EXHIBIT 8
May 31, 1996
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estate, IL 60179
Attn: Gary Crittenden, Executive Vice President,
Business Planning and Strategy
Gentlemen:
In connection with your consideration of a possible business combination or
acquisition transaction (a "Transaction") with Orchard Supply Hardware Stores
Corporation (together with its subsidiary, Orchard Supply Hardware
Corporation, the "Company") certain financial, operational and other
information concerning the Company is being furnished to you. As a condition
to your receipt of such information, you agree, as set forth below, to treat
any information concerning the Company (irrespective of its source or form of
communication) that may be furnished to you by or on behalf of the Company
(collectively referred to as "Evaluation Material"), whether furnished before,
on or after the date of this Confidentiality Agreement ("Confidentiality
Agreement"), in accordance with the provisions hereof and you further agree to
abide by the other provisions contained in this Confidentiality Agreement. The
term Evaluation Material shall include any notes, analyses, compilations,
studies or other documents or records prepared by you or others, which contain
or reflect or are generated from information supplied by the Company or its
representatives. The term Evaluation Material shall not include information
which you can prove by documentary evidence (i) is now or becomes generally
available to the public other than as a result of a disclosure by you or your
representatives in violation of this Confidentiality Agreement, (ii) was
available to you on a non-confidential basis from a source other than the
Company or its representatives, prior to receipt in accordance with this
Confidentiality Agreement provided such information is not known by you to be
subject to another confidentiality agreement with or other obligation of
secrecy to the Company or another party, (iii) becomes available to you on a
non-confidential basis from sources other than the Company or its
representatives, provided that such source is not known by you or your
representatives to be prohibited from transmitting the information to you by a
contractual, legal or fiduciary obligation, or (iv) was or is independently
developed by you or on your behalf without the use of any Evaluation Material
and not otherwise in violation of clause (iii) of this paragraph.
You agree that the Evaluation Material will be used solely for the purpose
of evaluating and negotiating a possible Transaction involving the Company and
will not be used by you for any other purpose and that the Evaluation Material
will be kept confidential by you; provided, however, that any of such
information may be disclosed to your directors, officers, employees, potential
financing sources and professional service providers (collectively referred to
as "your representatives") who, in your reasonable judgment, need to know such
information for the purpose described above, it being understood that prior to
any disclosure of Evaluation Material, each of your representatives shall be
informed by you of the terms of this Confidentiality Agreement, that the
provisions hereof shall be deemed to be fully applicable to him or her, and of
the confidential nature of the Evaluation Material. You shall be responsible
for any breach of this Confidentiality Agreement by you or any of your
representatives.
Except as provided below, without the prior written consent of the other
party, neither you nor the Company will disclose, and each of you and the
Company will direct its respective representatives not to disclose, to any
person other than its respective representatives, the fact that the Evaluation
Material has been made available to you, the fact that you or we are
considering a Transaction, or any information with respect to the discussions
or
Sears, Roebuck and Co.
May 31, 1996
Page 2
negotiations, including the status thereof. The term "person" as used in this
Confidentiality Agreement shall be broadly interpreted to include, without
limitation, any corporation, company, partnership or individual.
Disclosure of any portion of Evaluation Material by either party or its
respective representatives or of any matter covered in the preceding paragraph
by either party or its respective representatives shall not be precluded under
this Agreement, if such disclosure is, in the reasonable opinion of counsel to
the disclosing party: (i) required by law or the rules and regulations of any
stock exchange on which the securities of the disclosing party are traded or
of any other regulatory authority having jurisdiction over the disclosing
party, (ii) necessary to establish rights under this Agreement, (iii)
consented to in writing by the other party or (iv) in response to a valid
subpoena or order of a court or other governmental body or other valid legal
process; provided that (a) with respect to any such subpoena, order or legal
process, the disclosing party shall first give notice to the other party and
use reasonable efforts to cooperate with the other party so that such other
party may take legally available steps to resist or narrow such subpoena,
order or legal process and obtain an appropriate protective order or other
assurance that confidential treatment will be accorded such information and
(b) the disclosing party will furnish only such of the Evaluation Material
being sought as such party is advised by its counsel is legally required in
response to the subpoena, order or other legal process. Prior to making any
disclosure permitted by this paragraph, the disclosing party will, to the
extent practicable, consult with the other party with respect to the proposed
disclosure.
