Exhibit 4.8
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
BY AND AMONG
THE PANTRY, INC.,
FS EQUITY PARTNERS III, L.P.,
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
CHASE MANHATTAN CAPITAL, L.P.,
CB CAPITAL INVESTORS, L.P.,
BASEBALL PARTNERS
AND
PETER J. SODINI
OCTOBER 23, 1997
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement")
is made and entered into as of October 23, 1997 by and among The Pantry, Inc., a
Delaware corporation (the "Company"), FS Equity Partners III, L.P., a Delaware
limited partnership ("FSEP III"), FS Equity Partners International, L.P., a
Delaware limited partnership ("FSEP International"), Chase Manhattan Capital,
L.P., a Delaware limited partnership and successor-in-interest to Chase
Manhattan Capital Corporation, a Delaware corporation ("CMC"), CB Capital
Investors, L.P., a Delaware limited partnership ("CBC"), Baseball Partners, a
New York general partnership ("BP"), and Peter J. Sodini, an individual
("Sodini").
RECITALS
1. The Company, FSEP III, FSEP International, CMC and BP wish to
amend and restate that certain Stockholders' Agreement dated as of August 19,
1996 (the "Old Stockholders' Agreement") by and among such parties, as further
set forth below.
2. The execution and delivery of this Agreement is a condition to
the consummation of the transactions contemplated by that certain Stock Purchase
Agreement dated as of an even date herewith by and among the Company, FSEP III,
FSEP International, CBC and Sodini.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
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terms shall have the following meanings:
Affiliate: Such term shall have the meaning set forth in Rule 12b-2 of
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the General Rules and Regulations promulgated under the Securities Exchange Act
of 1934, as amended.
Chase Entities: CMC, CBC, BP and any member of the Chase Capital Group
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to which any of CMC, CBC or BP transfers shares of Common Stock in accordance
with Section 6.
Common Stock: The Common Stock, par value $0.01 per share, of the
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Company.
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Employee: Any employee, director or consultant of the Company.
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FS Entities: FSEP III and FSEP International.
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Person: Any individual, corporation, entity, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof.
Public Market Sale: A sale of securities into the public market
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pursuant to Rule 144 or an effective registration statement.
SBIC: A Small Business Investment Company licensed by the U.S. Small
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Business Administration (or any successor agency) (the "SBA") that owns shares
of Common Stock.
Securities Act: The Securities Act of 1933, as amended.
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SEC: Securities and Exchange Commission.
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Voting Securities: All of the outstanding shares of the capital stock
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of the Company then possessing general voting power with respect to the election
of directors.
2. Right of First Offer.
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(a) Offer. Subject to Section 6(a), if either Sodini or any of
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the Chase Entities determines to solicit, or causes to be solicited, proposals
for the acquisition (whether by means of a sale of stock, exchange or other
method of sale) of any shares of Common Stock, or receives an unsolicited offer
to so acquire any such shares and such Person determines to pursue such an offer
for the acquisition of such shares, such Person shall first give the FS Entities
written notice (the "Notice") of such intention, which notice shall include a
term sheet stating, among other material terms, the minimum sales price that
such Person would accept for such shares (the "Target Price"). The FS Entities
shall have the right for a period of 20 days following the delivery of the
Notice (the "Acceptance Period") to accept the offer to purchase all but not
less than all such shares at the Target Price and upon the other terms provided
with the Notice.
(b) Acceptance. The FS Entities shall, if either so desires,
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exercise their rights by delivering to such Person written notice of election
prior to 5:00 p.m. Los Angeles time on or before the last day of the Acceptance
Period. The acceptance of the offer to purchase all such shares of Common Stock
shall identify the committed source of financing for such purchase or provide
evidence that the FS Entities are able to effect the purchase. Such Person and
the FS Entities shall, as soon as reasonably possible, negotiate in good faith a
definitive acquisition agreement containing appropriate provisions customary for
a
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transaction of the type contemplated. If no definitive agreement is agreed upon
within 30 days after negotiations are so commenced, such Person shall be free to
resume its efforts to sell such shares of Common Stock to other prospective
buyers, as further set forth in Section 2(c) below.
