EXHIBIT 10.2
SECOND AMENDED AND
RESTATED
PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED
PLEDGE AGREEMENT (this
“ Pledge Agreement ”) is entered into as of
December 29, 2005 by and among THE PANTRY, INC., a
Delaware corporation (the “ Borrower ”), the
Domestic Subsidiaries of the Borrower from time to time a party
hereto (individually a “ Guarantor ” and
collectively the “ Guarantors ”; the Guarantors,
together with the Borrower, individually a “ Pledgor
” and collectively the “ Pledgors ”) and
WACHOVIA BANK, NATIONAL ASSOCIATION , in its capacity as
Administrative Agent under the Credit Agreement referred to below
(in such capacity, the “ Administrative Agent ”)
for the several banks and other financial institutions as may from
time to time become parties to such Credit Agreement (individually
a “ Secured Party ” and collectively the “
Secured Parties ”).
RECITALS
WHEREAS , pursuant to that certain Amended and Restated
Credit Agreement dated as of March 12, 2004 (as amended,
modified, extended, renewed or replaced, the “ Existing
Credit Agreement ”), among the Borrower, the lenders
party thereto, and the Administrative Agent, the lenders agreed to
make loans and issue letters of credit upon the terms and subject
to the conditions set forth therein;
WHEREAS , pursuant to that certain Second Amended and
Restated Credit Agreement dated as of the date hereof (as amended,
modified, extended, renewed or replaced from time to time, the
“ Credit Agreement ”), among the Borrower, the
Guarantors, the Secured Parties party thereto, and the
Administrative Agent, the Secured Parties have agreed to refinance
the Existing Credit Agreement and make Loans and issue Letters of
Credit upon the terms and subject to the conditions set forth
therein;
WHEREAS , in connection with the Existing Credit
Agreement, the Borrower and certain of the Guarantors entered into
that certain Amended and Restated Pledge Agreement dated as of
March 12, 2004 (as amended, modified, extended, renewed or
replaced, the “ Existing Pledge Agreement ”);
and
WHEREAS , it is a condition precedent to the
effectiveness of the Credit Agreement and the obligations of the
Secured Parties to make their respective Loans and to issue Letters
of Credit under the Credit Agreement that the Pledgors shall have
executed and delivered this Pledge Agreement (which amends and
restates the Existing Pledge Agreement) to the Administrative Agent
for the ratable benefit of the Secured Parties.
NOW, THEREFORE
, in consideration of these premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions . Unless
otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to such terms in the Credit Agreement, and
the following terms that are defined in the Uniform Commercial Code
from time to time in effect in the State of North
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Carolina (the “ UCC ”) are
used herein as so defined: Certificated Security, Control,
Entitlement Order, Financial Asset, Investment Company Security,
Securities Account, Security, Security Entitlement, Securities
Intermediary and Uncertificated Security. For purposes of this
Pledge Agreement, the term “Secured Party” shall
include any Hedging Agreement Provider.
2. Pledge and Grant of Security
Interest . To secure the prompt payment and performance in full
when due, whether by lapse of time or otherwise, of the Pledgor
Obligations (as defined in Section 3 hereof), each Pledgor
hereby pledges and assigns to the Administrative Agent, for the
ratable benefit of the Secured Parties, and grants to the
Administrative Agent, for the ratable benefit of the Secured
Parties, a continuing security interest in any and all right, title
and interest of such Pledgor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter
(collectively, the “ Pledged Collateral
”):
(a) Pledged Capital Stock .
(i) 100% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding Capital Stock of each Domestic
Subsidiary set forth on Schedule 2(a) attached hereto and
(ii) 65% (or, if less, the full amount owned by such Pledgor)
of each class of the issued and outstanding Capital Stock entitled
to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) (“ Voting Equity ”)
and 100% (or, if less, the full amount owned by such Pledgor) of
each class of the issued and outstanding Capital Stock not entitled
to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) (“ Non-Voting Equity
”) of each Foreign Subsidiary set forth on Schedule
2(a) attached hereto (collectively, together with the Capital
Stock and other interests described in clauses (y) and
(z) and in Sections 2(b) and 2(c) below, the “
Pledged Capital Stock ”), including, but not limited
to, the following:
(y) subject to the percentage
restrictions described above, all shares, securities, membership
interests or other equity interests representing a dividend on any
of the Pledged Capital Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Capital Stock,
or resulting from a stock split, revision, reclassification or
other exchange therefor, and any subscriptions, warrants, rights or
options issued to the holder of, or otherwise in respect of, the
Pledged Capital Stock; and
(z) without affecting the
obligations of the Pledgors under any provision prohibiting such
action hereunder or under the Credit Agreement, in the event of any
consolidation or merger involving the issuer of any Pledged Capital
Stock and in which such issuer is not the surviving entity, all
shares of each class of the Capital Stock attributable to the
affected Pledged Capital Stock of the successor entity formed by or
resulting from such consolidation or merger, subject to the
percentage restrictions described above.
