and Merger Sub, and Transcat and Merger Sub will be entitled, in addition to any
other rights and remedies it may have at law or in equity, to apply for and have



44









 







issued an
injunction enjoining and restraining Selling Shareholder from doing or continuing to do any such
act and any other violations or threatened violations of this Section 7.7. Selling Shareholder
acknowledges and agrees that the covenants set forth in this Section 7.7 are reasonable and valid
in geographical and temporal scope and in all other respects. If any of such covenants are found to
be invalid or unenforceable by a final determination of a court of competent jurisdiction (i) the
remaining terms and provisions hereof shall be unimpaired and (ii) the invalid or unenforceable
term or provision shall be deemed replaced by a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable term or provision.
In the event that, notwithstanding the first sentence of this Section 7.7(d), any of the provisions
of this Section 7.7 relating to the geographic or temporal scope of the covenants contained therein
or the nature of the business restricted thereby shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems enforceable, such provision
shall be deemed to be replaced herein by the maximum restriction deemed enforceable by such court.



          (e) Notwithstanding any contrary provision contained in this Agreement, the restrictions set
forth in this Section shall expire upon any failure of Transcat or Merger Sub to pay any undisputed
amount under this Agreement or the Earn Out Agreement, which failure is not cured within fifteen
(15) days after written notice of such non-payment by Selling Shareholder. Selling Shareholder
acknowledges and agrees that exercise of Transcat’s and Merger Sub’s rights under Section 9.6 of
this Agreement shall not be deemed a failure to make payment to Selling Shareholder and the terms
of this Section shall not expire upon the exercise of such rights.



ARTICLE 8.




CONDITIONS PRECEDENT TO PARTIES’ OBLIGATIONS




     8.1 Conditions to Each Party’s Obligation to Effect the Merger.



     The respective obligations of Westcon, Transcat and Merger Sub to effect the Merger are
subject to the satisfaction prior to the Closing Date of each of the following conditions:



          (a) Nasdaq Listing. The shares of Transcat Common Stock issuable to Selling Shareholder in
the Merger will have been authorized for listing on the Nasdaq upon official notice of issuance.



          (b) Governmental Approvals. Other than the filing provided for by Section 2.1, all licenses,
franchises, certificates, permits, accreditations, authorizations, consents, orders or approvals
of, or registrations, declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity the failure to obtain which would materially delay, prevent or hinder the
consummation of the Merger, will have occurred, been filed or been
obtained, including any authorizations, filings or notices required under Competition Laws;
and, in the event that the Merger Consideration is the Stock Merger Consideration, Transcat will
have received all state securities or “Blue Sky” permits and other authorizations necessary to
issue the Transcat Common Stock in exchange for the Westcon Common Stock and to consummate the
Merger.



45









 





          (c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent
injunction or other order or Law issued by any court of competent jurisdiction or other
Governmental Entity, or other legal restraint or prohibition, preventing the consummation of the
Merger will be in effect.



     8.2 Conditions to Obligations of Transcat and Merger Sub.



     The obligations of Transcat and Merger Sub to effect the Merger are subject to the
satisfaction of the following additional conditions, unless waived by Transcat:



          (a) Representations and Warranties. The representations and warranties of Westcon set forth
in this Agreement will be true and correct in all respects (without regard to any qualifications as
to materiality or a Material Adverse Effect), in each case as of the date of this Agreement and as
of the Closing Date, with the same force and effect as if made on and as of the Closing Date, in
each case except for representations and warranties that speak only as of a specific date, which
will have been true and correct as of such date (it being understood that for purposes of
determining the accuracy of such representations or warranties, any updates or amendments to the
Westcon Disclosure Schedules not made in accordance with the provisions of Section 11.3 will be
disregarded); and Transcat will have received a certificate to such effect signed on behalf of
Westcon by its Certifying Officers.



          (b) Performance of Obligations of Westcon. Westcon will have performed in all respects all
obligations required to be performed by it under this Agreement at or prior to the Closing Date,
and Transcat will have received a certificate to such effect signed on behalf of Westcon by its
Certifying Officers.



