Exhibit (e)(4)
CONFIDENTIALITY AGREEMENT
1. This agreement ("Agreement") is by and among Sun Capital Partners Group,
Inc. (the "Interested Party") and Rag Shops, Inc. (the "Company") in
connection with the request by the Interested Party to receive information
regarding the Company to be used in consideration of a potential
acquisition or investment transaction involving the Interested Party (a
"Transaction"). In consideration of being furnished with information
regarding the Company, the Interested Party agrees as follows:
2. Information regarding the Company furnished by the Company to the
Interested Party including, but not limited to, the Confidential
Memorandum and other information regarding the business, financial
condition, customer lists, marketing strategy, names of employees,
compensation amounts and formulas, billing amounts, operations, and
prospects of the Company ("Proprietary Information") shall be deemed
confidential. Proprietary Information shall not include any information
which (a) is or becomes generally available to the public other than as a
result of disclosure by the Interested Party or its directors, officers,
employees, agents, advisors or other representatives (collectively,
"Representatives") in breach of this agreement, (b) is already known to
Interested Party, (c) is or becomes available to the Interested Party from
a source not known by Interested Party to be bound by a confidentiality
agreement with the Company or (d) is independently developed by Interested
Party or its Representatives.
3. The Interested Party understands and acknowledges that neither the Company
nor any of its representatives (including, without limitation, SunTrust
Xxxxxxxx Xxxxxxxx Capital Markets ("STRH")) make any representation or
warranty, express or implied, as to the accuracy or completeness of the
Proprietary Information. The Interested Party agrees that neither the
Company nor any of its representatives (including without limitation STRH)
shall have any liability relating to or resulting from the use of the
Proprietary Information. Only those representations or warranties which
are made in a final definitive agreement regarding the Transactions
contemplated hereby, when, as and if executed, and subject to such
limitations and restrictions as may be specified therein, will have any
legal effect.
4. Except as otherwise required by law or legal process, without the prior
written consent of the Company, the Interested Party will not, directly or
indirectly, use, disclose or reveal any Proprietary Information to any
person except to its Representatives and then for the sole purpose of
enabling such Representatives to evaluate various aspects of a possible
Transaction and then to only those Representatives who clearly need such
access to actively and directly participate in the evaluation of the
Proprietary Information. Furthermore, the Interested Party will not use
the Proprietary Information in any way detrimental to the Company or any
of its employees or customers.
5. Except as otherwise required by law or legal process, without the prior
written consent of the Company, the Interested Party will not and will
direct its Representatives not to: (i) disclose to any person including,
but not limited to, any customer, employee, supplier, creditor, or
competitor of the Company (a) the fact that the Proprietary Information
has been made available to the Interested Party, or (b) the fact that
discussions or negotiations are taking place concerning a possible
Transaction, or (c) the terms, conditions or other facts with respect to
any such Transaction including the status thereof; (ii) make any statement
to any customer, employee, supplier, creditor or competitor of the Company
outside the ordinary course of business or make any inquiry about the
Company's business to any such party, or (iii) make any public statement
including, without limitation, any public announcement, release to trade
publications or to the press unless such statement is necessary to comply
with any law. Subject to the foregoing, in no event shall the Company be
identified in any public statement without its prior written consent.
6. The Interested Party will not solicit any of the Company's employees for
employment for a period of two years from the date of this Agreement
provided that the term "solicit" shall not include the placement by
Interested Party or its agents of general solicitations for employment in
newspapers, trade journals, the Internet, through recruiters or by any
similar media.
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7. The Interested Party will promptly advise the Company if it has determined
not to pursue a possible transaction with the Company, and will, upon
written request of the Company, destroy or return all Proprietary
Information, as well as any copies, records, notes or other pertinent
written, printed, or tangible materials to the Company.
8. The Interested Party acknowledges and agrees that the Proprietary
Information was developed by the Company at great expense and that the
Proprietary Information is critical to the condition and competitive
survival of the Company and that in the event that the Interested Party or
any of its Representatives breaches or threatens to breach any of the
provisions of this Agreement, monetary damages will be an inadequate
remedy and, therefore, due to the immediate irreparable actual and
substantial harm which will result from a breach or a threatened breach by
the Interested Party or its Representatives of the provisions of the
Agreement, the Company shall be entitled to obtain an immediate permanent
injunction against such breach and other equitable relief to enforce any
and all of the provisions of this Agreement. The Interested Party agrees
to waive and to use commercially reasonable efforts to cause its
Representatives to waive any requirement for the security or posting of
any bond in connection with such remedy. The remedies afforded to the
Company by this paragraph shall be in addition to any and all other
remedies available to the Company for any violation, breach or threatened
breach of this Agreement by the Interested Party or its Representatives.