(c) Rejection. If the FS Entities elect not to exercise their
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purchase rights under Section 2(b) during the Acceptance Period or if such
Person and the FS Entities are unable to conclude negotiations of a definitive
agreement during the 30-day period described above, such Person shall have the
right for a period of 60 days thereafter to sell such shares of Common Stock or,
within such 60-day period, to enter into a definitive agreement to sell such
shares within 30 days of the date of such agreement for a sales price equal to
or greater than the Target Price and upon terms that are not materially less
favorable to such Person than the terms provided to the FS Entities in the
Notice.
(d) Below Target Price Offer. If such Person receives a written
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offer for such shares of Common Stock at any time during such 60-day period
which is acceptable to such Person but is less than the Target Price or upon
terms materially less favorable to such Person than the terms provided to the FS
Entities in the Notice (the "Below Target Price Offer"), such Person shall
promptly deliver a copy of the Below Target Price Offer to the FS Entities.
During the 20-day period following delivery of such written offer, the FS
Entities shall have the right to accept the offer to purchase all, but not less
than all, of such shares of Common Stock on the terms reflected in the Below
Target Price Offer. The FS Entities shall, if they so desire, exercise such
right by delivering to such Person written notice of election prior to 5:00 p.m.
Los Angeles time on or before the final day of such additional 20-day period
(and shall identify the committed source of financing or evidence that the FS
Entities are able to effect the purchase), and such Person and the FS Entities
shall then negotiate a definitive acquisition agreement, in each case in the
manner contemplated by Section 2(b) above. If the FS Entities do not elect to
accept the offer to purchase such shares on such terms within such 20-day period
or if such Person and the FS Entities are unable to conclude negotiations of a
definitive agreement within 30 days of the date of the acceptance of the Below
Target Price Offer, such Person shall have 60 days to consummate the sale of
such shares at a price and upon terms that are not materially less favorable to
such Person than the price and terms specified in the Below Target Price Offer.
(e) Exempt Transfers. The FS Entities' rights under this Section
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2 shall not apply to (i) transfers by Sodini or the Chase Entities in connection
with a public offering of shares of Common Stock pursuant to a registration
statement filed with and declared effective by the SEC, (ii) transfers pursuant
to Rule 144 of the Securities Act or (iii) transfers permitted by Section 6
below.
(f) Transferees Bound. The obligations of each of Sodini and the
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Chase Entities pursuant to this Section 2 shall be binding upon any transferee
of any of the shares of Common Stock held by such Persons, and Sodini and each
of the Chase Entities shall
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obtain and deliver to the FS Entities a written commitment to be bound by such
provisions from such transferee prior to any transfer.
3. Obligation to Sell Securities.
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(a) Sale Requirement. Subject to Section 6(a), if the FS
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Entities find a third-party buyer, who is not an Affiliate of the FS Entities,
for all, but not less than all, of the shares of Common Stock held by the FS
Entities (whether such sale is by way of purchase, merger or other form of
transaction), upon the request of the FS Entities, Sodini and each of the Chase
Entities shall sell all of their respective shares of Common Stock to such
third-party buyer pursuant to the terms and conditions negotiated by the FS
Entities for the sale of all the shares of Common Stock held by the FS Entities.
Sodini and each of the Chase Entities further agrees to timely take such other
actions as the FS Entities may reasonably request to enforce each of Sodini's
and the Chase Entities' respective obligation to sell his and its shares of
Common Stock and otherwise as necessary in connection with the approval of the
consummation of such sale, including any approval by the Company's stockholders
of such sale.
