Exhibit 10.9
STOCK PLEDGE AGREEMENT
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THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made as of
October 23, 1997 by and between Peter J. Sodini, as pledgor ("Pledgor"), and The
Pantry, Inc., a Delaware corporation ("Pledgee").
R E C I T A L S:
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A. Pursuant to that certain Stock Purchase Agreement of even date
herewith (the "Purchase Agreement") by and among Pledgee, Pledgor and certain
other parties thereto, Pledgor has agreed to purchase 889 shares (the "Shares")
of the Common Stock, $.01 par value per share, of Pledgee.
B. Pursuant to the terms of that certain Secured Promissory Note (the
"Note") of even date herewith delivered by Pledgor to Pledgee in partial payment
for the Shares, Pledgor has agreed to make payments of principal and interest to
Pledgee as provided in the Note.
C. Pursuant to the terms of the Purchase Agreement and the Note,
Pledgor is required to execute this Pledge Agreement to secure payment in full
of all obligations under the Note, whether for principal, interest, fees,
expenses or otherwise and to ensure compliance with the terms and conditions of
this Pledge Agreement.
D. In order to induce Pledgee to make the loan evidenced by the Note
and in order to induce Pledgee to sell the Shares pursuant to the Purchase
Agreement, Pledgor agrees to have the Shares subject to this Pledge Agreement.
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties hereto agree as
follows:
1. Grant of Security Interest. Pledgor hereby grants to Pledgee a
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security interest in the Shares, pledges and hypothecates the Shares to Pledgee,
and deposits the certificates evidencing the Shares (the "Certificates") with
Pledgee as collateral security for the payment by Pledgor of all obligations
existing under the Note, whether for principal, interest, fees, expenses or
otherwise, and the satisfaction of all obligations of Pledgor under this Pledge
Agreement. The Certificates, together with one or more stock assignments duly
executed in blank with signatures appropriately guaranteed or witnessed, are
being delivered herewith to Pledgee, to be retained by Pledgee as the
pledgeholder for the Shares.
2. Representations and Warranties of Pledgor. Pledgor represents and
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warrants to Pledgee that the Shares are free and clear of all claims, mortgages,
pledges, liens and other encumbrances of any nature whatsoever, except (a) the
liens and restrictions set forth herein and in the Note and (b) any restrictions
upon sale and distribution imposed by the Securities Act of 1933, as amended
(the "Act"), applicable state securities laws, and that certain Amended and
Restated Stockholders' Agreement of even date herewith by and among Pledgee,
Pledgor and certain other parties thereto (the "Stockholders' Agreement").
3. Voting of Shares. So long as there shall exist no Event of
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Default (as hereinafter defined), Pledgor shall be entitled to exercise, as
Pledgor deems proper but in a manner not inconsistent with the terms hereof,
Pledgor's rights to voting power with respect to the Shares. Pledgee, and not
Pledgor, shall be entitled to vote the Shares at any time that there exists an
Event of Default.
4. Dividends and Other Distributions. So long as there shall
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exist no Event of Default and except as provided in Section 5 of this Pledge
Agreement, Pledgor shall be entitled to receive any dividend or other
distribution with respect to the Shares. If there exists an Event of Default,
such dividend or distribution shall be delivered to Pledgee to be held as
additional collateral security under this Pledge Agreement.
5. Stock Dividends. In the event of any dividend or distribution
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in shares of capital stock or other securities of Pledgee or any successor or
assign of Pledgee which is issued in respect of, in exchange for or in
substitution of, the Shares by reason of any stock dividend, stock split,
reverse split, recapitalization, reclassification, combination, merger,
consolidation or otherwise, the shares or other securities to be distributed to
Pledgor shall be held by Pledgee as additional collateral security under this
Pledge Agreement and shall be encompassed within the term "Shares" for purposes
of this Pledge Agreement.
6. Pledgee's Duties. So long as Pledgee exercises reasonable
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care with respect to the Shares in its possession, Pledgee shall have no
liability for any loss or damage to such Shares, and in no event shall Pledgee
have liability for any diminution in value of the Shares occasioned by economic
or market conditions or events. Pledgee shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Shares in
its possession are accorded treatment substantially equal to that which Pledgee
accords its own property, it being understood that Pledgee shall not have any
responsibility under this Pledge Agreement for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to the Shares, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any person or entity with respect to the Shares.
7. Release from Pledge; Transfers to Permitted Transferees. In
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the event of a purchase of any or all of the Shares pursuant to Section 2 of the
Stockholders' Agreement, such Shares shall be released from this Pledge
Agreement.
