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June 27, 1997
CONFIDENTIAL
Finishmaster, Inc.
0000 00xx Xxxxxx, XX
Xxxxxxxx, Xxxxxxxx 00000
LDI AutoPaints, Inc.
Xxxx Distribution, Inc.
LDI, Ltd
LDI Management, Inc.
Xxxxx X. Xxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Finishmaster, Inc. ("Finishmaster") and LDI Autopaints, Inc.
(collectively with Finishmaster, Xxxx Distribution, Inc., LDI, Ltd., LDI
Management, Xxxxx X. Xxxx and the affiliates, subsidiaries and divisions of the
foregoing, "LDI" or "you") has requested information concerning Xxxxxxxx PBE,
Inc. (together with its subsidiaries, the "Company") to be used in connection
with consideration of a possible negotiated transaction (a "Proposed
Transaction"). In consideration of, and as a condition to, furnishing LDI with
such information, the Company hereby requests your agreement as follows:
Confidentiality; Evaluation Material. You hereby agree to treat all
information, whether written or oral, concerning the Company or any of its
affiliates, which the Company or any of its directors, officers, employees,
agents, financial advisors or representatives (collectively, its
"Representatives") furnishes, whether before or after the date of this letter
agreement, to you or your directors, officers, employees, agents, legal
counsel, financial advisors, accountants or representatives (collectively, your
"Representatives"), together with all reports, analyses, compilations, data,
studies and other materials which contain or otherwise reflect or are generated
from such information (collectively, the "Evaluation Material") confidentially
and in accordance with the provisions of this letter agreement.
Notwithstanding the foregoing, the term "Evaluation Material" shall not for the
purposes of this letter agreement include any information which (a) at the time
of disclosure or thereafter is generally available to and known by the public
other than as a result of a disclosure by you or your Representatives, (b) was
or becomes available to you on a nonconfidential basis from a source other than
the Company or any of its Representatives, provided that such source is not
bound by a confidentiality agreement with, or other contractual, legal or
fiduciary obligation to, the Company, or (c) has been independently acquired or
developed by you without violating any of the obligations of you or your
Representatives under this letter agreement.
Highly Confidential Evaluation Material. The term "Highly
Confidential Evaluation Material" as used in this letter agreement shall mean
all Evaluation Material which contains or discusses competitively sensitive
price, promotional and marketing information with regard to any market in which
the Company and Finishmaster directly or indirectly compete. Highly
Confidential Evaluation Material shall be disclosed only on a need to know
basis to
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officers or Representatives of you with no involvement in sales and marketing,
and under no circumstances shall be disclosed to any other person, particularly
to any person with direct or indirect responsibility for pricing, marketing,
sales or promotional activity of Finishmaster. Before disclosure, the identity
of the person(s) receiving the Highly Confidential Evaluation Material shall be
confirmed to the Company in writing and shall be acceptable to the Company in
its discretion. The purpose and intent of this paragraph 2 is to prevent the
disclosure of information that may be competitively sensitive to any person
employed by you with responsibility for pricing or promoting any products which
may be deemed competitive with the Company for antitrust law purposes.
Non-Disclosure. Subject to paragraph 9 below, the Evaluation Material
will be kept confidential by you and your Representatives and will not, without
the prior written consent of the Company (which it may grant or withhold in its
sole discretion), be disclosed, in whole or in part, to any third party by you
or by any of your Representatives in any manner whatsoever, and will not be
used by you or by any of your Representatives, directly or indirectly, for any
purpose other than in connection with your evaluation of a Proposed Transaction
or in any way directly or indirectly detrimental to the Company. In addition,
you hereby agree to disclose that you are evaluating a Proposed Transaction and
to transmit Evaluation Material to only those of your Representatives who need
to know the information for the purpose of evaluating the Proposed Transaction
and are informed by you of the confidential nature of the information and agree
to be bound by the terms of this agreement to the same extent as if they were
parties hereto, it being understood, however, that you shall be responsible for
any actions by your Representatives which are not in accordance with the
agreements contained herein.