You and your representatives will upon the request of the Company at your
election either (1) promptly deliver to the Company all Evaluation Material in
or under your or your representatives' possession or control, without
retaining any copy, extract or reproduction thereof, or (2) promptly destroy
all Evaluation Material in or under your or your representatives' possession
or control, and such destruction shall be certified in writing to the Company
by one of your officers supervising such destruction. Notwithstanding the
return or destruction of the Evaluation Material, you and your representatives
will continue to be bound by the confidentiality and other obligations created
hereby.
You acknowledge that you are aware, and that you will advise, or have
advised, your representatives who are informed as to the matters which are the
subject of this Confidentiality Agreement, that the United States securities
laws prohibit any person who has received from an issuer material, nonpublic
information concerning the matters which are the subject of this
Confidentiality Agreement from purchasing or selling securities of such issuer
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 while in possession of material nonpublic information.
You hereby further acknowledge that the Evaluation Material is being
furnished to you in further consideration of your agreement that except with
respect to the evaluation and negotiation of a Transaction as contemplated by
this Confidentiality Agreement (and, in such connection, only with or to the
Company, its Board of Directors and/or representatives), neither you nor any
of your subsidiaries will, for a period of two years from the date hereof,
directly or indirectly, alone or with others, (a) negotiate with or provide
any information to any party with respect to, or make any statement or
proposal to the Board of Directors of the Company, to any of its agents or to
any stockholder of the Company with respect to, or make any public
announcement or proposal or offer whatsoever (including, but not limited to
any "solicitation" of "proxies" as such terms are defined or used in
Regulation 14A of the Securities Exchange Act of 1934) with respect to, or
otherwise solicit, seek or offer to effect (i) any form of business
combination or transaction involving the Company or any affiliate thereof,
including, without limitation, a merger, tender or exchange offer or
liquidation of the Company's assets, (ii) any form of restructuring,
recapitalization or similar transaction with respect to the Company or any
affiliate thereof, (iii) any purchase of any securities or assets, or rights
to acquire any securities or assets, of the Company, or
Sears, Roebuck and Co.
May 31, 1996
Page 3
(iv) any proposal to seek representation on the Board of Directors of the
Company or otherwise to seek to control or influence the management, Board of
Directors or policies of the Company, (v) any request or proposal to waive,
terminate or amend the provisions of this paragraph, or (vi) any proposal or
other statement inconsistent with the terms of this paragraph, (b) instigate,
encourage or assist any third party to do any of the foregoing, or (c) become
the beneficial owner of more than 1% of any class of securities of the
Company, unless and until you have received the prior written invitation or
approval of a majority of the Board of Directors of the Company to do any of
the foregoing; provided, however, that the foregoing shall not prohibit,
subject to the provisions of this Confidentiality Agreement, any of your
affiliates which is in the business of acquiring and maintaining investment
portfolios from acquiring or owning securities of the Company in the ordinary
course of its business for investment and not with an intention of obtaining
or exercising control of the Company.
You agree that without the prior consent of the Company, neither you nor any
of your representatives will contact any employee, supplier, customer or
representative of the Company concerning the Evaluation Material or the
Transaction, or except in the ordinary course of business, any aspect of the
Company's business, assets, prospects or finances. It is understood and agreed
that Maynard Jenkins, the Company's Chief Executive Officer, or J. Frederick
Simmons of Freeman Spogli & Company Incorporated ((310) 444-1832) shall
arrange for appropriate contacts at the Company. It is also understood that
all (a) communications regarding a possible transaction, (b) requests for
additional information, (c) requests for facility tours or management meetings
and (d) discussions or questions regarding procedures will be submitted or
directed through Mr. Jenkins or Mr. Simmons.
