EXHIBIT (c)(2)
[LETTERHEAD OF SHELTER COMPONENTS CORPORATION APPEARS HERE]
August 25, 1997
Xx. Xxxxx X. Xxxxxx PRIVILEGED & CONFIDENTIAL
Chairman -------------------------
Kevco, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
RE: Confidentiality Agreement
-------------------------
Dear Xxxxx:
In connection with your consideration of a possible negotiated
transaction between Kevco, Inc., acting directly or through an affiliate or a
wholly-owned subsidiary ("You") and Shelter Components Corporation and its
subsidiaries (the "Company"), You have requested information concerning the
Company. As a condition to your being furnished with such information as You may
reasonably request, You agree to treat any information concerning the Company
(whether prepared by the Company, its directors, officers, employees, agents,
advisors or otherwise, and whether oral, written or in any other format
including, without limitation, on any form of computer or other electronic
media) which may be furnished to You or your representatives (which term, for
purposes of this agreement (the "Agreement"), shall include your directors,
officers, employees, agents, advisors, potential financing sources and any
affiliates of such persons) by or on behalf of the Company (herein collectively
referred to as the "Evaluation Material") in accordance with the provisions of
this Agreement, and to take or abstain from taking certain other actions herein
set forth.
The term "Evaluation Material" also shall be deemed to include all
notes, analyses, compilations, studies, interpretations and other documents
prepared by You or your representatives which contain, reflect or are based
upon, in whole or in part, the information furnished to You or your
representatives pursuant hereto. The term "Evaluation Material" does not include
information which (i) is already in your possession, provided that such
information is not known by You after due inquiry to be subject to another
confidentiality agreement with or other obligation of secrecy to the Company or
another person, (ii) is or becomes generally available to the public other than
as a result of a disclosure by You or your representatives, or (iii) becomes
available to You on a non-confidential basis from a source other than the
Company, its directors, officers, employees, agents or advisors, provided that
such source is not
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August 25, 1997
bound by a confidentiality agreement with, or have a duty of secrecy or a
fiduciary obligation to, the Company or another party.
You agree that the Evaluation Material will be used solely for the purpose
of evaluating a possible transaction between the Company and You and for no
other purpose and will not be used in any way detrimental to the Company
(including, without limitation, directly or indirectly in the conduct of your
business) and that such information will be kept strictly confidential by You
and your representatives; provided, however, that any of such information may be
disclosed to such of your representatives who need to know such information for
the purpose of assisting You in evaluating any such possible transaction (it
being understood and agreed that such representatives shall be informed by You
of the confidential nature of such information and shall agree to treat such
information confidentially and to be bound by this Agreement. You agree that all
of your representatives to whom any of such information is disclosed will act in
accordance with and be bound by the terms of this Agreement and that You shall
be responsible to the Company for any breach of the provisions of this Agreement
by You or by any of your representatives, and shall indemnify and hold harmless
the Company from any damage, loss, cost or liability (including, without
limitation, attorney's fees and costs with respect to the enforcement of this
Agreement) arising out of or resulting from any unauthorized use or disclosure
by You or your representatives of any of the Evaluation Material or any other
breach of the provisions of this Agreement.
Certain of the Evaluation Material is considered by the Company to be its
most sensitive information, including without limitation, product marketing and
pricing information (collectively referred to as the "Most Sensitive Material").
Notwithstanding anything herein to the contrary, You shall not have access to
the Most Sensitive Material unless and until a Definitive Agreement has been
executed and delivered. Under the Definitive Agreement, the Company and You will
develop a reasonable protocol providing for your access to the Most Sensitive
Material to the maximum extent permitted by law.
You hereby acknowledge that You are aware, and that You will advise such
representatives who become aware of any of the Evaluation Material, that the
United States securities laws prohibit any person who has material, non-public
information relating to a corporation from purchasing or selling securities of
the corporation or from communicating such information to any other person. The
information being provided pursuant hereto may be of such a nature.
In the event that You or your representatives receive a request to disclose
all or any part of the information contained in the Evaluation Material under
the terms of a
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August 25, 1997
valid and effective subpoena or order issued by a court of competent
jurisdiction or by a governmental or administrative body, You will immediately
notify the Company of the existence, terms and circumstances surrounding such a
request so that the Company may seek a protective order or other appropriate
remedy (and You will provide such cooperation in connection therewith as the
Company may reasonably request) or waive compliance with the provision of this
Agreement. If such protective order or other remedy is not obtained or the
Company waives compliance with the provisions of this Agreement, You will
furnish only that portion of the Evaluation Material which in the written
opinion of your counsel is legally required to be disclosed and will exercise
reasonable efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to the Evaluation Material so furnished.