(b) Conditions to Sale Requirement. The obligations of each of
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Sodini and the Chase Entities pursuant to this Section 3 are subject to the
satisfaction of the following conditions:
(i) Upon the consummation of a transaction as described in
Section 3(a) (the "Proposed Transaction"), Sodini and the Chase
Entities will each receive the same form and amount of consideration
per share, or if the FS Entities are given an option as to the form
and amount of consideration to be received, Sodini and the Chase
Entities will be given the same option;
(ii) No FS Entity or Affiliate of an FS Entity who holds
any debt or other securities issued by the Company (i.e., securities
other than shares of Common Stock) shall, pursuant to the Proposed
Transaction, receive in consideration of such debt or other securities
an amount greater than the sum of, without duplication, a) the face
amount or liquidation value of such securities, plus b) any accrued
but unpaid interest or dividends (including cumulative dividends, if
applicable) plus c) any prepayment or redemption premium or penalty
set forth in the terms of the agreements evidencing such securities;
(iii) Neither Sodini nor any Chase Entity shall be
obligated to make any out-of-pocket expenditure prior to the
consummation of the Proposed Transaction (excluding modest
expenditures for postage, copies, etc.) and neither Sodini nor any
Chase Entity shall be obligated to pay more than his or its "pro rata
share" of reasonable expenses incurred in connection with a
consummated Proposed Transaction to the extent such costs are incurred
for the
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benefit of the FS Entities, Sodini and all Chase Entities selling
shares of Common Stock and are not otherwise paid by the Company or
the third-party (costs incurred by or on behalf of an FS Entity for
its sole benefit will not be considered costs of the Proposed
Transaction hereunder);
(iv) In the event that either Sodini or the Chase Entities
are required to make any representations or indemnities in connection
with the Proposed Transaction (other than representations and
indemnities concerning each such Person's valid ownership of his or
its shares of Common Stock, free of all liens and encumbrances (other
than those arising under applicable securities laws), and such
Person's authority, power, and right to enter into and consummate such
purchase or merger agreement without violating any other agreement),
then each of Sodini and each Chase Entity shall not be liable with
respect to a sale of such shares for more than his or its "pro rata
share" of any liability for misrepresentation or indemnity and such
liability shall be capped at no more than his or its "pro rata share"
of the total purchase price received in such Proposed Transaction by
such Person for such shares; and
(v) Neither Sodini nor any Chase Entity shall be obligated
to take any action, or refrain from taking any action, that he or it
reasonably believes will result in his or in its or any of its
Affiliates' violation of any law or order.
(vi) As used in this Section 3, a "pro rata share" shall
mean the ratio of (i) the total number of shares of Common Stock to be
sold by such Person in a Proposed Transaction, to (ii) the total
number of shares of Common Stock to be sold by all entities in such
Proposed Transaction.
(c) Transferees Bound. The obligations of each of Sodini and the
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Chase Entities pursuant to this Section 3 shall be binding upon any transferee
of any of his or their shares of Common Stock and each of Sodini and each Chase
Entity shall obtain and deliver to the FS Entities a written commitment to be
bound by such provisions from such transferee prior to any transfer.
4. Tag Along Rights.
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(a) Rights. Neither the FS Entities nor the Chase Entities (each
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of the foregoing may from time to time be the "Selling Holder") shall sell or
otherwise dispose of to any Person (the "Buyer") (other than transfers within
the Chase Capital Group pursuant to Section 6) any shares of Common Stock held
or beneficially owned by the Selling Holder unless the non-Selling Holder (the
"Non-Selling Holder") together with Sodini or any other holder of shares of
Common Stock who have rights to participate in sales or other dispositions of
such shares by any of the Stockholders pursuant to written agreements by and
between such
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Stockholder and any such holder (collectively, and together with the Non-Selling
Holders, the "Co-Sale Right Holders"), are given an opportunity to sell or
otherwise dispose of to the Buyer their respective Pro Rata Share (determined in
accordance with Section 4(b) below) of any shares of Common Stock held by such
Co-Sale Right Holders (the "Tag Along Rights").
(b) TAR Offer. Prior to the consummation by the Selling Holder
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of any sale or other disposition of the Selling Holder's shares of Common Stock
which is subject to the provisions of Section 4(a), the Selling Holder shall
cause the bona fide offer from the Buyer to purchase or otherwise acquire such
Selling Holder's shares of Common Stock from the Selling Holder to be reduced to
writing (the "TAR Offer") and shall deliver written notice of the TAR Offer,
together with a true copy of the TAR Offer (the "TAR Notice"), to each of the
Co-Sale Right Holders in the event such proposed sale or other disposition is
subject to the Tag Along Rights (a "TAR Sale"). Each TAR Offer shall include an
offer to purchase or otherwise acquire from each Co-Sale Right Holder
(individually, a "TAR Offeree" and collectively, the "TAR Offerees"), at the
same time, at the same price and on the same terms as apply to the sale or other
disposition by the Selling Holder to the Buyer and according to the terms and
subject to the conditions of this Agreement, not less than the amount of the
shares of Common Stock held by such TAR Offeree as shall be equal to the product
of (i) the total number of shares of Common Stock which the Buyer desires to
purchase or otherwise acquire, times (ii) the TAR Offeree's Pro Rata Share,
which is a fraction, the numerator of which is the total number of shares of
shares of Common Stock subject to the TAR Offer held by such TAR Offeree on the
date of the TAR Notice and the denominator of which is the total number of
shares of Common Stock held on such date by the Selling Holder and all the TAR
Offerees who elect, pursuant to Section 4(c) below, to accept the TAR Offer.
