EXHIBIT 10.7
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STOCK PURCHASE AGREEMENT
among
THE PANTRY, INC.,
FS EQUITY PARTNERS III, L.P.,
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
CB CAPITAL INVESTORS, L.P.
and
PETER J. SODINI
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Dated as of October 23, 1997
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TABLE OF CONTENTS
Page
----
ARTICLE I THE TRANSACTIONS................................ 1
1.1 Purchase and Sale............................... 1
1.2 Purchase Price.................................. 1
1.3 Closing Matters................................. 2
1.4 Time and Place of Closing....................... 2
1.5 Fees and Expenses............................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 2
2.1 Organization.................................... 2
2.2 Authority....................................... 2
2.3 No Violation.................................... 3
2.4 Brokers......................................... 3
2.5 Securities Act Representation................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY... 4
3.1 Corporate Organization.......................... 4
3.2 Capital Stock................................... 4
3.3 Newly Issued Shares............................. 5
3.4 Authority....................................... 6
3.5 No Violation.................................... 6
3.6 Litigation...................................... 7
3.7 Financial Statements and SEC Reports............ 7
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TABLE OF CONTENTS (Continued)
Page
----
3.8 Absence of Certain Changes or Events............ 8
3.9 Brokers; Certain Expenses....................... 8
3.10 Senior Notes Offering Memorandum................ 8
3.11 Small Business Matters.......................... 8
ARTICLE IV COVENANTS AND AGREEMENTS........................ 9
4.1 Efforts to Consummate........................... 9
4.2 Consents........................................ 9
4.3 Delivery of Financial Statements and Other
Documents....................................... 10
ARTICLE V CONDITIONS PRECEDENT............................ 11
5.1 Conditions to Each Party's Obligations.......... 11
5.2 Conditions to the Obligations of the Company.... 11
5.3 Conditions to the Obligations of the Purchasers. 11
ARTICLE VI MISCELLANEOUS................................... 12
6.1 Notices......................................... 12
6.2 Headings; Agreement............................. 13
6.3 Publicity....................................... 13
6.4 Entire Agreement................................ 13
6.5 Conveyance Taxes................................ 14
6.6 Assignment...................................... 14
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TABLE OF CONTENTS (Continued)
Page
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6.7 Counterparts.................................... 14
6.8 Amendment....................................... 14
6.9 Governing Law................................... 14
6.10 Third Party Beneficiaries....................... 14
6.11 Limitation of Liability......................... 14
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EXHIBITS
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Exhibit A Amended and Restated Stockholders' Agreement
Exhibit B Amended and Restated Registration Rights Agreement
Exhibit C Contribution to Capital Agreement
SCHEDULES
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Schedule A Schedule of Purchasers
Schedule B Outstanding Common Stock
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STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT ("Agreement") dated as of October 23, 1997 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"), CB
Capital Investors, L.P., a Delaware limited partnership ("Chase"), and Peter J.
Sodini, an individual ("Sodini"). FSEP III, FSEP International, Chase and
Sodini are sometimes collectively referred to herein as the "Purchasers" and
individually as a "Purchaser".
R E C I T A L S:
- - - - - - - -
The Purchasers wish to purchase from the Company an aggregate amount of
72,000 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), for $450.00 per share of Common Stock in the amounts and for
the consideration set forth opposite each such Purchaser's name on Schedule A
----------
attached hereto; and
The Board of Directors of the Company (the "Board") has approved this
Agreement and the transactions contemplated hereby, upon the terms and subject
to the conditions set forth herein.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, and in order to set
forth the terms and conditions of the transactions described herein, the parties
hereby agree as follows:
ARTICLE
THE TRANSACTIONS
1.1 Purchase and Sale. Upon the terms and subject to the conditions set
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forth in this Agreement, at the Closing, as defined below, the Purchasers shall
purchase from the Company and the Company shall sell to the Purchasers 72,000
shares of Common Stock.
1.2 Purchase Price. The purchase price to be paid by the Purchasers for
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the shares of Common Stock acquired hereunder shall be $450.00 per share of
Common Stock.