In the event that you decide to proceed with your review of the Evaluation
Material and consideration of a possible Transaction after the preliminary
meeting to be held on May 31, 1996, you agree that without the Company's prior
written consent, for a period of two years from the date hereof, you will not
directly or indirectly solicit for employment (other than through general
advertising) any management employee of the Company who become known to you in
the course of your (or your representatives') review of the Evaluation
Material or investigation and inquiries in connection with your evaluation of
the Company regard to a potential Transaction; and you will not initiate,
participate in, include or contribute to any interference with the Company's
employment relationship with any such person.
You acknowledge and agree that the Company would not have an adequate remedy
at law and would be irreparably harmed in the event that any of the provisions
of this Confidentiality Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Company shall be entitled to injunctive relief to prevent breaches of this
Confidentiality Agreement and to specifically enforce the terms and provisions
hereof, in addition to any other remedy to which the Company may be entitled
at law or in equity. The prevailing party in any litigation shall, after a
final non-appealable judgment has been issued, be entitled to recover from the
other party its legal expenses, including reasonable legal fees, incurred in
connection therewith. It is further understood and agreed that no failure to
or delay in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, and no single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise of any right,
power or privilege.
You understand that the Company does not make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. Only those
representations and warranties contained in the final definitive agreement
covering the Transaction, when, as and if executed, and subject to such
limitations as may be specified therein, will have any legal effect. You agree
that unless and until a definitive agreement (expressly excluding any executed
letter of intent or other preliminary written agreement and any written or
oral acceptance of an offer or a bid) with respect to any Transaction has been
executed and delivered, neither the Company nor you will be under any legal
obligation of any kind whatsoever with respect to such a transaction by virtue
of this
Sears, Roebuck and Co.
May 31, 1996
Page 4
letter agreement or any written or oral expression with respect to such a
Transaction by either party or any of its respective agents except, in the
case of this Confidentiality Agreement, for the matters specifically agreed to
herein.
You acknowledge and agree that we reserve the right, in our sole discretion,
to change the procedures relating to our consideration of a possible
Transaction at any time without prior notice to you, to reject any and all
proposals made by you or any of your representatives, and to terminate
discussions and negotiations with you at any time and for any reason. Unless
and until a written definitive agreement concerning the Transaction has been
executed, neither we nor any of our representatives will have any liability to
you with respect to the Transaction or the evaluation and the bidding process
and procedures, whether by virtue of this Confidentiality Agreement, any other
written or oral expression with respect to the Transaction or otherwise except
as expressly provided in this Agreement. Unless and until a written definitive
agreement concerning the Transaction has been executed, neither you nor any of
your representatives will have any liability to us with respect to a
Transaction, whether by virtue of this Confidentiality Agreement, any other
written or oral expression with respect to the Transaction or otherwise,
except as expressly provided in this Agreement. We understand that you reserve
the right to terminate discussions and negotiations with us at any time and
for any reason.
This Confidentiality Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed within such State. Each of the Company and you agrees
and consents to personal jurisdiction and venue in any action brought in any
court, federal or state, within the State of California having subject matter
jurisdiction in connection with any matter arising under this Confidentiality
Agreement and irrevocably waives any defense of inconvenient forum in respect
of any such action.
This Confidentiality Agreement shall remain in effect for a period of two
years from the date hereof and may be modified or waived only by a separate
writing by the Company and you that expressly so modifies or waives this
Confidentiality Agreement.
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter agreement to the undersigned, whereupon this
Confidentiality Agreement shall become a binding agreement between you and the
undersigned.
Very truly yours,
ORCHARD SUPPLY HARDWARE STORES
CORPORATION
By: /s/ Maynard Jenkins
----------------------------------
Maynard Jenkins,
President and Chief Executive
Officer
Agreed to and Accepted:
SEARS, ROEBUCK AND CO.
By: /s/ Gary Crittenden
---------------------------
Gary Crittenden,
Executive Vice President,
Business Planning and Strategy
Date: