FIRST AMENDMENT TO RESTRUCTURING AGREEMENT
effective as of May 22, 2002
by and among
HY I INVESTMENTS, L.L.C.,
THOSE INVESTMENT FUNDS THAT ARE MANAGED
BY XXXXXXX MANAGEMENT CORPORATION AND
ITS AFFILIATED ENTITIES AND THAT ARE HOLDERS OF OLD NOTES
and
PENTACON, INC.
This FIRST AMENDMENT TO RESTRUCTURING AGREEMENT effective as of May 22,
2002 ("this AGREEMENT") is made and entered into by and among HY I INVESTMENTS,
L.L.C., THOSE INVESTMENT FUNDS MANAGED BY XXXXXXX MANAGEMENT CORPORATION AND ITS
AFFILIATED ENTITIES AND THAT HOLD OLD NOTES (together, the "HOLDERS") and
PENTACON, INC., a Delaware corporation (the "COMPANY"). Capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the
Restructuring Agreement.
WHEREAS, the Holders and the Company executed that certain
Restructuring Agreement dated as of April 30, 2002 (the "Restructuring
Agreement") which provided for, among other things, an offer to acquire Old
Notes in exchange for new notes and preferred stock (the "Offer").
WHEREAS, under the Restructuring Agreement, the Offer was to be
implemented pursuant to an exchange offer or pursuant to a pre-negotiated plan
of reorganization in a case filed under chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code").
WHEREAS, pursuant to section 1.02 of the Restructuring Agreement, the
Company and the Holders have the right to consent to or vote for a Superior
Offer.
WHEREAS, the Board of Directors of the Company and the Holders have
consulted with each other in good faith and have determined that an offer
received by the Company for the purchase of substantially all of its assets of
the Company and its subsidiaries by Anixter International, Inc. (the
"Purchaser") pursuant to a chapter 11 plan is a Superior Offer (the "Purchase
Offer").
WHEREAS, the Company and Holders desire to amend the Restructuring
Agreement to provide for certain representations, warranties and agreements in
connection with consummating the Purchase Offer pursuant to a chapter 11 plan
and also to prescribe various conditions to the consummation of such
transactions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Restructuring Agreement as follows:
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ARTICLE I
THE AMENDMENTS
The Restructuring Agreement is hereby amended as follows (unless
specified otherwise, "Section" and "Article" references used herein refer to
those provisions of the Restructuring Agreement):
SECTION 1.1 Section 1.01 (and all subparts thereof) of the Restructuring
Agreement is hereby amended and restated to read in its entirety as follows:
Section 1.01 The Plan. Subject to the other terms hereof and
provided that this Agreement shall not have been terminated in accordance
with Section 6.01 and after consultation with the Holders, the Company has
determined to consummate the Purchase Offer by means of a pre-negotiated
chapter 11 plan of reorganization filed under Chapter 11 of the Bankruptcy
Code which incorporates the terms and conditions of the Term Sheet for Joint
Plan of Reorganization attached hereto as Exhibit A (the "Term Sheet"). The
Company, as promptly as practicable after the execution hereof, shall
commence a chapter 11 bankruptcy case and seek confirmation of the Plan by
the Bankruptcy Court. The Company shall consult with the Holders concerning
any amendments or modifications to the Plan and any related disclosure
statement before filing or serving any such amendments in the bankruptcy case.
SECTION 1.2 Section 1.02 (a) of the Restructuring Agreement is amended and
restated to read in its entirety as follows:
Section 1.02 Holder Actions. (a) subject to the terms and
conditions of this Agreement, each Holder hereby severally:
(i) approves and consents to the Term Sheet, including without
limitation, the classification and treatment of claims and
equity interests described in the Term Sheet;
(ii) agrees to vote or cause to be voted all of its Old Notes in
favor of a plan of reorganization implementing the Term Sheet
and otherwise in form and substance reasonably satisfactory to
the Holders (the "Plan") and in connection therewith to
execute a ballot or ballots voting to accept the Plan;
(iii) agrees to vote against any competing plan that may interfere
with or be inconsistent with the Plan and in connection
therewith to execute a ballot or ballots voting to reject such
competing plan;
(iv) agrees not to and will cause its respective officers,
directors, employees and professionals or other agents not to,
directly or indirectly, take any action to encourage any
competing plan that may interfere with or be inconsistent with
the Plan, except that nothing herein shall preclude the
Holders from soliciting, initiating, or seeking out a Superior
Offer; and
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(v) agrees to support confirmation of the Plan;
provided, however, that at any time, the Company or the Holders receive a bona
fide offer for the purchase of all or substantially all the assets of the
Company or for the merger or consolidation of the Company with or into any other
company (collectively "Alternative Offer"), which the Board of Directors and the
Holders, in good faith after consultation with each other, determine to be a
superior offer to the Purchase Offer or Plan (a "Superior Offer") then the
Holder shall have the right prior to the confirmation date of the Plan, to
rescind its approval and consent to the Plan and to vote for and consent to such
Superior Offer. Each of the Company and the Holders agree to inform the other
upon its receipt of any proposal, expression of interest or request for
information from any person relating to an Alternative Offer and to deliver to
the other any and all written materials received by such person in connection
therewith. In addition, nothing contained herein shall be deemed to restrict the
sale or transfer by any Holder of any of its Old Notes; provided that the
purchaser thereof shall be bound by the terms of this Agreement, including this
Section 1.02.
SECTION 1.3 Sections 1.03 (a) and (b) of the Restructuring Agreement are
hereby deleted in their entirety.