1.3 Closing Matters. At the Closing each Purchaser will wire transfer in
---------------
same day funds to the Company the sums set forth opposite such Purchaser's name
on Schedule A in payment of the purchase price for the shares of Common Stock to
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be purchased by such Purchaser, provided that Sodini may pay a portion of his
purchase price in cash and a portion in the form of a promissory note, the terms
of which shall be acceptable to Sodini and the Company, and the Company shall
deliver a certificate or certificates to such Purchaser, representing the shares
of Common Stock purchased thereby.
1.4 Time and Place of Closing. The consummation of the transactions
-------------------------
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.
New York time, at the offices of the Company at 1801 Douglas Drive, Sanford,
North Carolina 27330 on the first business day following the satisfaction or
waiver of all of the conditions required to be satisfied at or prior to the
Closing, as set forth in Article V, or at such other time, place or date as the
parties hereto shall agree upon in writing (the "Closing Date").
1.5 Fees and Expenses. The Company shall on the first business day after
-----------------
the Closing Date, pay to FS & Co. Incorporated a transaction fee of Two Million
Dollars ($2,000,000), by wire transfer in same day funds.
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS
Each Purchaser, severally as to itself only and not as to any other
Purchaser, represents and warrants to the Company, to the extent applicable, as
follows:
2.1 Organization. Purchaser is a limited partnership duly organized,
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validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. Purchaser has full partnership power and authority to
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execute and deliver this Agreement, the Amended and Restated Stockholders'
Agreement (the "Stockholders' Agreement") the form of which agreement is
attached hereto as Exhibit A, the Amended and Restated Registration Rights
Agreement, the form of which agreement is attached as Exhibit B hereto (the
"Registration Rights Agreement"), and the Contribution to Capital Agreement, the
form of which agreement is attached as Exhibit C hereto (the "Contribution
Agreement", and, together with the Stockholders' Agreement and the Registation
Rights Agreement, the "Ancillary Agreements"), and to consummate the
transactions contemplated on its part hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each of the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized
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by all necessary action on the part of Purchaser. No other action on the part
of Purchaser or its partners is necessary to authorize the execution and
delivery of this Agreement or the Ancillary Agreements by Purchaser or the
performance by Purchaser of its obligations hereunder or thereunder. Each of
this Agreement and each of the Ancillary Agreements has been duly executed and
delivered by Purchaser and constitutes a legal, valid and binding agreement of
Purchaser, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). Each other agreement to be executed by
Purchaser in connection with this Agreement on or prior to the Closing Date will
be duly executed and delivered by Purchaser and (assuming due execution and
delivery by the other party or parties thereto) will constitute a legal, valid
and binding obligation of Purchaser, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors' rights generally and subject
to general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except to the extent that
indemnification with respect to securities laws violations may be held void as
against public policy.
2.3 No Violation. The execution and delivery of this Agreement and the
------------
Ancillary Agreements by Purchaser, the performance by Purchaser of his or its
obligations hereunder and thereunder and the consummation by him or it of the
transactions contemplated hereby and thereby, will not violate any provision of
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award applicable to Purchaser, require the consent, waiver, approval,
license or authorization of or any filing by Purchaser with any person or
governmental authority (other than such consents, waivers, approvals, licenses
and authorizations and filings as shall have been or will be timely made or
obtained by or on behalf of Purchaser) or violate, result (with or without
notice or the passage of time, or both) in a breach of or give rise to the right
to accelerate, terminate or cancel any obligation under or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of any charter or bylaw, partnership agreement, indenture,
mortgage, agreement, contract, order, judgment, ordinance, regulation or decree
to which Purchaser is subject or by which Purchaser is bound and which would
have an adverse effect on the ability of Purchaser to perform his or its
obligations under this Agreement and the Ancillary Agreements.
2.4 Brokers. Purchaser has not paid or become obligated to pay any fee or
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commission to any broker, finder, investment banker or other intermediary in
connection with this Agreement, it being acknowledged and agreed that no
Purchaser shall be liable to FS & Co. Incorporated or any affiliate thereof with
respect to the fee payable by the Company pursuant to Section 1.5.