Pursuant to Section 4(d), the Selling Holder may then sell to the Buyer the
number of shares of Common Stock remaining after the shares of Common Stock to
be sold by the TAR Offerees are subtracted from the number of shares of Common
Stock to be sold by the Selling Holder as contained in the TAR Offer.
(c) Acceptance Notice. If a TAR Offeree desires to accept the
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TAR Offer with respect to his or its shares of Common Stock, such TAR Offeree
shall do so by delivering to the Selling Holder a written notice stating such
TAR Offeree's irrevocable acceptance of the TAR Offer with respect to such TAR
Offeree's shares of Common Stock and setting forth the amount of the shares of
Common Stock that such TAR Offeree desires to sell to the Buyer (the "Acceptance
Notice"), which Acceptance Notice shall be delivered to the Selling Holder
within 20 days after the delivery of the TAR Notice to such TAR Offeree. Such
Acceptance Notice shall constitute such TAR Offeree's agreement to sell to the
Buyer the lesser of (i) the amount of such TAR Offeree's shares of Common Stock
which such TAR Offeree is entitled to sell to the Buyer pursuant to this Section
4 and (ii) the amount of such TAR Offeree's shares of Common Stock which such
TAR Offeree desires to sell to the Buyer as set forth in such TAR Offeree's
Acceptance Notice. In addition, such Acceptance Notice shall include (i) a
written undertaking of the TAR Offeree to deliver, at least three business days
prior to the expected date of the consummation of such sale or other disposition
to the
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Buyer as indicated in the TAR Notice, such documents (including stock
assignments and stock certificates, if any) as shall be reasonably required to
transfer the amount of such TAR Offeree's shares of Common Stock that such TAR
Offeree agrees to sell to the Buyer pursuant to the TAR Offer and (ii) a limited
power-of-attorney authorizing the Selling Holder to transfer such shares to the
Buyer pursuant to the terms of the TAR Offer. If a TAR Offeree does not deliver
an Acceptance Notice to the Selling Holder in accordance with the provisions of
this Section 4(c), such TAR Offeree shall be deemed to have irrevocably rejected
the TAR Offer.
(d) Consummation. If there is a decrease in the price to be
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paid by the Buyer for the shares of Common Stock to be sold from the price set
forth in the TAR Offer, which decrease is acceptable to the Selling Holder or
other material change in terms which are less favorable to the Selling Holder
but which are acceptable to the Selling Holder, the Selling Holder shall notify
the TAR Offerees of such decrease or other material terms, and each TAR Offeree
shall have five business days from the date of receipt of the notice of such
decrease to reduce the shares of Common Stock he or it will sell to such Buyer
as previously indicated in the applicable Acceptance Notice. The Selling Holder
shall act as agent for the TAR Offerees in connection with such sale or other
disposition and shall cause to be remitted promptly to each of the TAR Offerees
the total consideration for the shares of Common Stock sold by such TAR Offeree
pursuant thereto, which consideration shall be in the same form as the
consideration received by the Selling Holder and shall be net of such TAR
Offeree's applicable portion of the expenses of such sale or other disposition,
as provided in Section 4(e) below. The Selling Holder shall furnish, or shall
cause to be furnished, promptly such other evidence of the consummation and time
of consummation of such sale or other disposition and the terms thereof as shall
be reasonably requested. If the Selling Holder does not complete such sale or
other disposition, the Selling Holder shall return to the TAR Offerees all
documents (including stock assignments and stock certificates, if any) and
powers-of-attorney which the TAR Offerees delivered to the Selling Holder
pursuant to the terms of this Section 4 or otherwise in connection with such
sale or other disposition.
(e) Expenses. Each Co-Sale Right Holder shall bear such
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holder's pro rata share of the reasonable expenses incurred by the Selling
Holder in connection with any sales or other dispositions of such Co-Sale Right
Holder's shares of Common Stock made pursuant to the Tag Along Rights.
(f) Exempt Sales. The Tag Along Rights and obligations set
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forth in this Section 4 shall not apply to a Public Market Sale.