(b) Additional Interests .
(i) 100% (or, if less, the full amount owned by such Pledgor)
of each class of the issued and outstanding Capital Stock of any
Person which hereafter becomes a Domestic Subsidiary and
(ii) 65% (or, if less, the full amount owned by such Pledgor)
of the Voting Equity and 100% (or, if less, the full amount owned
by such Pledgor) of the Non-Voting Equity of any Person which
hereafter becomes a Foreign Subsidiary, including, without
limitation, the certificates representing such Capital
Stock.
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(c) Other Equity Interests .
Subject to the percentage restrictions described above, any and all
other Capital Stock or other equity interests owned by the Pledgors
in any Domestic Subsidiary or any Foreign Subsidiary.
(d) Proceeds . All proceeds
and products of the foregoing, however and whenever acquired and in
whatever form.
Without limiting the generality of
the foregoing, it is hereby specifically understood and agreed that
a Pledgor may from time to time hereafter pledge and deliver
additional shares of Capital Stock or other interests to the
Administrative Agent as collateral security for the Pledgor
Obligations. Upon such pledge and delivery to the Administrative
Agent, such additional shares of Capital Stock or other interests
shall be deemed to be part of the Pledged Collateral of such
Pledgor and shall be subject to the terms of this Pledge Agreement
whether or not Schedule 2(a) is amended to refer to such
additional shares.
3. Security for Pledgor
Obligations . The security interest created hereby in the
Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing
or hereafter incurred (the “ Pledgor Obligations
”): (a) all of the Credit Party Obligations, howsoever
evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several and
(b) all expenses and charges, legal and otherwise, reasonably
incurred by the Administrative Agent and/or the Secured Parties in
collecting or enforcing any of the Credit Party Obligations or in
realizing on or protecting any security therefor, including without
limitation the security granted hereunder.
4. Delivery of the Pledged
Collateral; Perfection of Security Interest . Each Pledgor
hereby agrees that:
(a) Delivery of Certificates and
Instruments . Each Pledgor shall deliver as security to the
Administrative Agent (i) simultaneously with or prior to the
execution and delivery of this Pledge Agreement (or at such later
time as the Administrative Agent may agree), all certificates
representing the Pledged Capital Stock owned by such Pledgor and
(ii) promptly upon the receipt thereof by or on behalf of a
Pledgor, all other certificates and instruments constituting
Pledged Collateral owned by a Pledgor. Prior to delivery to the
Administrative Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust
by such Pledgor for the benefit of the Administrative Agent
pursuant hereto. All such certificates shall be delivered in
suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank,
substantially in the form provided in Exhibit 4(a) attached
hereto.
(b) Additional Securities .
If such Pledgor shall receive by virtue of its being or having been
the owner of any Pledged Collateral, any (i) certificate,
including without limitation, any certificate representing a
dividend or distribution in connection with any
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increase or reduction of capital,
reclassification, merger, consolidation, sale of assets,
combination of shares or membership or equity interests, stock
splits, spin-off or split-off, promissory notes or other
instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities or other equity interests in
connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such certificate, instrument, option, right
or distribution in trust for the benefit of the Administrative
Agent, shall segregate it from such Pledgor’s other property
and shall deliver it forthwith to the Administrative Agent in the
exact form received together with any necessary endorsement and/or
appropriate stock power duly executed in blank, substantially in
the form provided in Exhibit 4(a) , to be held by the
Administrative Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.
(c) Provisions Relating to
Uncertificated Securities, Securities Entitlements and Securities
Accounts . The Pledgors shall promptly notify the
Administrative Agent of any Pledged Collateral consisting of an
Uncertificated Security or a Securities Entitlement or any Pledged
Collateral held in a Securities Account. With respect to any such
Pledged Collateral, (i) the applicable Pledgor and the
applicable issuer of the Uncertificated Security or the applicable
Securities Intermediary shall enter into an agreement with the
Administrative Agent granting Control to the Administrative Agent
over such Pledged Collateral, such agreement to be in form and
substance satisfactory to the Administrative Agent and
(ii) the Administrative Agent shall be entitled, upon the
occurrence and during the continuance of a Default or an Event of
Default, to notify the applicable issuer of the Uncertificated
Security or the applicable Securities Intermediary that it should
follow the instructions or the Entitlement Orders of the
Administrative Agent and no longer follow the instructions or the
Entitlement Orders of the applicable Pledgor. Upon receipt by a
Pledgor of notice from a Securities Intermediary of its intent to
terminate the Securities Account of such Pledgor held by such
Securities Intermediary, prior to the termination of such
Securities Account the Pledged Collateral in such Securities
Account shall be (A) transferred to a new Securities Account
which is subject to a control agreement as provided above or
(B) transferred to an account held by the Administrative Agent
(in which it will be held until a new Securities Account is
established).