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2.5 Securities Act Representation. Purchaser was not formed or organized
-----------------------------
for the purpose of purchasing shares of Common Stock and is an "accredited
investor" as defined in Rule 501 promulgated as part of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"). Purchaser is not
purchasing shares of Common Stock with a view to a distribution or resale of any
of such shares in violation of any applicable securities laws. In making his or
its decision to invest in shares of Common Stock, such Purchaser has relied upon
independent investigations made by such Purchaser and, to the extent believed by
him or it to be appropriate, has relied on investigations made by such
Purchaser's representatives, including such Purchaser's own legal, accounting,
investment, financial, tax and other professional advisors and such Purchaser
has been afforded an opportunity to examine all documents and to ask questions
of, and to receive answers from, the Company and its representatives concerning
the current financial and operational condition of the Company, the Company's
prospects, the terms of each of this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby and such Purchaser's investment
in such shares of Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants, except as disclosed on the schedules
(the "Disclosure Schedules") attached hereto, each of which disclosures shall
reference the applicable Section hereof to which it applies, to each Purchaser
as follows:
3.1 Corporate Organization. The Company is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Delaware,
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a material and
adverse effect upon the financial condition or results of operations of the
Company and its subsidiaries, considered as a whole (a "Material Adverse
Effect").
3.2 Capital Stock. (a) As of the date hereof, the authorized capital stock
-------------
of the Company consists in its entirety of (i) Three Hundred Thousand (300,000)
shares of Common Stock, of which (A) One Hundred Fourteen Thousand Twenty-Nine
(114,029) are issued and outstanding and are held of record by the persons and
in the amounts set forth on Schedule B hereto, (B) Forty-Six Thousand (46,000)
are reserved for issuance upon exercise of two (2) Common Stock Purchase
Warrants (the "Warrants") and are held of record by the persons and in the
amounts set forth on Schedule B hereto and (C) One Hundred Thirty-Nine
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Thousand Nine Hundred Seventy-One (139,971) are authorized but unissued and none
of which are held by the Company as treasury shares, and (ii) One Hundred Fifty
Thousand (150,000) shares of Preferred Stock, of which (A) Fifty Thousand
(50,000) shares have been designated as the Series A Preferred Stock of the
Company (the "Series A Stock"), of which Twenty-Five Thousand Nine Hundred
Ninety-Eight and Six Hundred Twelve Thousandths (25,998.612) shares of Series A
Stock are issued and outstanding and none of which are held by the Company as
treasury shares and (B) Twenty-Five Thousand (25,000) shares have been
designated as the Series B Preferred Stock of the Company (the "Series B
Stock"), of which Seventeen Thousand Five Hundred (17,500) shares of Series B
Stock are issued and outstanding and none of which are held by the Company as
treasury shares.
(b) Following the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, there will be (i) One Hundred Eight-Six
Thousand Twenty-Nine (186,029) shares of Common Stock outstanding and Forty-Six
Thousand Shares (46,000) of Common Stock reserved for issurance on exercise of
the Warrants, (ii) no shares of Series A Stock outstanding, (iii) Seventeen
Thousand Five Hundred (17,500) shares of Series B Stock outstanding and (iv)
except for the Warrants, no outstanding options, warrants or other similar
securities.
(c) All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable
and free of preemptive rights with respect thereto and were issued in compliance
with all applicable federal and state securities laws and regulations. Except
with respect to the Stockholders' Agreement, there are no voting trusts or other
agreements, arrangements or understandings with respect to the voting of the
capital stock of the Company to which the Company is a party or, to the best of
the Company's knowledge, to which any other person is a party. Except as
contemplated hereby or as set forth in the Disclosure Schedules, there are no
preemptive rights, registration rights, subscriptions, options, warrants,
rights, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of the Company (collectively, "Preemptive Rights") and there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire or sell, issue or otherwise transfer any shares of capital stock.
3.3 Newly Issued Shares.
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(a) The shares of Common Stock sold and issued by the Company to the
Purchasers pursuant to the terms of this Agreement have been duly authorized
and, when issued as contemplated hereby at the Closing, will be validly issued,
fully paid and non-assessable and no person has Preemptive Rights with respect
to such shares. At the Closing, the Purchasers will acquire good and marketable
title to the shares of Common Stock, free and clear of any and all security
interests, liens, claims, pledges, encumbrances or other rights of
5
any kind (collectively, "Encumbrances"), except as may exist under the
Stockholders' Agreement, as amended by the Amendment.
(b) The shares of Common Stock sold and issued by the Company to the
Purchasers pursuant to the terms of this Agreement will be issued in compliance
with all applicable federal and state securities laws and regulations.
