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Item 1.01
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Entry into a Material Definitive Agreement.
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On May 11, 2020, Cantel
Medical Corp. (“Cantel” or the “Company”) entered into a Second Amendment (“Second Amendment”)
to the Fourth Amended and Restated Credit Agreement, dated as of June 28, 2018 (as amended, supplemented or otherwise modified
from time to time, including by the First Amendment, dated as of September 6, 2019, and the Second Amendment the “Credit
Agreement”), among the Company, its subsidiary obligors party thereto, Bank of America, N.A. as administrative agent, swing
line lender and L/C issuer and the lenders party thereto.
The Second Amendment’s
principal changes to the Credit Agreement include (a) permitting Cantel to incur indebtedness in the form of convertible debt,
(b) increasing the maximum consolidated leverage ratio covenant for the fiscal quarter ending April 30, 2020 to 5.25:1.00 and suspend
such financial maintenance covenant until October 31, 2021, at which point the maximum consolidated leverage ratio covenant will
be reinstated on the terms set forth in the Second Amendment, (c) suspending the consolidated interest coverage ratio from after
April 30, 2020 until October 31, 2021, (d) requiring Cantel to maintain minimum liquidity (as defined in the Second Amendment)
of at least $50,000,000 during the fiscal quarter ending July 31, 2020 and $75,000,000 during each of the fiscal quarters ending
with the fiscal quarter ending July 31, 2021, (e) requiring Cantel to maintain minimum consolidated EBITDA (as defined in the Second
Amendment) for each period of four fiscal quarters ending on the last day of the fiscal quarters ending July 31, 2020 through July
31, 2021 in the amounts set forth in the Second Amendment and (f) limiting Cantel’s ability to pay dividends and repurchase
shares of its common stock during the period the consolidated leverage ratio and consolidated interest coverage ratio are suspended.
Cantel will not be issuing a dividend on August 1, 2020.
Pursuant to the Credit
Agreement, subject to the satisfaction of certain conditions precedent, including the consent of the lenders, Cantel may from time
to time increase its borrowing capacity under the revolving credit facility by, or incur incremental term loans in, an aggregate
amount not to exceed the sum of (i) the greater of (x) $300 million or (y) an amount equal to two times Cantel’s
consolidated EBITDA, calculated on a pro forma basis, plus (ii) the aggregate principal amount of voluntary prepayments of
the revolving loans and term loans, minus the aggregate principal amount of certain incremental secured indebtedness otherwise
incurred in accordance with the terms of the Credit Agreement.
The interest rates
have been amended so that loans under the Credit Agreement, until the third business day following the date on which a compliance
certificate is delivered for the fiscal quarter ending October 31, 2021, bear interest at 2.00% above the base rate for base rate
borrowings, or at 3.00% above LIBOR for LIBOR-based borrowings, and the Credit Agreement also provides for commitment fees of 0.50%
on undrawn revolving facility commitments. Thereafter, (i) borrowings under the Credit Agreement bear interest at rates ranging
from 0.00% to 1.75% above base rate for base rate borrowings, or at rates ranging from 1.00% to 2.75% above LIBOR for LIBOR-based
borrowings, depending on the Company’s consolidated leverage ratio, which is the consolidated ratio of total funded debt
(minus certain unrestricted cash) to consolidated EBITDA and (ii) the Credit Agreement also provides for commitment fees ranging
from 0.20% to 0.50%, depending on the Company’s consolidated leverage ratio on undrawn revolving facility commitments.
The Credit Agreement
contains affirmative and negative covenants reasonably customary for similar credit facilities and is secured by (i) substantially
all assets of Cantel and its U.S.-based subsidiaries, (ii) a pledge by Cantel and its U.S.-based subsidiaries that guarantees the
obligations under the Credit Agreement of all of the outstanding shares of its U.S.-based subsidiaries and 65% of the outstanding
shares of certain of Cantel’s foreign-based subsidiaries and (iii) a guaranty by Cantel’s domestic subsidiaries.
The foregoing description
of the Second Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full
text of the Second Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.