5. Affiliate Transactions.
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(a) Neither the Company nor any Affiliate will enter into any
transaction with any stockholder of the Company or any Affiliate thereof or with
any member of management of the Company unless the terms and conditions of such
transaction are no less
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favorable to the Company or its Affiliate, as the case may be, than would be
obtained in a comparable arm's length transaction with an unaffiliated third
party.
(b) As long as the Chase Entities (or any of them) own shares of
Common Stock, no FS Entity or any Affiliate of an FS Entity will be entitled to
payment of fees except for services rendered in connection with a material
acquisition, merger, divestiture, reorganization or restructuring, provided that
such fee is no more favorable to the FS Entity or an Affiliate of the FS Entity
than would be available from a nationally recognized investment banking firm,
and provided, further, that such fee shall not be payable without the consent of
the Majority Chase Entities, as defined below, if the FS Entity is selling its
entire interest in an acquisition, merger, reorganization or restructuring
transaction. The foregoing shall not prevent payment after the date hereof of a
fee of $2,000,000 to an FS Entity or an Affiliate of an FS Entity in connection
with the consummation of the transactions contemplated by the Stock Purchase
Agreement.
6. Transfers; Transfers Within Chase Capital Group.
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(a) Prior to February 18, 1998, no Chase Entity shall sell,
assign, transfer, hypothecate, encumber or otherwise dispose of (collectively, a
"Transfer") any shares of Common Stock or any right, title or interest therein,
without the consent of the FS Entities. Except as otherwise set forth in Section
3, prior to February 18, 1998, no FS Entity shall sell, assign, transfer,
hypothecate, encumber or otherwise dispose of any shares of Common Stock, or any
right, title or interest therein, without the consent of the Majority Chase
Entities. Any attempt to Transfer any shares of Common Stock, or any right,
title or interest therein, other than in compliance with this Agreement, shall
be null and void, and the Company shall not give effect to any such attempted
transaction or transfer.
(b) For purposes of this Agreement, "Chase Capital Group" means
and includes (i) The Chase Manhattan Corporation, (ii) entities that are
Affiliates of The Chase Manhattan Corporation and (iii) entities the majority of
the equity owners of which are employees, officers or directors of any of the
foregoing. Notwithstanding anything in this Agreement to the contrary, any
member of the Chase Capital Group may Transfer its shares of Common Stock to
other members of the Chase Capital Group without restriction, provided that any
transferee agrees to be bound by provisions in this Agreement, and members of
the Chase Capital Group may purchase shares of Common Stock from BP upon the
Transfer of such shares of Common Stock by BP to such members, including without
limitation, any Transfer resulting from the enforcement of a security interest
by Chase in such shares existing as of the date hereof pursuant to the terms of
a pledge agreement between Chase and BP (the "Pledge Agreement"), provided that
the Transfer of such shares of Common Stock by BP or Chase in connection with
the enforcement by Chase of its rights under the Pledge Agreement to any person
other than a member of the Chase Capital Group shall be subject to Section 2
hereof, and provided, further, that, to the extent the terms of the Pledge
Agreement are contrary to or otherwise inconsistent with the terms of this
Agreement, the terms of this Agreement shall
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supersede all such contrary or inconsistent terms. In the event of a Transfer
within the Chase Capital Group, all references to "Chase" or the "Chase
Entities" shall thereafter refer to each of the members of the Chase Capital
Group with respect to the shares of Common Stock owned by such member. The FS
Entities' Tag Along Rights pursuant to Section 4 will not apply to Transfers
within the Chase Capital Group, or to Transfers from BP to the Chase Capital
Group.