3.4 Authority. The Company has full corporate power and authority to
---------
execute and deliver this Agreement and the Ancillary Agreements to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated on its part hereby and thereby. The execution, delivery and
performance by the Company of this Agreement and each Ancillary Agreement and
the consummation of the transactions contemplated on its part hereby and thereby
have been duly authorized by the Board, and no other corporate proceedings on
the part of the Company or its stockholders are necessary to authorize the
execution and delivery of this Agreement or the Ancillary Agreements by the
Company or to consummate the transactions contemplated on its part hereby or
thereby. Each of this Agreement and each of the Ancillary Agreements has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors' rights generally and subject
to general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except to the extent that
indemnification with respect to securities laws violations may be held void as
against public policy.
3.5 No Violation. The execution, delivery and performance of this
------------
Agreement and the Ancillary Agreements by the Company and the consummation by it
of the transactions contemplated hereby and thereby will not (a) violate any
provision of law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to the Company or any of its subsidiaries, (b)
require the consent, waiver, approval or authorization of or any filing by the
Company or any of its subsidiaries with any person or governmental authority,
(c) violate, result (with or without notice or the passage of time, or both) in
a breach of, or give rise to the right to terminate, accelerate or cancel any
obligation under, or require the payment of any fee, or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of the charter documents of the Company or any of its
subsidiaries, or any indenture, mortgage, lien, order, judgment, ordinance,
regulation, decree or other agreement or instrument to which the Company or any
of its subsidiaries is subject or bound which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect or interfere
in any way with the Company's ability to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements, (d) result in the
creation of any Encumbrance upon any property of the Company or any of its
subsidiaries which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or result in a loss or adverse modification
of any license, permit,
6
certificate, franchise or contract granted to or otherwise held by the Company
or any of its subsidiaries which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.6 Litigation. Except as disclosed in the SEC Filings, as defined below,
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there are no actions, proceedings, complaints, grievances, investigations or
unfair labor practice complaints or grievances or investigations pending or, to
the best of the Company's knowledge, threatened, against the Company or any of
its subsidiaries, assets or property before any court or governmental or
regulatory authority or body or arbitrator, which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. There are
no such actions, proceedings or investigations pending or, to the best knowledge
of the Company, threatened against the Company or, to the best knowledge of the
Company, pending or threatened against any other party challenging the validity
or propriety of the transactions contemplated by this Agreement. Except as
disclosed in the SEC Filings, none of the Company or any of its subsidiaries,
assets or property is subject to any order, judgment, injunction or decree,
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
3.7 Financial Statements and SEC Reports. The Company has delivered to the
------------------------------------
Purchasers true and complete copies of the Company's Annual Report on Form 10-K
for the fiscal year ended September 26, 1996 (the "1996 10-K"), as filed with
the Securities and Exchange Commission (the "SEC") on December 26, 1996, and all
filings made with the SEC since September 26, 1996, including, without
limitation, the Company's Quarterly Report on Form 10-Q for the quarter ended
December 26, 1996, as filed with the SEC on February 10, 1997, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 27, 1997, as filed
with the SEC on May 12, 1997, the Company's Quarterly Report on Form 10-Q for
the quarter ended June 26, 1997, as filed with the SEC on July 31, 1997, and as
amended by a Form 10-Q/A, as filed with the SEC on August 8, 1997, the Company's
Current Report on Form 8-K dated September 5, 1997, as filed with the SEC on
September 5, 1997, and any financial statements or schedules included or
incorporated by reference therein (collectively, the "SEC Filings"). As of
their respective dates, the SEC Filings did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements of
the Company and its subsidiaries included in the SEC Filings were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated therein or in the notes thereto and
except that the quarterly financial statements do not contain all of the
footnote disclosures required by GAAP for annual financial statements) and
present fairly the consolidated financial position, results of operations and
cash flows of the Company and its subsidiaries as of the dates and for the
periods indicated.
7
3.8 Absence of Certain Changes or Events. Since June 26, 1997 the Company
------------------------------------
and its subsidiaries have conducted their respective businesses in the ordinary
course and there has not been any
3.9 Brokers; Certain Expenses. Except as set forth in Section 1.5, the
-------------------------
Company has not paid or become obligated to pay any fee or commission to any
broker, finder, investment banker or other intermediary in connection with any
of the transactions contemplated by this Agreement.
