EXHIBIT 10.7
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of May 16,
2000, is executed by and between Xxxxxxx X. Xxxxxxx, a natural person residing
at the address set forth on the signature page hereof (the "Pledgor"), and
Wilmar Industries, Inc., a New Jersey corporation (the "Company").
WITNESSETH:
WHEREAS, the Pledgor entered into a Subscription Agreement, dated as of
the date hereof (the "Subscription Agreement"), between the Company and the
Pledgor, pursuant to which the Company sold to the Pledgor and the Pledgor
purchased from the Company 27,068 shares of Common Stock , no par value (the
"Common Stock"), of the Company and 57,293 shares of Senior Preferred Stock, par
value $0.01 per share (the "Preferred Stock"; together with the Common Stock,
the "Shares"), of the Company in consideration for a secured recourse promissory
note, in the principal amount of $599,998 executed by the Pledgor in favor of
the Company (the "Promissory Note");
WHEREAS, the Pledgor is willing to pledge the Shares as collateral
security for the payment and performance of his obligations under the Promissory
Note; and
WHEREAS, simultaneously herewith the Pledgor is entering into a
Shareholders Agreement (the "Shareholders Agreement") dated the date hereof
among the Company and its shareholders;
NOW, THEREFORE, in consideration of the premises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Pledgor and the Company do hereby agree as follows:
1. PLEDGE. The Pledgor hereby pledges to the Company and
grants to the Company a security interest in the following (collectively, the
"Pledged Collateral"):
(a) The Shares and the certificates representing the
Shares (all such shares, the "Pledged Stock"), accompanied by stock powers (the
"Powers") duly executed in blank; and
(b) all dividends, cash, instruments or other property
from time to time received, receivable, payable or otherwise distributed in
respect of, or in exchange for, or upon a Transfer, conversion or redemption of,
any or all of the Pledged Stock.
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2. SECURITY FOR LIABILITIES. The Pledged Collateral secures
the prompt payment, performance and observance of (a) all amounts of
indebtedness of the Pledgor to the Company under the Promissory Note and all of
the Pledgor's obligations thereunder and (b) the Pledgor's obligations and
liabilities under this Pledge Agreement (all such obligations and liabilities of
the Pledgor now or hereafter existing being hereinafter referred to as the
"Liabilities").
3. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. In
addition to, and not in limitation of, the rights the Company has under the
Shareholders Agreement, the Company may, after the occurrence of an Event of
Default (as defined in the Promissory Note), without notice and at its option,
transfer or register the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder. In addition, the Company may at any
time exchange certificates or instruments representing or evidencing Pledged
Stock for certificates or instruments of smaller or larger denominations.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of
the Pledged Stock, free and clear of all claims, pledges, liens, encumbrances,
charges and security interests of every nature whatsoever except for the
security interest created by this Pledge Agreement and the Promissory Note
(collectively, "Liens");
(b) The Pledgor has capacity to enter into this Pledge
Agreement;
(c) Except for the restrictions contained in or
contemplated by this Agreement, the Shareholders Agreement and the Promissory
Note, there are no restrictions upon the voting rights associated with the
Pledged Stock or upon the transfer of any of the Pledged Collateral, including,
but not limited to, the pledge and grant of a security interest in or otherwise
transfer of such Pledged Collateral free of any Liens;
(d) No authorization, approval, or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery or performance of this Pledge
Agreement by the Pledgor or (ii) for the exercise by the Company (or its
designee, where applicable) of the voting or other rights provided for in this
Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant
to this Pledge Agreement (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally);
(e) The pledge of the Pledged Collateral pursuant to this
Pledge Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, in favor of the Company for the benefit of the
Company, securing the payment and performance of the Liabilities; and
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(f) The Powers have been duly executed and give the
Company the authority they purport to confer.
5. VOTING RIGHTS. During the term of this Pledge Agreement,
and except as provided in this Section 5, the Pledgor shall have the right,
subject to the restrictions on voting contained in the Shareholders Agreement,
to vote the Pledged Stock to the extent permitted by the Certificate of
Incorporation in a manner not inconsistent with the terms of this Pledge
Agreement and any other agreement, instrument or document executed pursuant
thereto or in connection therewith. After the occurrence of an Event of Default
(as defined in the Promissory Note), the Pledgor hereby irrevocably grants his
or her proxy to the Company or its designee to exercise any and all voting
powers pertaining to the Pledged Collateral, subject to restrictions on voting
contained in the Shareholders Agreement.