7. Regulatory Compliance Cooperation.
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(a) In the event that an SBIC determines that it has a Regulatory
Problem (as defined below), the Company agrees to use commercially reasonable
efforts to take all such actions as are reasonably requested by such SBIC in
order (i) to effectuate and facilitate any transfer by such SBIC of any
Securities (as defined below) of the Company then held by such SBIC to any
Person designated by such SBIC and approved by the FS Entities (with such
approval not to be unreasonably withheld), (ii) to permit such SBIC (or any
Affiliate of such SBIC) to exchange all or any portion of the voting Securities
then held by such Person on a share-for-share basis for shares of a class of
non-voting Securities of the Company, which non-voting Securities shall be
identical in all respects to such voting Securities, except that such new
Securities shall be non-voting and shall be convertible into voting Securities
on such terms as are requested by such SBIC in light of regulatory
considerations then prevailing, (iii) to continue and preserve the voting
interests with respect to the Company arising out of such SBIC's ownership of
voting Securities before the transfers and amendments referred to above
(including entering into such additional agreements as are requested by such
SBIC to permit any Person(s) designated by such SBIC and approved by the FS
Entities (with such approval not to be unreasonably withheld) to exercise any
voting power which is relinquished by such SBIC upon any exchange of voting
Securities for nonvoting Securities of the Company) and (iv) entering into such
additional agreements, adopting such amendments to this Agreement, the
Certificate of Incorporation and Bylaws of the Company and other relevant
agreements and taking such additional actions, in each case as are reasonably
requested by such SBIC in order to effectuate the intent of the foregoing.
If an SBIC elects to transfer Securities of the Company to a
Regulated Holder (as defined below) in order to avoid a Regulatory Problem, the
Company shall enter into such agreements with such Regulated Holder as it may
reasonably request in order to assist such Regulated Holder in complying with
applicable laws, rules and regulations to which it is subject. Such agreements
may include restrictions on the redemption, repurchase or retirement of
Securities of the Company that would result or be reasonably expected to result
in such Regulated Holder holding more voting securities or total securities
(equity and debt) than it is permitted to hold under such regulations.
(b) In the event an SBIC has the right to acquire any of the
Company's Securities (as the result of a preemptive offer, pro rata offer or
otherwise), at such SBIC's request the Company will offer to sell to such SBIC
non-voting Securities on the same
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terms as would have existed had such SBIC acquired the Securities so offered and
immediately requested their exchange for non-voting Securities pursuant to
paragraph (a) above.
(c) In the event that any subsidiary of the Company ever offers
to sell any of its Securities to an SBIC, then the Company will cause such
subsidiary to enter into agreements with such SBIC substantially similar to this
Section 7 and Section 8.
(d) For purposes of this Section 7:
(i) "Regulated Holder" means any holder of the Company's
Securities that is (or that is a subsidiary of a bank holding company
that is) subject to the various provisions of Regulation Y of the
Board of Governors of the Federal Reserve Systems, 12 C.F.R., Part 225
(or any successor to Regulation Y);
(ii) "Regulatory Problem" means (A) any set of facts or
circumstances wherein it has been asserted by any governmental
regulatory agency (or an SBIC believes that there is a significant
risk of such assertion) that such Person (or any bank holding company
that controls such Person) is not entitled to hold, or exercise any
material right with respect to, all or any portion of the Securities
of the Company which such Person holds or (B) when such Person and its
Affiliates would own, control or have power (including voting rights)
over a greater quantity of Securities of the Company than is permitted
under any law or regulation or any requirement of any governmental
authority applicable to such Person or to which such Person is
subject; and
(iii) "Securities" means with respect to any Person, such
Person's capital stock or any options, warrants or other Securities
which are directly or indirectly convertible into, or exercisable or
exchangeable for, such Person's capital stock (whether or not such
derivative Securities are issued by the Company). Whenever a
reference herein to Securities refers to any derivative Securities,
the rights of an SBIC shall apply to such derivative Securities and
all underlying Securities directly or indirectly issuable upon
conversion, exchange or exercise of such derivative Securities.
(e) Any transferee of Securities from Buyer must agree in
writing to be bound by all of the provisions of this Agreement.
8. Information Rights and Related Covenants.
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(a) Within 75 days after the closing of a purchase of shares of
Common Stock pursuant to the terms of the Stock Purchase Agreement, the Company
shall provide to each SBIC a certificate of its chief financial officer (i)
verifying (and describing in
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reasonable detail) the use of the proceeds of such SBIC's financing and (ii)
certifying compliance by the Company with the provisions of this Agreement and
any purchase or subscription agreement to which such SBIC is a party. In
addition to any other rights granted hereunder, the Company shall provide each
SBIC, any Affiliate of such SBIC and the SBA access to its books and records for
the purpose of verifying the use of the proceeds of such Person's financing and
for all other purposes required by the SBA.
(b) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall provide to each SBIC a
written assessment, in form and substance satisfactory to such SBIC, of the
economic impact of such SBIC's financing hereunder, specifying the full-time
equivalent jobs created or retained, the impact of the financing on the
Company's business in terms of expanded revenue and taxes and other appropriate
economic benefits, including, but not limited to, technology development or
commercialization, minority business development, urban or rural business
development, expansion of exports and assistance to manufacturing firms.