3.10 Senior Notes Offering Memorandum. The Company has delivered to the
--------------------------------
Purchasers a true and complete copy of the Offering Memorandum dated September
29, 1997, relating to $190,000,000 of Senior Subordinated Notes due 2007
proposed to be issued by the Company (the "Offering Memorandum"). The Offering
Memorandum does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.11 Small Business Matters.
----------------------
(a) The Company, together with its "affiliates" (as that term is defined
in Title 13, Code of Federal Regulations, (S) 121.103), is a "small business
concern" within the meaning of the Small Business Investment Act of 1958, as
amended ("SBIA"), and the regulations thereunder, including Title 13, Code of
Federal Regulations (S) 121.301(c). The information set forth in the Small
Business Administration Forms 480, 652 and Parts A and B of Form 1031 regarding
the Company and its affiliates that have been executed and delivered to Chase is
accurate and complete.
(b) The proceeds from the sale of Common Stock will be used by the Company
for the purposes described in the Offering Memorandum. No portion of such
proceeds will be used (i) to provide capital to a corporation licensed under the
SBIA, (ii) to acquire farm land, (iii) to fund production of a single item or
defined limited number of items, generally over a defined production period,
where such production will constitute the majority of the activities of the
Company and its subsidiaries (examples include motion pictures and electric
generating plants), or (iv) for any purpose contrary to the public interest
(including, but not limited to, activities which are in violation of law) or
inconsistent with free competitive enterprise, in each case, within the meaning
of 13 C.F.R. (S) 107.720.
(c) Neither the Company's nor any of its subsidiaries' primary business
activity involves, directly or indirectly, providing funds to others, the
purchase or discounting of debt obligations, factoring or long-term leasing of
equipment with no provision for maintenance or repair, and neither the Company
nor any of its subsidiaries is classified under Major Group 65 (Real Estate) of
the SIC Manual. The assets of the business of the
8
Company and its subsidiaries (the "Business") will not be reduced or consumed,
generally without replacement, as the life of the Business progresses, and the
nature of the Business does not require that a stream of cash payments be made
to the Business's financing sources, on a basis associated with the continuing
sale of assets (examples of such businesses would include real estate
development projects and oil and gas wells). See 13 C.F.R. (S) 107.720.
(d) The proceeds from the sale of the Common Stock to Chase at the Closing
will not be used substantially for a foreign operation, and at Closing or within
one year thereafter, no more than 49 percent of the employees or tangible assets
of the Company and its subsidiaries will be located outside the United States
(unless the Company can show, to the SBA's satisfaction, that the proceeds from
the sale of Common Stock to Chase at the Closing will be used for a specific
domestic purpose). This subsection (d) does not prohibit such proceeds from
being used to acquire foreign materials and equipment or foreign property rights
for use or sale in the United States.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Efforts to Consummate. Upon the terms and subject to the conditions
---------------------
herein provided, each of the Purchasers and the Company agrees to use his or its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement and each of the
Ancillary Agreements including (a) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby and (b) to fulfill all
conditions on his or its part to be fulfilled under this Agreement. In case at
any time after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or any of the Ancillary
Agreements, the proper partners, officers or directors of each party to this
Agreement or any of the Ancillary Agreements shall take all such reasonably
necessary action. No party hereto will take any action for the purpose of
delaying, impairing or impeding the receipt of any required consent,
authorization, order or approval or the making of any required filing
4.2 Consents. The Company and each of the Purchasers will use his or its
--------
reasonable best efforts to obtain all necessary waivers, consents and approvals
of all third parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement.
9
4.3 Delivery of Financial Statements and Other Documents. So long as the
----------------------------------------------------
Purchasers and/or their respective successors and assigns hold any shares of
Common Stock, the Company shall deliver the following financial statements and
other documents to such parties:
(a) The Company shall deliver to the Purchasers, as soon as practicable,
but in any event within ninety (90) days after the end of each fiscal year of
the Company, a statement of operations for such fiscal year, a balance sheet of
the Company as of the end of such year, and a statement of cash flows for such
year, such year-end financial reports to be in reasonable detail and prepared in
accordance with GAAP.
(b) The Company shall deliver to the Purchasers, as soon as practicable,
but in any event within forty-five (45) days after the end of each of the first
three (3) quarters of each fiscal year of the Company, an unaudited statement of
operations, balance sheet, and statement of cash flows of the Company for such
fiscal quarters as of the end of such fiscal quarters.