6. Dividends and Other Distributions.
(a) So long as there shall exist no condition, event or
act which constitutes an Event of Default or which with notice or lapse of time
or both would constitute an Event of Default:
(i) The Pledgor shall be entitled to receive and
retain any and all dividends paid in respect of the Pledged Collateral;
PROVIDED, HOWEVER, that any and all
(A) cash, instruments or other property
received, receivable or otherwise distributed in exchange for any of
the Pledged Collateral;
(B) dividends and other distributions
paid or payable in cash with respect to any of the Pledged Collateral
on account of a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in
surplus; and
(C) cash paid, payable or otherwise
distributed with respect to, a sale of, in redemption of, conversion
of, or in exchange for, any of the Pledged Collateral; shall be Pledged
Collateral, and shall be, forthwith delivered to the Company for the
benefit of the Company as Pledged Collateral and shall, if received by
the Pledgor, be received in trust for the benefit of the Company, be
segregated from the other property or funds of the Pledgor, and be
delivered immediately to the Company as Pledged Collateral in the same
form as so received (with any necessary endorsement); and
(ii) The Company shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to receive
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the dividends or interest payments which it is authorized to receive and retain
pursuant to clause (i) above.
(b) After the occurrence of any condition, event or act
which constitutes an Event of Default or which with notice or lapse of time or
both would constitute an Event of Default:
(i) All rights of the Pledgor to receive the
dividends which it would otherwise be authorized to receive and retain pursuant
to Section 6(a)(i) hereof shall cease, and all such rights shall thereupon
become vested in the Company, for the benefit of the Company, which shall
thereupon have the sole right to receive and retain as Pledged Collateral such
dividends and interest payments; and
(ii) All dividends which are received by the
Pledgor contrary to the provisions of clause (i) of this Section 6(b) shall be
received in trust for the benefit of the Company, shall be segregated from other
funds of the Pledgor and shall be paid over immediately to the Company as
Pledged Collateral in the same form as so received (with any necessary
endorsements).
7. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will
not (a) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral without the prior written consent of the Company, or
(b) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Pledge
Agreement.
8. REMEDIES.
(a) The Company shall have, in addition to any other
rights given under this Pledge Agreement or by law, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of New Jersey. In addition,
after the occurrence of an Event of Default, the Company shall have such powers
of sale and other powers as may be conferred by applicable law. With respect to
the Pledged Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Company or which the
Company shall otherwise have the ability to transfer under applicable law, the
Company may, in its sole discretion, without notice except as specified below,
after the occurrence of an Event of Default, sell or cause the same to be sold
at any exchange, broker's board or at public or private sale, in one or more
sales or lots, at such price as the Company may deem best, for cash or on credit
or for future delivery, without assumption of any credit risk, and the purchaser
of any or all of the Pledged Collateral so sold shall thereafter own the same,
absolutely free from any Lien, claim, encumbrance or right of any kind
whatsoever. The Company may, in its own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if permitted by
applicable law, buy the Pledged Collateral at any private sale. The Pledgor will
pay to the Company all reasonable expenses (including, without limitation, court
costs and reasonable attorneys' and paralegals' fees and expenses) of, or
incidental to, the enforcement of any of the provisions of this Pledge
Agreement. The Pledgor shall be
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liable for any deficiency following the sale of the Pledged Collateral,
including but not limited, to the costs and expenses incurred by the Company or
its agent in connection with the enforcement of its remedies under this Section
9 and to the extent provided for in the Promissory Note.
(b) The Pledgor recognizes that federal and state
securities laws may impose certain restrictions on the method by which a sale of
the Pledged Collateral may be effected after an Event of Default, and the
Pledgor agrees that after the occurrence of an Event of Default (i) it will be
commercially reasonable if a private sale, upon at least five (5) Business Days'
notice to the Pledgor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less then prices which could have been obtained for such security
on any market or exchange or in any other public sale and (ii) the Company may,
from time to time, attempt to sell all or any part of the Pledged Collateral by
means of a private placement restricting the bidders and prospective purchasers
to those who are qualified and will represent and agree that they are purchasing
for investment only and not for distribution. In so doing, the Company may
solicit offers to buy the Pledged Collateral, or any part of it, from a limited
number of investors deemed by the Company, in its reasonable judgment, to be
financially responsible parties who might be interested in purchasing the
Pledged Collateral. If the Company solicits such offers from not less than four
(4) such investors, then the acceptance by the Company of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposing of such Pledged Collateral; PROVIDED, HOWEVER, that this Section does
not impose a requirement that the Company solicit offers from four or more
investors in order for the sale to be commercially reasonable.
9. APPLICATION OF PROCEEDS. The proceeds of any sale, public
or private, of all or any portion of the Pledged Collateral shall be applied by
the Company as follows: (a) first, to the payment of the costs and expenses
incidental to the care or safekeeping of the Pledged Collateral and incurred in
such sale, including reasonable out-of-pocket costs and expenses of the Company
and the reasonable expenses of its agents and counsel; (b) second, to the
payment of defaulted interest on the Promissory Note; (c) third, to the payment
of other accrued interest under the Promissory Note; and (d) to the payment in
full of the principal amount owed and outstanding under the Promissory Note. The
balance, if any, remaining after payment in full of the Promissory Note, shall
be paid to the Pledgor, subject to any duty of the Company imposed by law to the
holder of any subordinate security interest in the Pledged Collateral known to
the Company.
10. SECURITY INTEREST ABSOLUTE. All rights of the Company and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of (a) any change in the time,
manner or place of payment of, or in any other term of, all or any part of the
Liabilities, and (b) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Pledge Agreement.