(c) Upon the request of an SBIC or any Affiliates of an SBIC, the
Company will (i) provide to such Person such financial statements and other
information as such Person may from time to time request for the purpose of
assessing the Company's financial condition and (ii) furnish to such Person all
information requested by it in order for it to prepare and file SBA Form 468 and
any other information requested or required by any governmental agency asserting
jurisdiction over such Person.
(d) For a period of one year following the date hereof, neither
the Company nor any of its subsidiaries will change its business activity if
such change would render the Company ineligible to receive financial assistance
from a Small Business Investment Company under the Small Business Investment Act
and the regulations thereunder. If the Company breaches this covenant, then, in
addition to all other remedies available to each SBIC, such SBIC may demand that
the Company immediately repurchase all securities acquired by such SBIC at the
purchase price paid therefor.
(e) The Company will at all times comply with the non-
discrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
9. Observer Rights. From and after August 19, 1996, the Chase
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Entities shall no longer be entitled to designate one non-voting observer (the
"Observer") to be admitted to each meeting of the Board of Directors of the
Company and each subsidiary, including telephonic meetings.
10. Representation on the Board of Directors. Subject to the
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terms and conditions of this Section 10, and provided that the Chase Entities
own at least ten percent (10%) of the outstanding Common Stock of the Company,
at each annual or special meeting of stockholders of Company, or in any written
consent executed in lieu of a stockholder meeting,
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at or pursuant to which persons are being elected to fill positions on the Board
of Directors of Company, each of the FS Entities and the Chase Entities agrees
to exercise, or cause to be exercised, voting rights with respect to Voting
Securities then owned or held of record by such entity in such a manner that a
candidate designated by a majority vote of the shares of Common Stock held by
the Chase Entities (the "Majority Chase Entities") shall be elected to fill and
continue to hold one of the positions on the Board of Directors of the Company.
If at any time from and after the date hereof, the Majority Chase Entities shall
notify the FS Entities of its desire to remove any director previously
designated by the Majority Chase Entities to serve on the Board of Directors of
the Company, each of the FS Entities agrees to exercise or cause to be exercised
voting rights with respect to Voting Securities owned or held of record by such
entity so as to remove such director of the Company. If at any time from and
after the date hereof, any director previously designated by the Majority Chase
Entities to serve on the Board of Directors of the Company ceases to be a
director (whether by reason of death, resignation, removal or otherwise), the
Majority Chase Entities shall be entitled to designate a successor director to
fill the vacancy created thereby, and each of the FS Entities agrees to exercise
its voting rights with respect to Voting Securities owned or held of record by
such entity so as to elect such designee as a director of Company. The Majority
Chase Entities may not assign their rights pursuant to this Section 10 and such
rights will terminate if the Majority Chase Entities hold less than ten percent
(10%) of the Company's outstanding Common Stock.
11. Copy of Agreement. A copy of this Agreement and all amendments
-----------------
hereto shall be filed with the Secretary of the Company and shall be kept at the
principal executive offices of the Company.
12. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Delaware without regard
to the conflicts of laws rules thereof.
13. Successors and Assigns. Except for the right set forth in Section
----------------------
10 of this Agreement, which is not assignable, the FS Entities and the Chase
Entities may assign their respective rights under this Agreement in connection
with the transfer or sale of at least 50% of the Securities held by each;
provided, however, that any such transfer or sale must be in compliance with
this Agreement and all applicable federal and state securities laws. Any
transferee of Securities will be bound by all obligations of the transferring
party hereunder and shall obtain a written undertaking to be so bound prior to
any such transfer. Each of the Chase Entities only may assign its rights under
this Agreement to only one (1) assignee and such assignee shall not be entitled
to further assign such rights.
14. Continuation of Rights and Obligations. All of the FS Entities'
--------------------------------------
and the Chase Entities' other rights and obligations shall continue in full
force and effect following the Company's initial public offering of shares of
Common Stock pursuant to an effective registration statement.
12
15. Amendment and Waiver. This Agreement may be amended, modified or
--------------------
supplemented, and compliance with any provision hereof may be waived, only with
the written consent of the FS Entities, the Majority Chase Entities and Sodini,
and any amendment, modification, supplement or waiver so consented to in writing
shall be binding upon the parties hereto and all transferees of shares of Common
Stock held by any of the FS Entities, the Majority Chase Entities and Sodini.