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No Shares may be Transferred (as defined in the Stockholders'
Agreement) unless Pledgor has made payment to Pledgee of all unpaid obligations
existing under the Note, whether for principal, interest, fees, expenses or
otherwise and all unsatisfied obligations of Pledgor under this Pledge
Agreement. Upon receipt by Pledgee of the payment required by this paragraph,
the Shares shall be released from this Pledge Agreement.
8. Sale of Collateral. Upon the occurrence of any Event of
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Default ,Pledgee shall have all the rights and remedies of a secured party under
the Uniform Commercial Code as in effect in the State of California (the "UCC")
and also may, without notice, except as specified below, at its option, sell all
or any part of the Shares, for cash, notes or other property upon credit for
future delivery or upon such other terms as Pledgee may deem commercially
reasonable. Upon such sale, Pledgee, unless prohibited by a provision of any
applicable statute, may purchase all or any part of the Shares being sold, free
from and discharged of all trusts, claims, rights of redemption and equities of
Pledgor. If the proceeds of any sale of the Shares shall be insufficient to pay
all amounts due under the Note and satisfy the obligations of Pledgor under the
Purchase Agreement and this Pledge Agreement, including collection costs and
expenses of such sale, Pledgor shall remain obligated and liable for any
deficiency with respect thereto. If, at any time when Pledgee shall determine to
exercise its rights to sell all or any part of the Shares pursuant to this
Section 8, such Shares, or the part thereof to be sold, shall not be effectively
registered under the Act as then in effect or any similar statute then in force,
subject to the provisions of Section 9 hereof, Pledgee, in its sole and absolute
discretion, is hereby expressly authorized to sell such Shares, or any part
thereof, by private sale in such manner and under such circumstances as Pledgee
may deem necessary or advisable in order that such sale may be effectuated
legally without such registration. Without limiting the generality of the
foregoing, Pledgee, in its sole and absolute discretion, may approach and
negotiate with a restricted number of potential purchasers to effectuate such
sale or restrict such sale to a purchaser or purchasers who shall represent and
agree that such purchaser or purchasers are purchasing for its or their own
account, for investment only, and not with a view to the distribution or sale of
such Shares or any part thereof. Any sale conducted in the manner described in
the foregoing sentence shall be deemed to be a sale conducted in a commercially
reasonable manner within the meaning of the UCC, and Pledgor hereby consents and
agrees that Pledgee shall incur no responsibility or liability for selling all
or any part of the Shares at a price which is not unreasonably low,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were public. Pledgee shall not be obligated to make any
sale of the Shares regardless of notice of sale having been given. Pledgee may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and any such sale may, without further notice, be made
at the time and place to which it was so adjourned.
9. Redemption of Collateral. Notwithstanding any other provision
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of this Pledge Agreement, upon the occurrence of an Event of Default, Pledgee
shall give Pledgor written notice of the time and place of any public sale or of
the time on or after which any private sale or other Transfer is to be made at
least five days before the date fixed for any public sale or before the day on
or after which any private sale or other Transfer is to be made. Pledgor agrees
that, to the
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extent notice of sale shall be required by law, such five days' notice shall
constitute reasonable notification. This notice shall also specify the aggregate
outstanding monetary obligations of the Pledgor to Pledgee at the date of such
notice (the "Total Obligation"). At any time during such five-day period,
Pledgor shall have the right to redeem the Shares by the payment by certified or
bank cashier's check of an amount equal to the Total Obligation.
10. Events of Default. At the option of Pledgee, the principal
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balance of the Note and all accrued and unpaid interest thereon, and all other
obligations of Pledgor to Pledgee thereunder, under the Purchase Agreement and
hereunder, shall become and be immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind (all of which are hereby
expressly waived by Pledgor), upon the occurrence of any of the events set forth
below (individually, an "Event of Default"):
(a) Pledgor shall fail to make complete payment of any
installment of accrued interest under the Note within five days after payment of
such installment of accrued interest is due;
(b) Pledgor shall fail to make complete payment of
principal when due under the Note;
(c) Pledgor shall fail to make the prepayment of
principal and accrued interest on the Note as required by the fourth paragraph
of the Note; or
(d) Pledgor shall commit a breach of or default under this
Pledge Agreement.
11. Termination. This Pledge Agreement shall terminate only upon
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payment to Pledgee of all unpaid obligations existing under the Note, whether
for principal, interest, fees, expenses or otherwise and all unsatisfied
obligations of Pledgor under the Purchase Agreement and this Pledge Agreement.
Upon termination of this Pledge Agreement, Pledgor shall be entitled to the
return of the Certificates then held by Pledgee and any other collateral
security then held by Pledgee pursuant to Section 4 or 5 of this Pledge
Agreement.