11. COMPANY APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
appoints the Company its attorney-in-fact, with full authority, in the name of
the Pledgor
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or otherwise, after the occurrence of an Event of Default, from time to time in
the Company's sole discretion to take any action and to execute any instrument
which the Company may deem necessary or advisable to accomplish the purposes of
this Pledge Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Pledgor representing any dividend or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same.
12. WAIVERS.
(a) The Pledgor hereby agrees that its obligations under
this Agreement shall be unconditional, irrespective of (i) the validity or
enforceability, avoidance or subordination of the Liabilities; (ii) the absence
of any attempt by, or on behalf of, the Company to collect, or take any other
action to enforce, all or any part of the Liabilities; (iii) the election of any
remedy by, or on behalf of, the Company with respect to all or any part of the
Liabilities; (iv) the failure of the Company to take any steps to perfect and
maintain its security interests in, or to the preserve its right to any of the
Pledged Collateral for all or any part of the Liabilities; or (v) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Pledgor.
(b) The Pledgor consents and agrees that neither the
Company nor any party acting for or on behalf of the Company shall be under any
obligation to marshal any assets in favor of the Pledgor or against or in
payment of all or any part of the Liabilities.
13. TERM. This Pledge Agreement shall remain in full force and
effect until the Liabilities have been fully paid and the Promissory Note has
been terminated. Upon the termination of this Pledge Agreement as provided above
(other than as a result of the sale of all of the Pledged Collateral), the
Company will release the security interest created hereunder and, if it then has
possession of the Pledged Collateral, will deliver the Pledged Collateral to the
Pledgor.
14. DEFINITIONS. The singular shall include the plural and
vice versa and any gender shall include any other gender as the context may
require.
15. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be
binding upon and inure to the benefit of the Company and the Pledgor and their
respective successors and assigns; PROVIDED, HOWEVER, that the Pledgor may not
(except as provided in SECTION 8 above) assign this Pledge Agreement or any of
the rights and obligations of the Pledgor hereunder without the prior written
consent of the Company.
16. GOVERNING LAW. Any dispute between the Company and
the Pledgor arising out of or related to the relationship established between
them in connection with this Pledge Agreement, and whether arising in contract,
tort, equity, or otherwise, shall be resolved in accordance with the laws of the
State of New Jersey.
17. JURISDICTION. The Company shall have the right to proceed
against the Pledgor in any court of competent jurisdiction, to realize on the
Pledged Collateral or
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any other security for the Liabilities or to enforce a judgment or other court
order entered in favor of the Company.
18. WAIVER OF BOND. The Pledgor waives the posting of any bond
otherwise required of the Company in connection with any judicial process or
proceeding to realize on the Pledged Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Company, or to enforce by specific performance, temporary restraining order,
or preliminary or permanent injunction, this Pledge Agreement or any other
agreement or document between the Company and the Pledgor.
19. SEVERABILITY. Whenever possible, each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but, if any provision of this Pledge Agreement shall
be held to be prohibited or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Pledge Agreement.
20. FURTHER ASSURANCES. The Pledgor agrees that it will
cooperate with the Company and will execute and deliver, or cause to be executed
and delivered all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the
execution and filing of financing statements, as the Company may reasonably
request from time to time in order to carry out the provisions and purposes of
this Pledge Agreement.
21. THE COMPANY'S DUTY OF CARE. The Company shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Pledged Collateral, except for those arising out of or in connection with
the Company's (a) gross negligence or willful misconduct, or (b) failure to use
reasonable care with respect to the safe custody of the Pledged Collateral in
the Company's possession. Without limiting the generality of the foregoing, the
Company shall be under no obligation to take any steps necessary to preserve
rights in the Pledged Collateral against any other parties but may do so at its
option. All expenses incurred in connection therewith shall be for the sole
account of the Pledgor, and shall constitute part of the Liabilities secured
hereby.
22. NOTICES. All notices and other communications required or
desired to be served, given or delivered hereunder shall be made in writing and
shall be addressed to the party to be notified as follows:
(a) If to the Company, to it at the following
address:
Wilmar Industries, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Chairman of the Board of Directors
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with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
(b) if to the Pledgor, to him at the address set forth
below his signature;
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications shall be
deemed to be validly served, given or delivered (i) three (3) days following
deposit in the United States mails, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified; or (iii) upon
delivery thereof to a reputable overnight courier service, with delivery charges
prepaid.
23. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver
of any provision of this Pledge Agreement shall in any event be effective unless
the same shall be in writing and signed by the Company and the Pledgor, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
24. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
25. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall together constitute one and the same agreement.
26. MERGER. This Pledge Agreement and the Promissory Note
represents the final agreement of the Pledgor with respect to the matters
contained herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, between the Pledgor
and the Company.
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IN WITNESS WHEREOF, the Pledgor and the Company have executed this
Pledge Agreement as of the date set forth above.
PLEDGOR: XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
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Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
WILMAR INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Chairman of the Board of Directors