You hereby acknowledge that the Evaluation Material is being furnished to
You in consideration, among other things, of your agreement that for a period of
eighteen (18) months from the date hereof, You and your affiliates (as defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended), will not,
directly or indirectly, acting alone or in concert with others, undertake any of
the following actions unless expressly requested in writing in advance by the
Board of Directors of the Company to so act:
(i) employ any of the current officers or other senior or key employees
of the Company identified as such by the Company with whom You have had contact
or who specifically identified to You as such during the period of your
investigation of the Company, so long as they are employed by the Company,
except in connection with and subject to the purchase of assets of the Company;
(ii) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" to vote (as such terms are used in the proxy rules
of the Securities and Exchange Commission), or seek to advise or influence any
person or entity with respect to the voting of, any voting securities of the
Company;
(iii) otherwise act, directly or indirectly, alone or in concert with
others, to seek to control or influence in any manner, the management, Board of
Directors, policies or affairs of the Company, or
(iv) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
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August 25, 1997
You agree that You and your affiliates will take no action of any form
in any court, or before any governmental or administrative tribunal or agency,
seeking a waiver of any of the prohibitions contained in this Agreement.
Although the Company will endeavor to include in the Evaluation Material
information known to it which it believes to be relevant for the purpose of your
investigation, You understand and agree that neither the Company nor any of its
representatives or advisors has made or hereby makes any representation or
warranty as to the accuracy or completeness of the Evaluation Material and that
You are not entitled to rely on the accuracy or completeness of the Evaluation
Material. You agree that neither the Company nor any of its directors, officers,
employees, agents or advisors shall have any liability to You or any of your
representatives resulting from the use of contents of the Evaluation Material or
from any action taken or any inaction occurring in reliance on the Evaluation
Material. Only those representations or warranties which are made in a final
Definitive Agreement regarding the transaction which is contemplated by this
Agreement (a "Definitive Agreement"), when, as and if executed, and subject to
such limitations and restrictions as may be specified therein, may be relied
upon and shall be legally binding upon the Company.
At the request of the Company, You and your representatives shall
promptly redeliver to the Company all Evaluation Material that is in writing or
in any other format (including, without limitation, on any form of computer or
other electronic media) and any other material containing or reflecting any
information in the Evaluation Material, and neither You nor your representatives
shall retain any copies, notes, extracts, compilations, analyses or other
reproductions, in whole or in part, of any Evaluation Material in any form
whatsoever (including, without limitation, on any form of computer or other
electronic media); provided, however, (i) Evaluation Material consisting of
documents, memoranda, notes, and other writings prepared by You and your
representatives, in any form whatsoever (including, without limitation, on any
form of computer or other electronic media), shall be destroyed immediately, and
confirmation of such destruction shall be certified in writing to the Company by
your authorized officer supervising such destruction, and (ii) oral Evaluation
Material shall continue to be subject to the provisions of this Agreement.
Unless and until a Definitive Agreement has been executed and delivered,
You agree that neither the Company nor You will be under any legal obligation of
any kind whatsoever with respect to any such transaction except for such matters
set forth specifically herein. You agree that the Company shall not be
prohibited from seeking to effect any of the transactions contemplated herein
with any third party. The agreements set forth in the Agreement may be expressly
modified or waived only by a separate writing executed between the Company and
You.
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August 25, 1997
You agree that You and your representatives shall direct all inquiries
and any request for information to Messrs. Xxxxxxxxx or Xxxxxx at the Company,
or persons designated by such officers, in connection with the possible
transaction contemplated by this Agreement and that no contact shall be made
with other persons in connection therewith.
The term "person" as used in this Agreement shall mean, with limitation,
any corporation, company, group, partnership, individual or other entity.
Until October 25, 1997, the Company shall not take (nor shall the
Company permit its officers, directors, employees, attorneys, or other agents to
take) any action to solicit or initiate the submission by a third party of a
proposal with respect to a merger or other business combination involving the
Company, a sale of all or substantially all of the assets of the Company, or a
sale of all or substantially all of the capital stock of the Company.
It is agreed that money damages would be an inadequate remedy for the
breach of this Agreement because of the difficulty of ascertaining the amount of
damages that would be suffered by the Company in the event of such breach.
Therefore, You agree that, without limiting any other remedies which the Company
may pursue, the Company shall be entitled to equitable relief, including,
without limitation, specific performance of this Agreement and injunctive relief
against any breach hereof, as a remedy for any breach of this Agreement, without
having to post any bond or any other form of security, without having to show
any likelihood or irreparable harm, and without having to prove that money
damages would be an inadequate remedy.
In the event that the Company should institute proceedings to enforce
any provisions of this Agreement, You agree that the Company, if a judgment is
entered in favor of the Company, shall be entitled to recover all expenses
relating to the enforcement of this Agreement, including, without limitation,
reasonable attorneys' fees and costs, in addition to any other remedies. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or in any way
invalidated by such court action.
It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.
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August 25, 1997
You hereby agree to submit to the jurisdiction of any court of the State
of Indiana or any federal court sitting in the State of Indiana for the purpose
of any suit, action or other proceeding arising out of this Agreement, or of the
transactions contemplated hereby, which is brought by or against the Company.
You agree that this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Indiana, without regard to the rules of
the conflict of laws of such State.
This Agreement shall continue for a period of eighteen (18) months,
provided that should any transaction contemplated hereunder be consummated,
then and in that event, the obligations hereunder shall cease.
If You are in agreement with the foregoing, please indicate such
agreement by signing and returning (1) one copy of this Agreement to the
Company, whereupon this Agreement will constitute our agreement with respect to
the subject matter hereof.
Very truly yours,
SHELTER COMPONENTS CORPORATION
/s/ XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
Confirmed and Agreed, this 25th day of August, 1997:
KEVCO, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Chairman
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