EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
October, 1997 by and between THE PANTRY, INC., a Delaware corporation (the
"Corporation"), and Peter J. Sodini (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ Employee as President and CEO of
the Corporation on the terms and conditions hereinafter set forth, and Employee
is desirous of accepting said employment.
NOW, THEREFORE, in consideration of the employment of Employee, the mutual
terms and conditions set forth below, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. Employment and Term. Subject to the terms and conditions of this
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Agreement, the Corporation agrees to employ the Employee in a full time capacity
to serve as President and CEO for a term commencing on October 1, 1997 and
ending on September 30, 2000. Employee will carry out faithfully and to the best
of his abilities such duties and have such responsibilities as would normally be
carried out by the President and CEO of the Corporation, subject to the control
of and in accordance with the directives and policies of the Board of Directors
of the Corporation. The employment of Employee shall be on a full time basis,
but the Employee may be a passive investor or otherwise have a passive interest
in other businesses, partnerships and entities so long as such other activities
of the Employee do not interfere with the performance of his duties hereunder
and so long as such other businesses, partnerships and entities do not cause the
Employee to violate the non-competition restrictions of this Agreement.
2. Compensation. The Corporation shall provide Employee with an annual
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salary equal to $475,000 payable in equal monthly installments, or such other
schedule established by the Corporation. The annual salary may, at the option
of the Board of Directors, be subject to annual increases upon review by the
Board of Directors. Any such reviews will be made after completion of the
Corporation's fiscal year, with any increases to be retroactive to the first day
of the fiscal year.
3. Bonus Program and Other Benefits. Employee shall be eligible to
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participate in a manner commensurate with other senior management employees of
the Corporation in all benefits or other programs available, to the extent such
exist or are sponsored by the Corporation. Without limiting the generality of
the foregoing, Employee shall participate in an incentive bonus program which
shall provide for a payout of a minimum of 25% upon the achievement of goals
determined by the Board of Directors.
4. Car Allowance. During the initial term of this Agreement, the
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Corporation shall provide Employee with a company car at the commencement of the
term of employment under this Agreement.
5. Employment Termination Prior to Change In Control.
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5.1 Termination By The Corporation. Prior to a Change in Control (as
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defined in Section 6.1 hereof), the Corporation may terminate Employee's
employment upon the occurrence of any of the following:
(a) At the election of the Corporation for just cause,
immediately upon written notice by the Corporation to Employee. For the purpose
of this Section 5.1(a), just cause for termination shall be deemed to exist in
the event of: (A) the willful and continued failure by Employee to substantially
perform his duties with the Corporation after written instruction by the
Corporation to do so, (B) the engaging by Employee in conduct which is
demonstrably and materially injurious to the Corporation, (C) the conviction of
Employee of, or the entry of a pleading of guilty or nolo contendere by Employee
to, any crime involving moral turpitude or any felony, (D) material breach by
Employee of any of the terms of this Agreement or (E) gross negligence or
willful misconduct in the performance of his duties.
(b) Upon death or upon determination of disability of Employee.
As used in this Section 5, the term "disability" or "disabled" shall mean the
failure of Employee, due to a physical or mental disability, for a period of 180
days, during any consecutive 12-month period to substantially perform the
services contemplated under this Agreement.
(c) At the election of the Corporation at any time, subject to
the provisions of Section 5.3(b).
5.2 Termination By The Employee. The Employee may terminate his
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employment upon 30 days' notice to the Corporation.
5.3 Effect of Termination Prior To Change In Control.
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(a) In the event Employee's employment is terminated pursuant to
Sections 5.1(a) or (b) or should the Employee terminate his employment pursuant
to Section 5.2, the Corporation shall pay to Employee the compensation and
benefits otherwise payable to him under Section 2 through the last day of his
actual employment by the Corporation (for termination for just cause or upon
death) or his effective date of termination (for termination upon disability).
(b) Should Employee's employment be terminated by the Corporation
pursuant to Section 5.1(c), the Employee shall be entitled to salary continuance
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through the term of this Agreement, at his then-applicable salary level until
such time as Employee engages in other employment, after which Employee shall
receive the difference, if any, between his salary with the Corporation and his
new salary. If possible under the provisions of such plan, the Corporation
shall continue Employee's medical insurance coverage through the term of this
Agreement, upon a termination under Section 5.1(c) until he engages in other
employment. In the event Employee is ineligible under such plan, the
Corporation shall arrange to provide Employee with substantially similar
benefits until he engages in other employment.
(c) If Employee's employment is terminated by death or because of
disability pursuant to Section 5.1(b), the Corporation shall pay to the estate
of the Employee or to Employee, as the case may be, 12 months' compensation
(less any amounts paid such individual under any disability plan).
