EXHIBIT 10.8
CONTRIBUTION TO CAPITAL AGREEMENT
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This CONTRIBUTION TO CAPITAL 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 ("FS International"), Chase Manhattan Capital, L.P., a
Delaware limited partnership, as predecessor-in-interest to Chase Manhattan
Capital Corporation, a Delaware corporation ("Chase"), and Baseball Partners, a
New York general partnership ("BP"). FSEP III, FS International, Chase and BP
are sometimes collectively referred to as the "Holders" and individually as the
"Holder."
R E C I T A L S
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A. In connection with their investment in the Company on November
30, 1995, and on August 19, 1996, the Holders received a combination of (i)
shares of the Company's common stock, $.01 par value per share (the "Common
Stock"), and (ii shares of the Company's Series A Preferred Stock, $.01 par
value per share (the "Series A Preferred").
B. The Company and the Holders wish to modify the Company's capital
structure by eliminating the Series A Preferred and by treating such capital
structure as if the Company had never issued shares of Series A Preferred (the
"Restructuring").
C. In connection with the Restructuring, the Holders, being the
holders of all of the outstanding shares of the Series A Preferred, have agreed
to contribute to the capital of the Company each outstanding share of Series A
Preferred held thereby (the "Series A Contribution") and, in connection
therewith, to waive all rights and interests in and to any and all outstanding
dividends related thereto.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the above-stated premises and such
other consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Contribution of Series A Preferred. In connection with the
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Restructuring and immediately prior to the closing of the transactions
contemplated by that certain Stock Purchase Agreement dated as of an even date
herewith, by and among the Company, FSEP III, FS International, Chase and Peter
J. Sodini, each Holder shall make the Series A Contribution. Immediately
following the Series A Contribution, the Company shall take all steps and
necessary and appropriate to complete the Restructuring, including without
limitation, the cancellation of all shares of Series A Preferred contributed by
the Holders and the elimination of the Series A Preferred from the Company's
capital structure.
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2. Waiver of All Dividends. Pursuant to the Restructuring, the
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Holders hereby (a) acknowledge and agree that the Company has not declared and
will not pay any dividend with respect to the Series A Preferred and (b) waive
any and all rights and interests (i) in and to any and all dividends that may be
cumulatively due and payable with respect to the Series A Preferred and (ii)
that may otherwise arise under to Section 2 of the Certificate of Designation of
Preferences of the Series A Preferred Stock of the Company, as amended.
3. Acknowledgement Regarding Warrants. The parties hereto
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acknowledge and agree that, notwithstanding the completion of the Restructuring,
no adjustment shall be made to the terms or conditions of the (a) the Common
Stock Purchase Warrant dated December 30, 1996, relating to Forty-Four Thousand
Two Hundred Twenty-One (44,221) shares of Common Stock issued by the Company in
favor of FSEP III or (b) the Common Stock Purchase Warrant dated December 30,
1996 relating to One Thousand Seven Hundred Seventy-Nine (1,779) shares of
Common Stock issued by the Company in favor of FSEP International, including
without limitation, any adjustment of the exercise price of $380.00 per share or
the number of shares issuable pursuant to the terms of either such warrant.
4. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware, without regard to
principles of conflicts of laws.
5. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THE PANTRY, INC.,
a Delaware corporation
By: /s/ WILLIAM T. FLYG
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Name: William T. Flyg
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Title: Senior Vice President - Finance and
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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
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Name: William M. Wardlaw
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Title: Vice President
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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
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Name: William M. Wardlaw
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Title: Vice President
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[Signatures continued on following page]
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[Signatures continued from previous page]
CHASE MANHATTAN CAPITAL, L.P.
a Delaware limited partnership
By: Chase Manhattan Capital Corporation
Its: General Partner
By: /s/ DONALD HOFMAN
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Name: Donald Hofman
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Title: General Partner
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BASEBALL PARTNERS,
a New York general partnership
By: /s/ CHRISTOPHER BEHRENS
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Name: Christopher Behrens
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Title: Principal
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