9. The Interested Party agrees that unless and until a final definitive
agreement regarding a transaction between the Company and the Interested
Party has been executed and delivered, neither the Company nor the
Interested Party will be under any legal obligation of any kind whatsoever
with respect to such a transaction by virtue of this Agreement except for
the matters specifically agreed to herein. The Interested Party further
acknowledges and agrees that the Company reserves the right to reject any
and all proposals made by the Interested Party with regard to a possible
transaction between the Company and the Interested Party and to terminate
discussions and negotiations with the Interested Party at any time.
10. The Interested Party acknowledges that it is aware and that its
Representatives have been advised that the United States securities laws
prohibit any person who has material, non-public information about 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. The Interested Party further acknowledges that it
is aware and that its Representatives have been advised that much of the
information provided to it about the Company is or may be in the nature of
material, non-public information. For a period of one year from the date
of this Agreement, neither the Interested Party nor its subsidiaries will
(i) acquire or seek to acquire, directly or indirectly, securities of the
Company which represent more than 5% of the outstanding common stock of
the Company, (ii) form or join in or participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with
respect to any voting securities of the Company, (iii) otherwise seek or
propose to influence or control the management or policies of the Company,
(iv) advise, assist or encourage any other person in connection with any
of the foregoing or take any action or disclose any intention or
arrangement inconsistent with the foregoing provided however that
Interested Party shall not be precluded or restricted in any manner from
participating in a bankruptcy auction or similar proceeding relating to
the Company or any of its assets or from consummating any transaction
resulting therefrom. The Interested Party also agrees to notify the
Company promptly if at any time during such period it is requested by a
third party to participate with such third party in any of the activities
described in this paragraph.
11. The Interested Party agrees to indemnify and hold harmless the Company and
its directors, officers, employees, agents and advisors (including,
without limitation, STRH) from any damage, loss, cost or liability
(including legal fees and the costs of enforcing this indemnity and all
related matters) arising out of or resulting from any breach of this
Agreement by the Interested Party or
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any of its Representatives but only if and to the extent that a court of
competent jurisdiction determines in a final non-appealable order, that
Interested Party or its Representatives breached this agreement.
12. The Company's financial advisor is XXXX. XXXX will arrange for all
appropriate contacts between the Company and the Interested Party. The
Interested Party agrees to direct all (i) communications regarding any
possible transactions with the Company, (ii) requests for additional
information, (iii) requests for facilities tours or management meetings
and (iv) discussions or questions regarding procedures exclusively to STRH
or its designees.
13. This Agreement may not be amended or modified except in writing signed by
each of the parties hereto and shall be governed by and construed in
accordance with the laws of the State of New Jersey. The Company and the
Interested Party hereby irrevocably and unconditionally consent to submit
to the exclusive jurisdiction of the courts of the State of New Jersey and
of the United States District Courts located in the City of Newark for any
lawsuits, claims or other proceedings arising out or relating to this
Agreement and agree not to commence any such lawsuit, claim or other
proceeding except in such courts. The Company and the Interested Party
hereby irrevocably and unconditionally waive any objection to the laying
of venue of any lawsuit, claim or other proceeding arising out of or
relating to this Agreement in the courts of the State of New Jersey or the
United States District Courts located in the City of Newark and hereby
further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such lawsuit, claim or other proceeding
brought in any such court has been brought in any inconvenient forum. Each
of the parties hereto expressly waives all right to trial by jury in any
action or proceeding arising out of or relating to this Agreement. This
Agreement shall expire two (2) years after the date hereof.
14. Please confirm the Interested Party's agreement with the foregoing by
signing and returning one copy of this letter to the undersigned,
whereupon this letter agreement shall become a binding agreement between
the Interested Party and the Company.
Sun Capital Partners Group, Inc. SunTrust Xxxxxxxx Xxxxxxxx Capital Markets
On behalf of the Company
By: /s/ C. Xxxxx Xxxxx /s/ Xxxxx X. Xxxxxxxx
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By: Senior Vice President By: Vice President
Date: May 12, 2004 Date: 5/13/04
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Questions or comments should be directed to Xxx Xxxx at SunTrust Xxxxxxxx
Xxxxxxxx Capital Markets at (000) 000-0000. Executed Confidentiality
Agreements should be faxed to Xxx Xxxxx at (000) 000-0000.
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