          (c) No Material Adverse Effect. Between the date hereof and the Closing Date, there will not
have occurred or been discovered one or more events or conditions which have, or which may
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and
Transcat will have received a certificate to such effect signed on behalf of Westcon by its
Certifying Officers.



          (d) No Amendments to Resolutions. The board of directors of Westcon will not have amended,
modified, rescinded or repealed the resolutions heretofore adopted by the board of directors which
approve this Agreement, the consummation of the Merger and the performance of all of Westcon’s and
the board of directors’ obligations hereunder, and will not have adopted any other resolutions in
connection with this Agreement and the transactions contemplated hereby inconsistent with such
resolutions, and Transcat will have received a certificate to such effect signed on behalf of
Westcon by its Certifying Officers.



          (e) Certificates of Incorporation. With respect to Westcon, Transcat will have received a
copy, certified as of a date reasonably proximate to the Closing Date by the Secretary
of State (or other appropriate Governmental Entity) of its jurisdiction of organization, of
its complete certificate of incorporation (or similar organizational document), including all
amendments to date.



46









 





          (f) Consents Under Agreements. Westcon will have obtained the consent or approval of each
Person whose consent or approval is required in order to permit the continuation or succession by
the Surviving Corporation pursuant to the Merger to any obligation, right or interest of Westcon
under any Intellectual Property or Contract.



          (g) Termination of Existing Lease Agreement; New Lease Agreement. Selling Shareholder, Jan M.
Goodhead and Westcon shall have executed and delivered a termination agreement for the Lease of the
commercial real estate located at 14058 and 14050 S.W. Milton Court, Portland, Oregon among
Westcon, Selling Shareholder and Jan. M. Goodhead dated March 1, 2006 in the form attached hereto
as Exhibit B. In addition, Selling Shareholder, Jan M. Goodhead and Merger Sub shall have executed
and delivered a lease agreement substantially in the form attached hereto as Exhibit C.



          (h) Earn-Out Agreement. Transcat and Selling Shareholder will have executed and delivered the
Earn-Out Agreement in substantially the same form as Exhibit D.



          (i) Westcon Debt Payoff Letter. Westcon shall deliver to Transcat, no less than three (3)
days prior to Closing, the Pay-Off Letter for all Westcon Debt in a form satisfactory to Transcat.



          (j) Termination of Employee Plans and 401(k) Plan. Westcon shall have delivered resolutions
of its Board of Directors terminating the 401(k) Plan and any other Employee Plan intended to be
qualified under Code Section 401(a) or 403(a) and provide Transcat with written evidence of such
termination in a form satisfactory to Transcat.



         (k) Other Closing Deliveries. Transcat will have received the following:



               (i) reasonable evidence of satisfaction of the covenants contained in Article 6;



               (ii) duly executed resignations of all directors and officers of Westcon (in those capacities
and not as employees), except to the extent the same is not permitted by non-U.S. Law or custom;
and



               (iii) certificates of good standing as of a date reasonably proximate to the Closing Date with
respect to Westcon from the respective Secretaries of State (or other appropriate Governmental
Entities) of its jurisdiction of organization and each other jurisdiction listed in Section 4.1 of
the Westcon Disclosure Schedules.



     8.3 Conditions to Obligations of Westcon.



     The obligation of Westcon to effect the Merger is subject to the satisfaction of the following
additional conditions, unless waived by Westcon:



          (a) Representations and Warranties. The representations and warranties of Transcat set forth
in this Agreement that are qualified as to materiality or a Material Adverse Effect will be true
and correct, and those that are not so qualified will be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing Date, with



47









 







the same force and
effect as if made on and as of the Closing Date, in each case except for representations and
warranties that speak only as of a specific date, which will have been true and correct as of such
date; and Westcon will have received a certificate to such effect signed on behalf of Transcat by
its Certifying Officer.



          (b) Performance of Obligations of Transcat and Merger Sub. Transcat and Merger Sub will have
performed in all material respects all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and Westcon will have received a certificate to such
effect signed on behalf of Transcat by its Certifying Officer.



ARTICLE 9.