16. Interpretation. The headings of the sections contained in this
--------------
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
17. Notices. All notices and other communications provided for or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or delivered by telecopier (with receipt
confirmed) or three (3) days after deposit in the mail, by registered or
certified mail (return receipt requested) postage prepaid, (i) if to the FS
Entities, at Freeman Spogli & Co. Incorporated, 11100 Santa Monica Boulevard,
Suite 1900, Los Angeles, California 90025, Attention: William M. Wardlaw,
telecopier: (310) 444-1870, (ii) if to the Chase Entities, at Chase Capital
Partners, L.P., 380 Madison Avenue, 12th Floor, New York, New York 10017,
Attention: Christopher C. Behrens, telecopier: (212) 622-3101 and (iii) if to
Sodini, The Pantry, Inc., 1801 Douglas Drive, Sanford, North Carolina 27330,
telecopier: (919) 774-3329 (or at such other address or telecopier number for
any party as shall be specified by like notice provided that notices of a change
of address or telecopier number shall be effective only upon receipt thereof).
18. Legends. All certificates evidencing shares of Common Stock that
-------
are issued to the FS Entities, the Chase Entities and Sodini shall be legended
as follows (in addition to any other legend required to be placed thereon):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS WITH RESPECT TO THE TRANSFER AND VOTING THEREOF AS SET FORTH IN
THAT CERTAIN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF OCTOBER
23, 1997, WHICH MAY BE VIEWED AT THE PRINCIPAL PLACE OF BUSINESS OF THE
CORPORATION AND A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFOR."
19. Further Assurances. The Company covenants and agrees that it
------------------
will act in good faith to preserve for the FS Entities, the Chase Entities and
Sodini the benefits of this Agreement and that it will take no voluntary action
to impair the benefits hereof or to avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
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hereunder or to deny to the FS Entities, the Chase Entities or Sodini any of the
benefits or protections contemplated hereby.
20. Injunctive Relief. It is acknowledged that it will be impossible
-----------------
to measure in money the damages that would be suffered if the parties hereto
fail to comply with any of the obligations herein imposed on them and that, in
the event of any such failure, an aggrieved party hereto will be irreparably
damaged and will not have an adequate remedy at law. Any such party shall,
therefore, be entitled to injunctive relief, including specific performance, to
enforce such obligations, and if any action should be brought in equity to
enforce any of the provisions of this Agreement, none of the parties hereto
shall raise the defense that there is an adequate remedy at law.
21. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
22. Entire Agreement. This Agreement is intended by the parties
----------------
hereto as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the parties hereto in respect of the subject
matter contained herein. This Agreement is intended to and does hereby supersede
entirely in all respects the Old Stockholders' Agreement, which shall terminate
and have no further force or effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE PANTRY, INC.,
a Delaware corporation
By: /s/ WILLIAM T. FLYG
----------------------------------------
Name: William T. Wardlaw
---------------------------------
Title: Senior Vice President - Finance and
Chief Financial Officer
---------------------------------
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ WILLIAM M. WARDLAW
----------------------------
Name: William M. Wardlaw
-----------------------
Title: Vice President
----------------------
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
a Delaware limited partnership
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ WILLIAM M. WARDLAW
-----------------------------
Name: William M. Wardlaw
----------------------
Title: Vice President
----------------------
15
CHASE MANHATTAN CAPITAL, L.P.
a Delaware limited partnership
By: Chase Manhattan Capital Corporation
Its: General Partner
By: /s/ DONALD HOFMANN
------------------------------
Name: Donald Hofmann
------------------------------
Title: General Partner
------------------------------
CB CAPITAL INVESTORS, L.P.,
a Delaware limited partnership
By: CB Capital Investors, Inc.
Its: General Partner
By: /s/ DONALD HOFMANN
------------------------------
Name: Donald Hofmann
------------------------------
Title: General Partner
------------------------------
BASEBALL PARTNERS,
a New York general partnership
By: /s/ CHRISTOPHER BEHRENS
----------------------------------------
Name: Christopher Behrens
---------------------------------
Title: General Partner
PETER J. SODINI
By: /s/ PETER J. SODINI
----------------------------------------
Peter J. Sodini
16