iii) Lease Agreement dated October 12, 1987, as amended, between 1741 Conant Partnership ("Conant") and Kevco with respect to the real property and improvements thereon located in Elkhart, Indiana as described therein (the "IDC Lease"); and

 
                                                                   EXHIBIT 10.40

                                  KEVCO, INC.
                     0000 Xx. Xxxxxxxxxx Xxxxx, Xxxxx 000
                            Xxxx Xxxxx, Xxxxx 00000

                                            October 1, 1996

Xx. Xxxxx X. Xxxxxx and
Xx. Xxxxx X. Xxxxxxx, Managing General Partners of
K & E Land & Leasing
and
K & E Land & Leasing, Managing General Partner of
and
1741 Xxxxxx Partnership
0000 Xx. Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000

        RE:  (i)     Lease Agreement dated December 1, 1977, as amended, between
                     K & E Land & Leasing ("K&E") and Kevco, Inc. ("Kevco") with
                     respect to the certain real property and improvements
                     thereon located in Elkhart, Indiana and described in said
                     Lease Agreement (the "Elkhart Lease");

             (ii)    Sublease and Lease Guarantee Agreement dated April 1, 1980,
                     as amended, between K&E and Kevco with respect to the real
                     property and improvements thereon located in Newton, Kansas
                     as described therein (the "Xxxxxx Sublease");

             (iii)   Lease Agreement dated October 12, 1987, as amended, between
                     1741 Xxxxxx Partnership ("Xxxxxx") and Kevco with respect
                     to the real property and improvements thereon located in
                     Elkhart, Indiana as described therein (the "IDC Lease");
                     and

             (iv)    Equipment Lease Agreement dated January 1, 1991, as
                     amended, between K&E and Kevco with respect to the
                     Equipment described (the "Equipment Lease").

Gentlemen:

        Reference is hereby made to the Elkhart Lease, the Xxxxxx Sublease and 
the Equipment Lease (collectively the "K&E Leases"). Reference is also made to 
the IDC Lease.

        The purpose of this letter is to confirm our agreement that, effective 
as of October 1, 1996, none of the K&E Leases or the IDC Lease will be amended 
in any manner without our mutual consent, including increasing the current 
rental payable under any of such leases, the effect or result of which would be 
to cause the term of any such lease, as amended, to contain terms or provisions 
less favorable to Kevco than that obtainable from an independent third party

 
[K & E LAND & LEASING LETTERHEAD APPEARS HERE]
Page 2


lessor; provided, however, that notwithstanding the foregoing, in no event shall
the monthly rental under any of such leases be decreased from that currently 
payable thereunder.

     If the foregoing accurately reflects our agreement, kindly indicate to such
effect on the second copy of this letter enclosed for that purpose and return 
same to the undersigned at your earliest convenience.

                                        Yours very truly,



                                        Xxxxx X. Xxxxxx
                                        Chairman of the Board and President

AGREED TO:

K & E Land & Leasing,
a Texas General Partnership


By:
   -----------------------------------
   Xxxxx X. Xxxxxx, Managing General Partner

By:
   -----------------------------------
   Xxxxx X. Xxxxxxx, Managing General Partner

Date: October 2, 1996


1741 Xxxxxx Partnership,
a Texas General Partnership


K & E Land & Leasing, Managing General Partner


By:
   -----------------------------------
   Xxxxx X. Xxxxxx, General Partner

By:
   -----------------------------------
   Xxxxx X. Xxxxxxx, General Partner

Date: October 2, 1996