12. Cumulation of Remedies; Waiver of Rights. The remedies
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provided herein in favor of Pledgee shall not be deemed exclusive but shall be
cumulative and shall be in addition to all of the remedies in favor of Pledgee
existing at law or in equity. Nothing in this Pledge Agreement shall require
Pledgee to proceed against or exhaust its remedies against the Shares before
proceeding against Pledgor or executing against any other security or collateral
securing performance of Pledgor's obligations to Pledgee under the Note, the
Purchase Agreement or this Pledge Agreement. No delay on the part of Pledgee in
exercising any of its options, powers or rights, or the partial or single
exercise thereof, shall constitute a waiver thereof.
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13. Execution of Endorsements, Assignments, Etc. Upon the
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occurrence of an Event of Default, Pledgee shall have the right for and in the
name, place and stead of Pledgor to execute endorsements, assignments or other
instruments of conveyance or transfer with respect to all or any of the Shares
and any other shares of the capital stock of Pledgee or other property which is
held by Pledgee as collateral security pursuant to this Pledge Agreement.
14. Miscellaneous.
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(a) Further Assurances. Each party hereto agrees to
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perform any further acts and execute and deliver any documents which may be
reasonably necessary to carry out the intent of this Pledge Agreement.
(b) Notice. All notices, requests and other
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communications hereunder shall be in writing and, if given by telegram, telecopy
or telex, shall be deemed to have been validly served, given or delivered when
sent, if given by personal delivery, shall be deemed to have been validly
served, given or delivered upon actual delivery and, if mailed, shall be deemed
to have been validly served, given or delivered three business days after
deposit in the United States mail, as registered or certified mail, with proper
postage prepaid and addressed to the party or parties to be notified, at the
following addresses (or such other address(es) as a party may designate for
itself by like notice):
If to Pledgee:
The Pantry, Inc.
1801 Douglas Drive
Sanford, NC 27330
Attention: Chief Financial Officer
If to Pledgor:
Peter J. Sodini
1112 Silver Oak Court
Raleigh, NC 27614
(c) Amendments. This Pledge Agreement may be amended only
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by a written agreement executed by the parties hereto.
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(d) Governing Law. This Pledge Agreement shall be
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governed by and construed in accordance with the laws of the State of Delaware.
(e) Disputes. In the event of any dispute between the
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parties arising out of this Pledge Agreement, the prevailing party shall be
entitled to recover from the nonprevailing party the reasonable expenses of the
prevailing party including, without limitation, reasonable attorneys' fees and
expenses.
(f) Entire Agreement. This Pledge Agreement and the
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instruments and agreements referred to herein constitute the entire agreement
and understanding among the parties pertaining to the subject matter hereof and
supersede any and all prior agreements, whether written or oral, relating
hereto.
(g) Successors and Assigns. Pledgee shall have the right
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to assign with absolute discretion any or all of its rights and/or obligations
and/or delegate any or all of its duties under this Pledge Agreement to any of
its affiliates, successors and/or assigns, including, without limitation to any
of its banks or lending institutions as collateral security, and this Pledge
Agreement shall inure to the benefit of, and be binding upon, such respective
affiliates, successors and/or assigns of Pledgee in the same manner and to the
same extent as if such affiliates, successors and/or assigns were original
parties hereto. Unless specifically provided herein to the contrary, Pledgor may
not assign any or all of its rights and/or obligations and/or delegate any or
all of its duties under this Pledge Agreement without the prior written consent
of Pledgee. Upon an assignment of any or all of Pledgor's rights and/or
obligations and/or a delegation of any or all of its duties under this Pledge
Agreement in accordance with the terms of this Pledge Agreement, this Pledge
Agreement shall inure to the benefit of, and be binding upon, Pledgor's
respective affiliates, successors and/or assigns in the same manner and to the
same extent as if such affiliates, successors and/or assigns were original
parties hereto.
(h) Headings. Introductory headings at the beginning of
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each section andsubsection of this Pledge Agreement are solely for the
convenience of the parties and shall not be deemed to be a limitation upon or
description of the contents of any such section and subsection of this Pledge
Agreement.
(i) Counterparts. This Pledge Agreement may be executed
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in two counterparts, each of which shall be deemed an original and both of
which, when taken together, shall constitute one and the same Pledge Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
Agreement as of the day and year first above written.
PLEDGEE:
THE PANTRY, INC., a Delaware corporation
By: /s/ William T. Flyg
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Name: William T. Flyg
Title: Senior Vice President-Finance and
Chief Financial Officer
PLEDGOR:
/s/ Peter J. Sodini
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Peter J. Sodini