No Public Announcement. Except as otherwise expressly permitted
hereby, without the prior written consent of the Company, you will not, and
will direct your Representatives not to, disclose to any person the fact that
any discussions (or any other discussions between or involving you and the
Company) with respect to the matters contemplated hereby are taking or have
taken place or other facts with respect to such discussions, including the
status thereof, or the fact (if such becomes the case) that any Evaluation
Material has been made available to you, nor otherwise make any public
disclosure, whether written or oral, with respect to this agreement or the
actions or transactions contemplated hereby, except and only to the extent such
disclosure is expressly permitted hereunder. No request or proposal to amend,
modify or waive any provision of this agreement (other than a request or
proposal made or solicited by the Company) shall be made or solicited except in
a non-public and confidential manner. The term "person" as used in this letter
shall be broadly interpreted to include, without limitation, any corporation,
company, partnership or individual.
Federal Securities Laws. You hereby acknowledge that you and your
Representatives are (a) aware that the United States securities laws prohibit
any person who has material, non-public information concerning a company from
purchasing or selling securities of such company or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities, and
(b) familiar with the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (collectively, the "Exchange
Act").
Company Contact; No Solicitation. It is understood that Xxxx Xxxxx
will arrange on your behalf for appropriate contacts with the Company for due
diligence purposes. Unless otherwise agreed to by the Company, all (a)
communications regarding any possible transaction, (b) requests for additional
information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms, will be
submitted or directed only to (i) Xxxx Xxxxx, (ii) representatives of the
Company's financial advisors identified by Xx. Xxxxx or (iii) a member of the
Board of Directors of the Company. As partial consideration of the Evaluation
Material being furnished to you, you hereby agree that, for a period of one
year from the date hereof, neither you nor any of your affiliates will,
directly or indirectly, solicit to employ any of the current employees of the
Company; provided, however, that this sentence shall not prohibit (1) general
advertisements of employment positions by you in any trade publication or other
publication of general circulation or (2) the employment of any current
employee of the Company by you if
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such person initiates contact with you without any prior solicitation by you or
on your behalf (other than that permitted by clause (1) hereto).
Standstill Agreement. You hereby further acknowledge that the
Evaluation Material is being furnished to you in consideration of your
agreement that neither you (including any person or entity directly or
indirectly, through one or more intermediaries, controlling you or controlled
by you or under common control with you) nor any of your Representatives,
acting alone or as part of any group, will, for a period of two years from the
date of this letter agreement, directly or indirectly, unless specifically
requested to do so in writing in advance by the Company's Board of Directors:
acquire or agree, offer, seek or propose to acquire, or cause to
be acquired, ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Exchange Act) of any of
the securities or assets of the Company (including any evidence of
indebtedness), or any rights or options to acquire any such ownership,
or
make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities
and Exchange Commission) to vote or seek to advise or influence in any
manner whatsoever any person or entity with respect to the voting of
any securities of the Company, or
form, join, or in any way participate in a "group" (within the
meaning of Section 13d(3) of the Exchange Act) with respect to any
voting securities of the Company, or
arrange, or in any way participate in, any financing for the
purchase of any voting securities or assets or securities convertible
or exchangeable into or exercisable for any voting securities or
assets of the Company, or
otherwise act, whether alone or in concert with others, to seek
to propose to the Company or any of its stockholders any merger,
business combination, restructuring, recapitalization or similar
transaction to or with the Company or otherwise act, whether alone or
in concert with others, to seek to control, change or influence the
management, Board of Directors or policies of the Company, or nominate
any person as a Director of the Company who is not nominated by the
then incumbent Directors, or propose any matter to be voted upon by
the stockholders of the Company, or
solicit, negotiate with, or provide any information to, any
person (other than the Company and its Representatives on a
confidential basis regarding a negotiated Proposed Transaction) with
respect to a merger, exchange offer or liquidation of the Company or
any other acquisition of the Company or any other similar transaction,
or
announce an intention to, or enter into any discussion,
negotiations, arrangements or understandings with any third party with
respect to, any of the foregoing, or
disclose any intention, plan or arrangement inconsistent with
the foregoing, or
advise, assist or encourage any other person in connection with
any of the foregoing.
In addition, you also agree during such two-year period not to (i)
request the Company (or any of the Representatives), directly or indirectly, to
amend or waive any provision of this paragraph 7 (including this sentence) or
(ii) take any action that might require the Company to make a public
announcement regarding a possible transaction (other than, with respect to this
clause (ii), in connection with any Proposed Transaction).