5. Representations and
Warranties . Each Pledgor hereby represents and warrants to the
Administrative Agent, for the benefit of the Secured Parties, that
so long as any of the Pledgor Obligations (other than contingent
indemnity or reimbursement obligations) remains outstanding or any
Credit Document or Secured Hedging Agreement is in effect, and
until all of the Commitments shall have been terminated:
(a) Authorization of Pledged
Capital Stock . The Pledged Capital Stock is duly authorized
and validly issued, is fully paid and nonassessable and is not
subject to the preemptive rights of any Person. All other shares of
Capital Stock or other interests constituting Pledged Collateral
will be duly authorized and validly issued, fully paid and
nonassessable and not subject to the preemptive rights of any
Person.
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(b) Title . Each Pledgor is
the legal, record and beneficial owner of the Pledged Collateral of
such Pledgor and will at all times be the legal and beneficial
owner of such Pledged Collateral free and clear of any Lien except
for the security interest created by this Pledge Agreement or the
Security Agreement or Permitted Encumbrances. There exists no
“adverse claim” within the meaning of
Section 8-102 of the UCC with respect to the Pledged Capital
Stock of such Pledgor.
(c) Exercising of Rights .
The exercise by the Administrative Agent of its rights and remedies
hereunder will not violate any law or governmental regulation,
subject to compliance by the Administrative Agent with the
requirements of any applicable securities laws, or any material
contractual restriction binding on or affecting a Pledgor or any of
its property.
(d) Pledgor’s Authority
. No authorization, approval or action by, and no notice or filing
with any Governmental Authority, the issuer of any Pledged Capital
Stock or third party is required either (i) for the pledge
made by a Pledgor or for the granting of the security interest by a
Pledgor pursuant to this Pledge Agreement or (ii) for the
exercise by the Administrative Agent or the Secured Parties of
their rights and remedies hereunder (except as may be required by
laws affecting the offering and sale of securities).
(e) Security
Interest/Priority . This Pledge Agreement creates a valid
security interest in favor of the Administrative Agent for the
ratable benefit of the Secured Parties, in the Pledged Collateral.
The taking possession by the Administrative Agent of the
certificates (if any) representing the Pledged Capital Stock and
all other certificates and instruments constituting Pledged
Collateral will perfect and establish the first priority of the
Administrative Agent’s security interest in all certificated
Pledged Capital Stock and such certificates and instruments. Upon
the filing of UCC financing statements in the appropriate filing
office in the location of each Pledgor’s State of
organization or formation, the Administrative Agent shall have a
first priority perfected security interest in all uncertificated
Pledged Capital Stock consisting of partnership or limited
liability company interests that do not constitute a Security
pursuant to Section 8-103(c) of the UCC. With respect to any
Pledged Collateral consisting of an Uncertificated Security or a
Securities Entitlement or held in a Securities Account, upon
execution and delivery by the applicable Pledgor, the
Administrative Agent, and the applicable Securities Intermediary or
the applicable issuer of the Uncertificated Security of an
agreement granting Control to the Administrative Agent over such
Pledged Collateral, the Administrative Agent shall have a first
priority perfected security interest in such Pledged Collateral.
Except as set forth in this Section, no action is necessary to
perfect or otherwise protect such security interest.
(f) No Other Capital Stock .
Except as set forth on Schedule 2(a) attached hereto, no
Pledgor owns any Capital Stock of any Domestic Subsidiary of the
Borrower.
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(g) Partnership and Limited
Liability Company Interests . Except as previously disclosed in
writing to the Administrative Agent, none of the Pledged Capital
Stock consisting of partnership or limited liability company
interests (i) is dealt in or traded on a securities exchange
or in a securities market, (ii) by its terms expressly
provides that it is a Security governed by Article 8 of the UCC,
(iii) is an Investment Company Security, (iv) is held in
a Securities Account or (v) constitutes a Security or a
Financial Asset.
6. Covenants . Each Pledgor
hereby covenants that, so long as any of the Pledgor Obligations
(other than contingent indemnity or reimbursement obligations)
remains outstanding or any Credit Document or Secured Hedging
Agreement is in effect, and until all of the Commitments shall have
been terminated, such Pledgor shall:
(a) Perfection of Security
Interests . Mark its books and records (and shall cause the
issuer of the Pledged Capital Stock of such Pledgor to mark its
books and records) to reflect the security interest granted to the
Administrative Agent, for the benefit of the Secured Parties,
pursuant to this Pledge Agreement. To the extent permitted by
applicable law, each Pledgor hereby authorizes the Administrative
Agent to prepare and file such financing statements (including
continuation statements) or amendments thereof or supplements
thereto or other instruments as the Administrative Agent may from
time to time deem necessary or appropriate in order to perfect and
maintain the security interests granted hereunder in accordance
with the UCC, including, without limitation, any financing
statement that describes the Pledged Collateral as “all
personal property” or “all assets” of such
Pledgor or that describes the Pledged Collateral in some other
manner as the Administrative Agent deems necessary or advisable.