INDEMNIFICATION




     9.1 Survival.



     The representations and warranties in this Agreement (other than the representations and
warranties contained in Sections 4.1 (Organization, Standing and Power), 4.2 (Capital Structure)
(Authority; Binding Effect), 4.8 (Assets; Title; Absence of Liens and Encumbrances), 4.10
(Intellectual Property), 4.13 (Environmental Matters), 4.14 (Employee Plans), 4.15 (Employment
Matters), 4.19 (Tax Matters), 4.27 (Investment Representations), 4.28 (Full Disclosure), 5.1
(Organization, Standing and Power) and 5.2 (Authority; Binding Effect) (collectively, the
“Surviving Representations and Warranties”) which shall survive the Closing indefinitely) shall
survive the Closing until the eighteen (18) month anniversary of the Closing, at which time they
shall terminate; provided that a claim based on the Surviving Representations and Warranties, any
claim based on fraud by Selling Shareholder or Westcon in connection with this Agreement or any
other agreements delivered in connection herewith and any claim based on fraud by Transcat or
Merger Sub in connection with this Agreement shall survive the Closing indefinitely, subject to any
applicable statute of limitations. Notwithstanding the foregoing, if prior to the stated expiration
of any representation and warranty there shall have been given notice of an indemnification claim
by a Person, such Person shall continue to have the right to such indemnification with respect to
such noticed claim notwithstanding such expiration.



     9.2 Indemnification by Westcon and Selling Shareholder.



     From and after the Closing Date, Westcon and Selling Shareholder shall jointly and severally
indemnify, save and hold harmless Transcat and Merger Sub, and their respective directors, officers
and stockholders and Representatives, or any of them (collectively, “Transcat Indemnitees”) from
and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or
suffered by any of them based upon, arising out of, related to or otherwise
in respect of any of the following (including any action, suit or proceeding based upon,
arising out of, related to or otherwise in respect of any thereof):



          (a) the inaccuracy in or breach of any representation or warranty of Westcon or Selling
Shareholder contained in Article 4 or any certificate delivered by Westcon or Selling Shareholder
to Transcat and Merger Sub in connection with this Agreement;



48









 





          (b) any failure to perform or observe or any breach of any covenant or agreement made by
Westcon or Selling Shareholder or any of their respective Affiliates in this Agreement or any other
agreement delivered by Westcon or Selling Shareholder; and



          (c) any undisclosed Liability of Westcon or Selling Shareholder.



     9.3 Indemnification by Transcat.



     From and after the Closing Date, Transcat shall indemnify, save and hold harmless Selling
Shareholder and his heirs and beneficiaries (collectively, “Selling Shareholder Indemnitees”) from
and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or
suffered by any them based upon, arising out of, related to or otherwise in respect of any of the
following (including any action, suit or proceeding based upon, arising out of, related to or
otherwise in respect of any thereof):



          (a) the inaccuracy in or breach of any representation or warranty by Transcat contained in
Article 5 or any certificate delivered by Transcat in connection with this Agreement; and



          (b) any failure to perform or observe or any breach of any covenant or agreement made by
Transcat or Merger Sub or any of their respective Affiliates in this Agreement.



     9.4 Notice of Claims.



     Except as provided in Section 9.5, if any Transcat Indemnitee or Selling Shareholder
Indemnitee (an “Indemnified Party”) believes that it has suffered or incurred any Losses for which
it is entitled to indemnification under this Article 9, such Indemnified Party shall so notify the
Party from whom indemnification is being claimed (the “Indemnifying Party”) with reasonable
promptness and reasonable particularity in light of the circumstances then existing. If any claim
is instituted by or against a third party with respect to which any Indemnified Party intends to
claim indemnification under this Article 9, such Indemnified Party shall promptly notify the
Indemnifying Party of such claim. The notice provided by the Indemnified Party to the Indemnifying
Party shall describe the claim (the “Asserted Liability”) in reasonable detail and shall indicate
the amount (or an estimate) of the Losses that have been or may be suffered by the Indemnified
Party. The failure of an Indemnified Party to give any notice required by this Section 9.4 shall
not affect any of the Indemnified Party’s rights under this Article 9 or otherwise except and to
the extent that such failure is prejudicial to the rights or obligations of the Indemnifying Party.



