EXHIBIT 11
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement"), dated as of October 21,
1997, among Kevco, Inc., a Texas corporation (the "Parent"), SCC Acquisition
Corp., an Indiana corporation and a direct wholly owned subsidiary of Parent
("Newco"), and the other parties signatory hereto (each a "Shareholder," and
collectively, the "Shareholders").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Newco and Shelter Components
Corporation, an Indiana corporation (the "Company"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which, among other things, Newco will be merged with and into the
Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company have agreed
that as soon as practicable (and not later than five Business Days) after the
first public announcement of the execution and delivery of the Merger Agreement,
Newco will commence a cash tender offer to purchase all outstanding shares of
Company Common Stock (as defined in Section 1), including all of the Shares (as
defined in Section 2) Beneficially Owned (as defined in Section 1) by the
Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Owned" or "Ownership" with respect to any securities shall mean
having the sole power to dispose of such securities and the sole power to vote
such securities.
(b) "Company Common Stock" shall mean at any time the common stock,
$.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
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2. TENDER OF SHARES.
(a) TENDER. Subject to Section 6, each Shareholder hereby agrees to
validly tender (and not to withdraw except in the case of termination of the
Merger Agreement as a result of a Superior Proposal) pursuant to and in
accordance with the terms of the Offer, not later than the fifth Business Day
prior to the expiration of the Offer (as such expiration date may be delayed
from time to time), the number of shares of Company Common Stock set forth
opposite such Shareholder's name on Schedule I hereto (the "Existing Shares"
and, together with any shares of Company Common Stock acquired by such
Shareholder after the date hereof and prior to the termination of this
Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise, the "Shares"). Each Shareholder
hereby acknowledges and agrees that Newco's obligation to accept for payment and
pay for Shares in the Offer is subject to the terms and conditions of the Offer.
(b) DISCLOSURE. Subject to Section 6, each Shareholder hereby agrees
to permit Parent and Newco to publish and disclose in the Offer Documents and,
if approval of the Merger by the Company's shareholders (other than Parent or
any of its wholly-owned subsidiaries) is required under Applicable Law, in the
Proxy Statement (including all documents and schedules filed with the SEC) his
or its identity and ownership of Company Common Stock and the nature of his or
its commitments under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK.
(a) VOTING AGREEMENT. Each Shareholder hereby agrees that during the
period commencing on the date hereof and continuing until the termination of
this Agreement, at any meeting of the holders of Company Common Stock, however
called, or in connection with any written consent of the holders of Company
Common Stock, such Shareholder shall vote (or cause to be voted) the Shares held
of record or Beneficially Owned by such Shareholder, whether issued, heretofore
owned or hereafter acquired, (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or Company
Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or Company Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or Company Subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Articles of
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Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the Company
or Company Subsidiaries which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement. Such Shareholder shall not enter into any agreement or understanding
with any Person or entity the effect of which would be inconsistent with or
violative of the provisions and agreements contained in this Section 3.
(b) GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(i) Subject to Section 6, each Shareholder hereby irrevocably grants
to and appoints Parent and Xxxxx X. Xxxxxx (as President and Chief Executive
Officer) and Xxxxx XxXxxxxx (as Chief Financial Officer) or either of them, in
their respective capacities of officers of Parent, and any individual who shall
hereafter succeed to any of such office of Parent, and each of them
individually, such Shareholder's Proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Shareholder, to vote
such Shareholder's Shares, or grant a consent or approval in respect of the
Shares in favor of the various transactions contemplated by the Merger Agreement
and against any Acquisition Proposal.
(ii) Subject to Section 6, each Shareholder represents that any
proxies heretofore given in respect of such Shareholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(iii) Each Shareholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance that such Shareholder's execution
and delivery of this Agreement. Each Shareholder hereby affirms that the
irrevocable proxy set forth in this Section 3(c) is given in connection with the
execution of the Merger Agreement and that such irrevocable proxy is given to
secure the performance of the duties of such Shareholder under this Agreement.
Each Shareholder hereby further affirms that the irrevocable proxy is coupled
with an interest and, except as provided under Section 6, may under no
circumstances be revoked. Each Shareholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do and caused to be done in accordance
with the terms of this Agreement prior to termination of this Agreement.
(c) OPTIONS. Each of the Shareholders that holds Options to acquire
shares of Company Common Stock, as identified on the signature pages hereof,
shall, if requested by the Company, consent to the cancellation of such
Shareholder's Options in exchange for a lump sum cash payment in accordance with
the terms of the Merger Agreement and shall execute all appropriate
documentation in connection with such cancellation. The foregoing shall not
apply if as a result thereof such Shareholder shall be required to disgorge any
profits on such Options pursuant to Section 16(b) of the 1934 Act or the rules
promulgated thereunder.