SECTION 1.4 Section 1.04 of the Restructuring Agreement is amended and
restated to read in its entirety as follows:
Section 1.04 Conditions to Holders' Obligations. The obligation of
each Holder to undertake the Holder actions required by Section 1.02 is
subject to fulfillment of each of the following conditions (all or any of
which may be waived in whole or in part by such Holder in its sole
discretion):
(a) the Plan implementing the Term Sheet and the related
disclosure statement shall reflect in all respects the Term
Sheet and shall otherwise be in form and substance reasonably
satisfactory to the Holders;
(b) all debtor-in-possession financing arrangements and related
orders shall be in form and substance reasonably satisfactory
to the Holders;
(c) any amendments or modifications to the Term Sheet or the Plan
shall be in form and substance reasonably satisfactory to the
Holders;
(d) the representations and warranties made by the Company in this
Agreement, the Plan and the asset purchase agreement relating
to the Purchase Offer (the "Asset Purchase Agreement") shall
be true and correct in all material respects on and as of the
Confirmation Date as though such representations or warranties
were made on and as of such date;
(e) the Asset Purchase Agreement shall not have been amended or
terminated for any reason; and
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(f) not more than 120 days shall have elapsed from the filing of
the Chapter 11 case relating to the Plan without the entry of
the confirmation order relating thereto.
SECTION 1.5 Article II of the Restructuring Agreement shall be amended to
delete all references to the "Consummation Date" and the "Offer." Section
2.04(b) shall be amended to delete clauses (i) and (ii). Section 2.06(a)
shall be amended to delete any reference to "Offer Documents."
SECTION 1.6 Article III of the Restructuring Agreement shall be amended to
delete all references to "Consummation Date," "Offer" and "Offer Documents."
A new section 3.06 shall be added to Article III as follows:
Section 3.06 Adequate Disclosure. The information reviewed by and
supplied to Holder with respect to the transaction contemplated under the
Purchase Offer and the Plan has been in all respect sufficient and adequate
to enable Holders to make an informed judgment concerning their support and
approval of the Purchase Offer and the Plan. Holders have been extensively
and adequately involved in the review and negotiation of the Purchase Offer
and the treatment of claims and interests in the Plan. Notwithstanding the
foregoing, this representation shall not constitute a waiver of, nor limit in
any way the Holders' right to require the fulfillment of the conditions
specified in Section 1.04.
SECTION 1.7 Article IV of the Restructuring Agreement is hereby amended to
delete all references to "Consummation Date."
SECTION 1.8 Article V of the Restructuring Agreement is hereby amended to
delete Sections 5.01 and 5.02 in their entirety. Section 5.03 is amended to
delete any reference to "Offer."
SECTION 1.9 Section 6.01 of the Restructuring Agreement is amended and
restated to read in its entirety as follows:
6.01 Termination. In addition to the other terms and provisions of
this Agreement, this Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) By mutual written agreement of the parties hereto;
(b) By either the Company or the Holders upon notification to the
non-terminating party by the terminating party:
(i) if the Bankruptcy Court enters an order denying
confirmation of the Plan and such order shall have
become final and non-appealable;
(ii) upon the election by the Board of Directors and the
Holders to pursue or accept an Alternative Offer; or
(iii) in the event the terminating party elects to support
an Alternative Offer which it believes is a Superior
Offer which is not supported by the non-terminating
party.
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(c) By the Holders upon notification to the Company prior to the
Confirmation Date:
(i) if there has been a breach of any of the
representations, warranties, covenants or agreements
on the part of the Company set forth in this
Agreement;
(ii) if any condition set forth in Section 1.04 of this
Agreement is not satisfied as of the date required
thereunder, or the Holders reasonably determine that
it is not possible for such condition to be satisfied
on or prior to such date; or
(iii) if, at any time prior to the Confirmation Date, the
Company's senior bank creditors (x) cease to agree to
forbear from, or require the payment of any fee in
excess of their customary and usual fee for such a
forbearance or the modification of any material term
of the facility in any way adverse to the Company, in
either case, as a condition to their agreeing to
continue to forbear from, (1) accelerating the
indebtedness owing to them by the Company and/or (2)
exercising any of their remedies in respect thereof
or (y) take any of the actions described in clauses
(1) or (2) immediately above.
SECTION 1.10 Article VII of the Restructuring Agreement is amended to delete
all references to "Offer," and "Consummation Date." Section 7.01 is amended
to delete the reference to Section 5.01.
SECTION 1.11 All Schedules to the Restructuring Agreement are deleted and
the Term Sheet is substituted therefore as Exhibit A to the Restructuring
Agreement.
SECTION 1.12 Capitalized terms used herein and not otherwise defined shall
have the meaning ascribed to such terms in the Restructuring Agreement.
SECTION 1.13 Except as expressly amended by this Agreement, the
Restructuring Agreement is hereby ratified and confirmed in all respects.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
HY I INVESTMENTS, L.L.C.
Dated: ________________ By:_________________________
Name:
Title:
THOSE INVESTMENTS FUNDS THAT ARE
MANAGED BY XXXXXXX MANAGEMENT
CORPORATION AND ITS AFFILIATED
ENTITIES AND THAT ARE HOLDERS OF
OLD NOTES
By: XXXXXXX MANAGEMENT CORPORATION
Dated: ________________ By:_________________________
Name:
Title:
PENTACON, INC.
Dated: ________________ By:_________________________
Name:
Title:
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