     9.5 Opportunity to Defend Third Party Claims.



          (a) Any Indemnifying Party will have the right to defend the Indemnified Party against any
third party claim for which it is entitled to indemnification from such Indemnifying Party under
this Article 9 with counsel reasonably satisfactory to the Indemnified Party so long as (i) any of
the Indemnifying Parties notifies the Indemnified Party in writing within twenty (20) days after
the Indemnified Party has given notice of the third party claim that



49









 







all of the Indemnifying
Parties will indemnify the Indemnified Party from and against the entirety of Losses the
Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or
caused by the third party claim, (ii) the Indemnifying Parties provide the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying Parties will have the
financial resources to defend against the third party claim and fulfill their indemnification
obligations hereunder, (iii) the third party claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the third party claim is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the continuing business interests
of the Indemnified Party, and (v) the Indemnifying Parties diligently conduct the defense of the
third party claim.



          (b) Notwithstanding the foregoing, without the prior consent of the Indemnified Party, the
Indemnifying Parties shall not settle or compromise any third party claim or consent to the entry
of a judgment in connection therewith that: (i) does not provide for the claimant to give an
unconditional release to the Indemnified Party in respect of the Asserted Liability; (ii) involves
relief other than monetary damages; (iii) places restrictions or conditions on the operation of the
business of the Indemnified Party or any of its Affiliates; or (iv) involves any finding or
admission of criminal liability or of any Laws.



          (c) So long as the Indemnifying Party has undertaken to conduct the defense of the third party
claim in accordance with Section 9.5(a), (i) the Indemnified Party may retain separate co-counsel
at its sole cost and expense and participate in the defense of the third party claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the Indemnifying Party, and
(iii) the Indemnifying Party shall keep the Indemnified Party reasonably informed as to the status
of the claim for which it is providing a defense. Notwithstanding the foregoing or Section 9.5(a),
in the event that (w) any of the conditions in Section 9.5(a)(i) is or becomes unsatisfied or; (x)
the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified
Party to defend such action within thirty (30) days after the Indemnifying Party notifies the
Indemnified Party of its intent to defend against the Asserted Liability; (y) the Indemnified Party
shall have reasonably concluded, based upon written advice of counsel, that it has defenses
available to it that are different from or additional to those available to the Indemnifying Party
(in which case the Indemnifying Party shall not have the right to direct the defense of such action
on behalf of the Indemnified Party with respect to such different defenses); or (z) representation
of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding, then the Indemnified Party may defend against the
third party claim in any manner it may deem
appropriate and, the Indemnifying Parties will be responsible for the Indemnified Party’s
costs of defending against the third party claim (including reasonable attorneys’ fees and
expenses), and the Indemnifying Parties will remain responsible for the entirety of the Losses the
Indemnified Party may suffer resulting from, arising out of or caused by the third party claim.



     9.6 Recoupment From Cash Merger Consideration.



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     Any indemnification to which a Transcat Indemnified Party is entitled under this Agreement as
a result of any Losses it may suffer shall first be made as a payment to such Transcat Indemnified
Party from the next payment of Merger Cash Consideration to be made to the Selling Shareholder
hereunder, which shall reduce such Merger Cash Consideration payments accordingly until such Losses
are indemnified in full. To the extent that the aggregate amount of such indemnification exceeds
the future Merger Cash Consideration payments to be received by the Selling Shareholder, the
Transcat Indemnified Party(ies) may reduce the amount, if any due owing, to Selling Shareholder
under the Earn-Out Agreement. To the extent that the aggregate amount of such indemnification
exceeds both the future Merger Cash Consideration payments and the amounts under the Earn-Out
Agreement, may recoup such unpaid Losses from the Selling Shareholder directly. Any indemnification
payment or set-off against the Merger Consideration made pursuant to this Article 9 shall be
treated, to the extent permitted or required by Laws, by all Parties as an adjustment to the
Purchase Price.



ARTICLE 10.