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Record of Evaluation Material. You and your Representatives will keep
a written record of the location of the Evaluation Material and will, promptly
upon the request of the Company, return to the Company all copies of the
Evaluation Material furnished to you and in your possession or in the
possession of your Representatives, without retaining a copy thereof. You and
your Representatives will destroy any analyses, compilations, studies or other
documents prepared by or for your, or your Representatives', internal use which
include, utilize or reflect the Evaluation Material. Such destruction will be
confirmed by you, upon request, in writing.
Required Disclosure. In the event that you or any of your
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar legal process) to disclose (a) any Evaluation Material, (b) any
information relating to the opinion, judgment or recommendation of any such
person concerning the Company, its affiliates or subsidiaries, or (c) any other
information supplied to you in the course of your, or your Representatives',
dealings with the Company, you will immediately notify the Company of such
request or requirement prior to disclosure so that the Company may seek an
appropriate protective order or waive compliance with the provisions of this
agreement, and/or take any other mutually agreed action. If, in the absence of
a protective order or the receipt of a waiver hereunder, you or any of your
Representatives are, in the reasonable written opinion of such person's
counsel, legally compelled to disclose information, you or such Representative
may disclose that portion of the requested information which such person's
counsel advises such person in writing that such person is compelled to
disclose. In any event, you and your Representatives will furnish only that
portion of the information which is legally required and will exercise your
best efforts to obtain reliable assurance that confidential treatment will be
accorded the information. In addition, neither you nor any of your
Representatives will oppose action by the Company to obtain an appropriate
protective order or other reliable assurance that such confidential treatment
will be so accorded.
No Agreement Relating to Proposed Transaction. You agree that unless
and until a definitive agreement between the Company and you with respect to
any Proposed Transaction has been executed and delivered, neither the Company
nor you will be under any legal obligation of any kind whatsoever with respect
to any such transaction by virtue of this or any written or oral expression
with respect to such a transaction by any of your or our respective directors,
officers, employees, advisors, partners or agents or any other Representatives
except, in the case of this letter, for the matters specifically agreed to
herein. Without limiting the generality of the foregoing, you further
acknowledge that (a) the Company and its Representatives shall be free to
conduct any process for any transaction involving the Company, if and as they
in their sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive
agreement without prior notice to you or any other person) and (b) any
procedures relating to such process or transaction may be changed at any time
without notice to you or any other person.
No Representations or Warranties Regarding Evaluation Material. You
hereby acknowledge that neither the Company nor any of its Representatives
makes any representation or warranty as to the accuracy or completeness of the
Evaluation Material. You agree that you shall assume full responsibility for
all conclusions you derive from the Evaluation Material and that neither the
Company nor any of its Representatives shall have any liability with respect to
the Evaluation Material or any use thereof.
Specific Performance. You agree that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives, and that, in addition to all other remedies, the Company shall
be entitled to specific performance and injunctive or other equitable relief as
a remedy for any such breach, and you further agree to waive and to use your
best efforts to cause your
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Representatives to waive, any requirement for the securing or posting of any
bond in connection with any such remedy. As provided in paragraph 3, you agree
to be responsible for any breach of this agreement by any of your
Representatives.
No Waiver. You understand and agree that no failure or delay by the
Company or any of its Representatives in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power, or privilege hereunder. The agreements set forth
herein may only be waived or modified by an agreement in writing signed on
behalf of the parties hereto.
Successors. This agreement shall inure to the benefit of and be
enforceable by the Company and its successors.
Validity. In case provisions of this agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of the agreement shall not in any way be affected or
impaired thereby.
Governing Law; Forum. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the choice of law provisions thereof.
Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
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Please acknowledge your agreement to the foregoing by countersigning
this letter in the place provided below and returning it to the undersigned.
Very truly yours,
XXXXXXXX PBE, INC.
By: /s/ Xxxxxxxx X. Xxxxx, III
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Xxxxxxxx X. Xxxxx, III
Chief Executive Officer
Executed and Agreed to as of
the date first set forth above:
Finishmaster, Inc.
LDI AutoPaints, Inc.
Xxxx Distribution, Inc.
LDI, Ltd.
LDI Management, Inc.
Xxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Authorized Signatory
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