(c) The Company shall deliver to the Purchasers, as soon as practicable,
but in any event within thirty (30) days after the end of each month, an
unaudited statement of operations, balance sheet, and statement of cash flows of
the Company for such month and for the fiscal year-to-date.
(d) The Company shall deliver to the Purchasers prior to the close of each
fiscal year, an operating budget for the next fiscal year forecasting the
Company's revenues, expenses and cash position, prepared on a monthly basis,
including balance sheets and sources and applications of funds statements for
such months.
(e) The Company shall deliver to the Purchasers, as soon as practicable,
but in any event within ten (10) days of receipt by the Company, copies of any
management letters of the Company's accountants.
(f) The Company shall promptly deliver to the Purchasers: notice of any
defaults under any material contracts or agreements; notice of any material
litigation; and copies of all filings with the SEC.
(g) The Company shall deliver to the Purchasers, as soon as practicable,
all other information reasonably requested by the Purchasers, where such
information is readily available and may be reduced to written form.
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ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligations. The respective obligations of
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each party to effect the transactions contemplated by this Agreement shall be
subject to the conditions that no United States or state governmental authority
or other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary, or permanent) which is in effect and has the effect of prohibiting
consummation of the transactions contemplated by this Agreement.
5.2 Conditions to the Obligations of the Company. The obligation of the
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Company to effect the transaction contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Purchasers shall have performed in all material respects their
obligations under this Agreement required to be performed by them on or prior to
the Closing Date pursuant to the terms hereof.
(b) The transactions contemplated by the Contribution Agreement
shall have been consummated.
(c) The Purchasers and BP shall have executed and delivered the
Stockholders' Agreement.
(d) The Purchasers and BP shall have executed and delivered the
Registration Rights Agreement.
(e) The representations and warranties of the Purchasers contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of such date, except to the extent that any
such representation or warranty is made as of a specified date in which case
such representation and warranty shall have been true and correct as of such
date.
5.3 Conditions to the Obligations of the Purchasers. The obligations of
-----------------------------------------------
each Purchaser to effect the transactions contemplated by this Agreement shall
be subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
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(a) Each of the Company and the other Purchasers shall have performed in
all material respects its obligations under this Agreement required to be
performed by it on or prior to the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of the Company and each other
Purchaser contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of such date, except
to the extent that any such representation or warranty is made as of a specified
date in which case such representation or warranty shall have been true and
correct as of such date.
(c) Each of the Company and the other Purchasers shall have executed and
delivered each of the Ancillary Agreements.
(d) Each of the Purchasers shall have received such other duly and validly
executed documents and instruments in connection with the Closing as are
reasonably requested by him or it.
(e) All necessary waivers, consents and approvals to or of the
transactions contemplated by this Agreement of any third parties or governmental
entities shall have been obtained and delivered to the Purchasers.
(f) All of the conditions to the closing of the Li'l Champs Acquisition
(as defined in the Offering Memorandum) shall have been satisfied or waived.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications given or made pursuant
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hereto shall be in writing and shall be deemed to have been given or made if in
writing and delivered personally, sent by commercial carrier or registered or
certified mail (postage prepaid, return receipt requested) or transmitted by
facsimile to the parties at the following addresses and numbers:
(a) If to FSEP III or FSEP International, to:
c/o Freeman Spogli & co.
11100 Santa Monica Boulevard
Suite 1900
Los Angeles, California 90025
Attention: Mr. William M. Wardlow
Facsimile No.: (310) 444-1870
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(b) If to the Company, to:
The Pantry, Inc.
1801 Douglas Drive
Sanford, North Carolina 27330
Attention: William Flyg
Facsimile No.: (919) 774-3329
(c) If to Chase, to:
Chase Manhattan Capital, L.P.
380 Madison Avenue, 12/th/ Floor
New York, NY 10017
Attention: Christopher Behrens
Facsimile No.: (212) 622-3101
(d) If to Sodini, to:
Peter J. Sodini
The Pantry, Inc.
1801 Douglas Drive
Sanford, North Carolina 27330
Facsimile No.: (919) 774-3329
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date actually received.
6.2 Headings; Agreement. The headings contained in this Agreement are
-------------------
inserted for convenience only and do not constitute a part of this Agreement.