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4. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Shareholder
hereby individually as to itself represents, warrants, covenants and agrees to
and with Parent as follows:
(a) OWNERSHIP OF SHARES. Such Shareholder is the record Owner of the
number of Existing Shares, other shares, and derivative securities set forth
opposite such Shareholder's name on Schedule I hereto. On the date hereof, the
Existing Shares set forth opposite such Shareholder's name on Schedule I hereto
constitute all of the shares or securities issued by the Company Owned of record
by such Shareholder. Such Shareholder has sole voting power and sole power to
issue instructions with respect to the matters set forth in Sections 2 and 3
hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares set
forth opposite such Shareholder's name on Schedule I hereto, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Shareholder has the legal
capacity, power and authority, as applicable, to enter into and perform all of
such Shareholder's obligations under this Agreement. The execution, delivery
and performance of this Agreement by such Shareholder will not violate any other
agreement to which such Shareholder is a party including, without limitation,
any voting agreement, shareholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors'
rights generally. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Shareholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by such Shareholder of the transactions contemplated hereby.
(c) NO CONFLICTS. Except for filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other Person
is necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and (B)
none of the execution and delivery of this Agreement by such Shareholder, the
consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall (1)
conflict with or result in any breach of any applicable organizational documents
applicable to such Shareholder, (2) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Shareholder is a party or by which such Shareholder or any of
such Shareholder's properties or assets may be
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bound, or (3) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to such Shareholder or any of such
Shareholder's properties or assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof and except as noted on Schedule I
hereto, the certificates representing such Shareholder's Existing Shares will
be, when tendered pursuant to Section 2(a) of this Agreement, held by such
Shareholder, or by a nominee or custodian for the benefit of such Shareholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, or any other encumbrances whatsoever, except for any such
encumbrances arising hereunder. The transfer by each Shareholder of his or its
Shares to Newco in the Offer shall pass to Newco good and valid title to the
number of Shares set forth opposite such Shareholder's name on Schedule I
hereto, free and clear of all claims, liens, restrictions, security interests,
pledges, limitations and encumbrances whatsoever.
(e) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Section 2 hereof,
subject to Section 6, no Shareholder shall (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Shareholder's Shares or Options or any interest therein; (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney, deposit
any Shares or Options into a voting trust or enter into a voting agreement with
respect to any Shares or Options; or (iii) take any action that would make any
representation or warranty of such Shareholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Shareholder from
performing such Shareholder's obligations under this Agreement.
(f) WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Shareholder
may have.
(g) RELIANCE BY PARENT. Such Shareholder understands and acknowledges
that Parent is entering into, and causing Newco to enter into, the Merger
Agreement in reliance upon such Shareholder's execution and delivery of this
Agreement.
(h) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, the transactions
contemplated by this Agreement.
5. STOP TRANSFER; CHANGES IN SHARES. Each Shareholder agrees with, and
covenants to, Parent that such Shareholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the
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Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.
6. TERMINATION. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares including but not limited
to the grant of the irrevocable proxy set forth in Section 3(b)(i) hereof, shall
terminate upon the earliest of (w) the acquisition of the Shares by Parent or
Newco pursuant to the Offer, (x) the Effective Time, (y) the termination of the
Merger Agreement or the withdrawal or modification by the Company Board of its
recommendation of the Offer or the Merger as permitted by Section 7.3(b) of the
Merger Agreement and (z) the six month anniversary of the date hereof.
7. SHAREHOLDER CAPACITY. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director.
8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Shareholder agrees that this Agreement and
the obligations hereunder shall attach to such Shareholder's Shares and shall be
binding upon any Person to which legal or beneficial ownership of such Shares
shall pass, whether by operation of law or otherwise, including, without
limitation, such Shareholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Shareholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound
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by the terms of this Agreement without the agreement of any other party hereto,
and thereafter such added shareholder shall be treated as a "Shareholder" for
all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Shareholders: At the addresses set forth on Schedule I hereto
If to Parent: Kevco, Inc.
0000 X. Xxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 817/332-2765
copy to: Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxx 00000
Telecopy: 817/334-7290
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement may cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
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(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Indiana, without giving effect to the
principles of conflicts of law thereof.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Parent, Newco and each Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
PARENT:
KEVCO, INC.
By:
------------------------------------------
Name: Xxxxx Xxxxxx
Title: Chairman of the Board and President
NEWCO:
SCC ACQUISITION CORP.
By:
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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SHAREHOLDERS:
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AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
COMPANY:
SHELTER COMPONENTS CORPORATION
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
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Schedule I to Shareholders Agreement
Number of Shares of
Name and Address Number of Shares Common Stock Issuable
of Shareholders of Common Stock Owned Upon Exercise of Options
---------------- --------------------- ------------------------
Xxxxxxx X. Xxxxxx 3,983 5,000
00000 Xxxxxx Xxxxx Xxx
Xxxxxxxxx, Xxxxxxx 00000-0000
Xxxxx X. Xxxxxxxxx 353,575 40,625
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxxx 383,422 40,625
00000 Xxxxxxxxx Xx.
Xxxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx 93,594 5,000
0 Xxxxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Xxxxxx X. Xxxxxx 15,091 5,000
000 Xxxxxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxxxx X. Xxxxxx 91,170 5,000
0000 Xxxxxxxxx Xxxx-XX0X
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx 125,377 5,000
c/o Janney Xxxxxxxxxx Xxxxx, Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx X. Xxxxxxx 24,906 35,000
00000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxxx --- 10,000
00000 Xxxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
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