TERMINATION




     10.1 Termination.



     This Agreement may be terminated at any time prior to the Effective Time, whether before or
after Shareholder Approval:



          (a) by mutual consent of Selling Shareholder and Transcat;



          (b) by Transcat, upon notice to Selling Shareholder, if (without any breach by Transcat of any
of its obligations hereunder) compliance with any condition set forth in Sections 8.1 or 8.2
becomes impossible, and such failure of compliance is not waived by Transcat;



          (c) by Westcon, upon notice to Transcat, if (without any breach by Westcon of any of its
obligations hereunder) compliance with any condition set forth in Sections 8.1 or 8.3 becomes
impossible, and such failure of compliance is not waived by Westcon;



          (d) by Transcat or by Westcon, upon notice to the other, at any time after                     
if Closing has not occurred by that date (except that the right to terminate under this Section
10.1(d) will not be available to any party whose failure to perform its obligations hereunder has
been the cause of the failure of Closing to occur by such date); or



          (e) by Transcat, upon notice to Selling Shareholder in the event the Selling Shareholder or
Westcon breaches any representation, warranty, or covenant contained in this
Agreement in any respect, Transcat has notified the Selling Shareholder of the breach, and the
breach has continued without cure for a period of thirty (30) days after the notice of breach.



     10.2 Effect of Termination.



     In the event of termination of this Agreement by any party, this Agreement will immediately
become void and of no effect, and there will be no liability or obligation on the part of Transcat,
Merger Sub, Westcon or any of their respective officers or directors to any other



51









 







party hereto,
except (a) as otherwise provided by Section 9.3, and (b) in the case of willful material breach of
this Agreement.



ARTICLE 11. IN GENERAL




     11.1 Amendment; Waiver.



     This Agreement may not be amended except by an instrument in writing signed by each of the
parties. No waiver of compliance with any provision or condition hereof, and no consent provided
for herein, will be effective unless evidenced by an instrument in writing duly executed by the
party sought to be charged therewith. No failure on the part of any party to exercise, and no
delay in exercising, any of its rights hereunder will operate as a waiver thereof, nor will any
single or partial exercise by either party of any right preclude any other or future exercise
thereof or the exercise of any other right.



     11.2 Notices.



     Each notice and other communication given hereunder will be in writing and will be deemed
given when delivered personally, sent by telecopier (receipt of which is confirmed), or mailed,
freight prepaid, by internationally recognized overnight courier (with receipt confirmed) to the
party for which it is intended at the following address (or at such other address for a party as is
specified by like notice):



          (a) if to Westcon prior to the Effective Time, to:


Westcon, Inc.

14058 SW Milton Court

Portland, Oregon 97224

Attention: David Goodhead

Fax: 508-598-4545




          with a copy (which will not constitute notice) to:


Kivel & Howard, LLP

111 SW Fifth Avenue, Suite 1775

Portland, Oregon 97204

Attention: Scott Howard

Fax: 503-802-4757




          (b) if to Transcat or Merger Sub, or to the Surviving Corporation after the Effective Time,
to:


c/o Transcat, Inc.

35 Vantage Point Drive

Rochester, New York 14624

Attention: Chief Executive Officer,
President and Chief Operating Officer

Fax: 585-352-7788




52









 








          and to:


Transcat, Inc.

35 Vantage Point Drive

Rochester, New York 14624

Attention: Chief Executive Officer

Fax: 585-352-7788




          with a copy (which will not constitute notice) to:


Harter, Secrest & Emery LLP

1600 Bausch & Lomb Place

Rochester, New York 14604-2711

Attention: James M. Jenkins

Fax: (585) 232-2152




     11.3 Westcon Disclosure Schedules and Other Instruments.



     The Westcon Disclosure Schedules, each certificate provided hereunder and each written
disclosure required hereby is incorporated by reference into this Agreement and will be considered
a part hereof as if set forth herein in full; provided, however, that information set forth in the
Westcon Disclosure Schedules or in any certification or written disclosure constitutes a
representation and warranty of the party providing the same, and not the mutual agreement of the
parties as to the facts therein stated. The Westcon Disclosure Schedules may not be amended or
updated after the date of its delivery, except by the written agreement of Transcat.