The term "Agreement" for purposes of representations and warranties hereunder
shall be deemed to include any Exhibits hereto to be executed and delivered by a
party.
6.3 Publicity. So long as this Agreement is in effect, the parties hereto
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shall not, and shall cause their affiliates not to, issue or cause the
publication of any press release or other announcement with respect to the
transactions contemplated by this Agreement or the Ancillary Agreements without
the consent of the other parties, which consent shall not be unreasonably
withheld or delayed.
6.4 Entire Agreement. This Agreement (including any Disclosure Schedules
----------------
and Exhibits hereto) constitutes the entire agreement among the parties and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
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6.5 Conveyance Taxes. The Company agrees to assume liability for and to
----------------
hold the Purchasers harmless against any sales, use, transfer, stamp, stock
transfer, real property transfer or gains, and value added taxes, any transfer,
registration, recording or other fees, and any similar taxes incurred as a
result of the transactions contemplated hereby.
6.6 Assignment. This Agreement and all of the provisions hereof shall be
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binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Except as otherwise provided in
the Ancillary Agreements or any Exhibits hereto, and except for an assignment of
rights, interests or obligations by Purchasers after the Closing, neither this
Agreement nor any of the rights, interests or obligations shall be assigned by
any of the parties hereto without the prior written consent of the other
parties.
6.7 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
6.8 Amendment. This Agreement may be amended by the parties hereto. This
---------
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto, provided that after the Closing this Agreement
may be amended without each party's written agreement, but no such amendment
shall be enforceable against any party which has not signed such amendment.
6.9 Governing Law. The validity and interpretation of this Agreement shall
-------------
be governed by the laws of the State of North Carolina, without reference to the
conflict of laws principles thereof.
6.10 Third Party Beneficiaries. This Agreement is not intended to confer
-------------------------
upon any other person any rights or remedies hereunder.
6.11 Limitation of Liability. In no event shall any partner or
-----------------------
representative of any Purchaser or of any partnership which is a partner of any
Purchaser or any partner of any such partnership, or any direct or indirect
stockholder, officer, director, partner or any other such person, be personally
liable for any obligation of any Purchaser under this Agreement. In no event
shall recourse with respect to the obligations under this Agreement of any
Purchaser be had to the assets or business of any person other than such
Purchaser.
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IN WITNESS WHEREOF, each of the Purchasers and the Company have caused this
Agreement to be signed by a duly authorized officer, partner or other person,
all as of the date first written above.
COMPANY: THE PANTRY, INC.,
a Delaware corporation
By: /s/ WILLIAM T. FLYG
---------------------------------------
Name: William T. Flyg
---------------------------------
Its: Senior Vice President - Finance
and Chief Financial Officer
---------------------------------
FSEP III: 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
------------------------
Its: Vice President
------------------------
FSEP INTERNATIONAL: 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
-------------------------
Its: Vice President
------------------------
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CHASE: CB CAPITAL INVESTORS, L.P.,
a Delaware limited partnership
By: CB Capital Investors, Inc.
Its: General Partner
By: /s/ DONALD HOFMANN
----------------------------
Name: Donald HOFMANN
------------------------
Its: General Partner
------------------------
SODINI: PETER J. SODINI
/s/ PETER J. SODINI
---------------------------------------
Peter J. Sodini
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SCHEDULE A
SCHEDULE OF PURCHASERS
----------------------
NUMBER OF SHARES OF
NAME OF COMMON STOCK CONSIDERATION
PURCHASER PURCHASED PAID
- --------- ------ -----------
FSEP III 57,110 $25,699,500
FSEP 2,311 1,039,950
International
Chase 11,690 5,260,500
Sodini 889 400,500
------ -----------
TOTAL: 72,000 $32,400,000
====== ===========
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SCHEDULE B
OUTSTANDING SHARES OF COMMON STOCK AND EQUIVALENTS
Holder Securities Held
- ------ ---------------
FSEP III 84,331 shares of Common Stock
Warrant to purchase 44,221 shares of
Common Stock
FSEP International 3,382 shares of Common Stock
Warrant to purchase 1,779 shares of Common
Stock
Chase Manhattan Capital, L.P 21,053 shares of Common Stock
Baseball Partners 5,263 shares of Common Stock
18