Each Pledgor hereby agrees that a carbon, photographic or other
reproduction of this Pledge Agreement or any such financing
statement is sufficient for filing as a financing statement by the
Administrative Agent without notice thereof to such Pledgor
wherever the Administrative Agent may reasonably determine is
appropriate. Each Pledgor shall also execute and deliver to the
Administrative Agent and/or file such agreements, assignments or
instruments (including affidavits, notices, reaffirmations and
amendments and restatements of existing documents, as the
Administrative Agent may reasonably request) and do all such other
things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its
security interests hereunder are perfected, including such
financing statements (including continuation statements) or
amendments thereof or supplements thereto or other instruments as
the Administrative Agent may from time to time reasonably request
in order to perfect and maintain the security interests granted
hereunder in accordance with the UCC and any other personal
property security legislation in the appropriate jurisdictions,
(ii) to consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Administrative Agent
of its rights and interests hereunder. To that end, each Pledgor
hereby irrevocably makes, constitutes and appoints the
Administrative Agent, its nominee or any other person whom the
Administrative Agent may designate, as such Pledgor’s
attorney-in-fact with full power and for the limited purpose to
sign in the name of such Pledgor any notices or any similar
documents which in the Administrative Agent’s reasonable
discretion would be necessary or appropriate in order to perfect
and maintain perfection of the security
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interests granted hereunder, such
power, being coupled with an interest, being and remaining
irrevocable so long as any of the Pledgor Obligations remain
outstanding (other than contingent indemnity or reimbursement
obligations) or any Credit Document or Secured Hedging Agreement is
in effect, and until all of the Commitments shall have terminated.
In the event for any reason the law of any jurisdiction other than
North Carolina becomes or is applicable to the Pledged Collateral
of any Pledgor or any part thereof, or to any of the Pledgor
Obligations, such Pledgor agrees to execute and deliver all such
instruments and to do all such other things as the Administrative
Agent reasonably deems necessary or appropriate to preserve,
protect and enforce the security interests of the Administrative
Agent under the law of such other jurisdiction (and, if any Pledgor
shall fail to do so promptly upon the request of the Administrative
Agent, then the Administrative Agent may execute any and all such
requested documents on behalf of such Pledgor pursuant to the power
of attorney granted hereinabove).
(b) Defense of Title .
Warrant and defend title to and ownership of the Pledged Collateral
of such Pledgor at its own expense against the claims and demands
of all other parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of
Pledged Collateral of such Pledgor or any interest therein, except
as permitted under the Credit Agreement and the other Credit
Documents; provided that in the event a Pledgor makes a sale
of Pledged Collateral that is permitted by the terms of the Credit
Agreement, the Administrative Agent shall release the Pledged
Collateral that is the subject of such sale free and clear of any
Lien and security interest under this Pledge Agreement or any other
Credit Document concurrently with the consummation of such
sale.
(c) Further Assurances .
Promptly execute and deliver at its expense all further instruments
and documents and take all further action that may be necessary and
desirable or that the Administrative Agent may reasonably request
in order to (i) perfect and protect the security interest
created hereby in the Pledged Collateral of such Pledgor
(including, without limitation, execution and delivery of one or
more control agreements reasonably acceptable to the Administrative
Agent, filing of UCC financing statements and any and all other
actions reasonably necessary to satisfy the Administrative Agent
that the Administrative Agent has obtained a first priority
perfected security interest in all Pledged Collateral);
(ii) enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) otherwise effect the
purposes of this Pledge Agreement, including, without limitation
and if requested by the Administrative Agent, delivering to the
Administrative Agent irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.
(d) Amendments . Not make or
consent to any amendment or other modification or waiver with
respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect
to any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit
Agreement.
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(e) Compliance with Securities
Laws . File all reports and other information now or hereafter
required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or
foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
(f) Issuance or Acquisition of
Capital Stock . Not without executing and delivering, or
causing to be executed and delivered, to the Administrative Agent
such agreements, documents and instruments as the Administrative
Agent may reasonably require, issue or acquire any Capital Stock
consisting of an interest in a partnership or a limited liability
company that (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of
the UCC, (iii) is an Investment Company Security, (iv) is
held in a Securities Account or (v) constitutes a Security or
a Financial Asset.
7. Performance of Obligations;
Advances by Administrative Agent