     11.4 Inferences.



     Inasmuch as this Agreement is the result of negotiations between sophisticated parties of
equal bargaining power represented by counsel, no inference in favor of or against any party will
be drawn from the fact that any portion of this Agreement has been drafted by or on behalf of such
party.



     11.5 Governing Law; Jurisdiction and Venue.



     This Agreement will be governed by and construed in accordance with the Laws of the State of
New York without regard to its principles of conflicts of laws. The parties agree that the
sole and exclusive forum for any Claim related to this Agreement, the interpretation or
construction hereof and the transactions contemplated hereby will be the Supreme Court of and for
the County of Monroe, State of New York. Each party unconditionally and irrevocably agrees not to
bring any Claim in any other forum and not to plead or otherwise attempt to defeat the trial of
such a matter in such court whether by asserting that such court is an inconvenient forum, lacks
jurisdiction (personal or other) or otherwise. Each Party hereby waives the right to a trial by
jury.



53









 





     11.6 Assignment.



     Neither this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any of the parties (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole discretion, any or all
of its rights, interests and obligations hereunder to any direct wholly-owned Subsidiary of
Transcat.



     11.7 Benefit.



     Subject to express provisions herein to the contrary, this Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective legal representatives, successors
and permitted assigns.



     11.8 Entire Agreement; Rights of Ownership.



     This Agreement constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof.
The parties acknowledge that no party or other Person will have the right to acquire or will be
deemed to have acquired shares of the capital stock of any other party pursuant to the Merger until
the Effective Time.



     11.9 Headings.



     The heading references herein and the tables and indexes hereto are for convenience purposes
only, do not constitute a part of this Agreement and will not be deemed to limit or affect any of
the provisions hereof.



     11.10 Counterparts.



     This Agreement, and any document or instrument required or permitted hereunder, may be
executed in counterparts, each of which will be deemed an original and all of which together will
constitute but one and the same instrument.



     11.11 Independent Counsel. The parties covenant and agree that they have carefully read this
Agreement, know its contents, and freely and voluntarily agree to all of its terms and conditions.
Each party acknowledges that it has had the opportunity to engage independent legal counsel of its
choice throughout all the negotiations that preceded the execution of this Agreement, and each
party acknowledges that it was given the opportunity to seek the consent and advice of independent
legal counsel prior to the execution of this Agreement and
consummation of the transactions contemplated herein. Each party shall bear its own legal
fees incurred as a result of the preparation, review and negotiation of this Agreement.



     11.12 Cooperation Following the Closing. Following the Closing, each party hereto shall
deliver to the other parties hereto such further information and documents and shall execute and
deliver to the other parties hereto such further instruments and agreements as any other party
hereto shall reasonably request to consummate or confirm the transactions provided for in this



54









 







Agreement, to accomplish the purpose of this Agreement or to assure to any other party hereto the
benefits of this Agreement.



[signature page follows]




55









 









     In Witness Whereof, each of Transcat, Merger Sub, Westcon and Selling Shareholder have caused
this Agreement and Plan of Merger to be duly executed and delivered as of the date first above
written.



	 	 	 	 	 
	 	TRANSCAT, INC.

 	 
	 	By:  	/s/
Charles P. Hadeed 	 
	 	 	Name:  	Charles P. Hadeed 	 
	 	 	Title:  	President, Chief Executive Officer and 
Chief
Operating Officer 	 
	 
	 	TRANSCAT ACQUISITION CORP.

 	 
	 	By:  	/s/
Charles P. Hadeed 	 
	 	 	Name:  	Charles P. Hadeed 	 
	 	 	Title:  	President, Chief Executive Officer and 
Chief
Operating Officer 	 
	 
	 	WESTCON, INC.

 	 
	 	By:  	/s/
David D. Goodhead 	 
	 	 	Name:  	David D. Goodhead 	 
	 	 	Title:  	President	 
	 
	 	 	 
	 	
/s/ David D. Goodhead 	 
	 	DAVID GOODHEAD, 	 
	 	Sole Shareholder of Westcon, Inc. 	 
	 




56