6. Employment and Termination Subsequent To A Change of Control.
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6.1 Definition of Change of Control. For purposes of this Agreement,
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a "Change in Control" shall mean a change in control of the Corporation of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Corporation is in fact
required to comply therewith; provided, that, without limitation, such a change
in control shall be deemed to have occurred if:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Corporation, trustee or other
fiduciary holding securities under an employee benefit plan of the Corporation
or a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation or the existing holders of capital stock of the Corporation as
of the date hereof, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 50% of the combined voting power of the
Corporation's then outstanding securities; or
(b) the consummation of a merger or consolidation of the
Corporation with any other corporation, other than (i) a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or consolidation
or (ii) a merger or consolidation effected to implement a recapitalization of
the Corporation (or similar transaction) in which no "person" (as hereinabove
defined and subject to the exceptions contained in such definition) acquires
more than 50% of the combined voting power of the Corporation's then outstanding
securities.
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(c) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets.
6.2 Termination Following Change In Control. Unless Employee's
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employment is terminated:
(a) because of Employee's death or disability (as defined in
Section 6.2(i)),
(b) by the Corporation for Cause as defined in Section 6.2(ii),
(c) by Employee other than for Good Reason as defined in Section
6.2(iii),
upon termination of Employee's employment subsequent to a Change of Control,
Employee shall be entitled to salary continuance together with regular benefits
for eighteen months from the date of the termination of his employment at his
then-applicable salary and benefits level, which entitlement shall not be
reduced even if Employee shall obtain other employment, provided that no
payments shall be made under this Section 6.2 to the extent such payments would
constitute "excess parachute payments" under the Internal Revenue Code of 1986,
as amended (the "Code") or to the extent the deductibility of such payments is
limited under the Code.
(i) Disability. If Employee is "disabled" as defined in
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Section 5.1(b), and within thirty (30) days after written notice of termination
is given he shall not have returned to the full-time performance of his duties,
Employee's employment may be terminated.
(ii) Cause. Termination by the Corporation of Employee's
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employment for "Cause" shall mean termination in the event of: (A) the willful
and continued failure by Employee to substantially perform his duties with the
Corporation after written instruction by the Corporation to do so, (B) the
engaging by Employee in conduct which is demonstrably and materially injurious
to the Corporation, or (C) the conviction of Employee of, or the entry of a
pleading of guilty or nolo contendere by Employee to, any crime involving moral
turpitude or any felony.
(iii) Good Reason. Employee shall be entitled to terminate
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his employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (1) during the twelve (12) month period following a Change in
Control, a good faith determination by Employee that, as a result of the Change
in Control, he is not able to discharge his duties effectively, (2) at such time
as a good faith determination is made by the Employee that he cannot carry out
his duties consistent with his ethical responsibilities, or (3)
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without Employee's express written consent, the occurrence after a Change in
Control of any of the following circumstances:
(A) the assignment to Employee of any duties inconsistent (except in
the nature of a promotion) with the position in the Corporation that he held
immediately prior to the Change in Control or a substantial adverse alteration
in the nature or status of his position or responsibilities or the conditions of
his employment from those in effect immediately prior to the Change in Control;
(B) a reduction by the Corporation in Employee's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time;
(C) the Corporation's requiring Employee to be based more than
twenty-five (25) miles from the Corporation's offices at which he was
principally employed immediately prior to the date of the Change in Control;
(D) the failure by the Corporation to pay to Employee any portion of
his current compensation or compensation under any deferred compensation program
of the Corporation within seven (7) days of the date such compensation is due;
(E) the failure by the Corporation to continue in effect any material
compensation or benefit plan in which Employee participates immediately prior to
the Change in Control unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Corporation to continue the Employee's participation therein (or
in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of his
participation relative to other participants, than existed at the time of the
Change in Control;
(F) the failure by the Corporation to continue to provide Employee
with benefits substantially similar to those enjoyed by him under any of the
Corporation's plans in which he was participating at the time of the Change in
Control, the taking of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits or deprive Employee of any
material fringe benefit enjoyed by him at the time of the Change in Control, or
the failure by the Corporation to provide Employee with the number of paid
vacation days to which he is entitled on the basis of his years of service with
the Corporation in accordance with the Corporation's normal vacation policy in
effect at the time of the change in control; or
(G) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 12 hereto.
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Employee's right to terminate his employment pursuant to this subsection
shall not be affected by his incapacity due to physical or mental illness.
Employee's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
7. Moving Expenses. In the event of any termination of Employee's
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employment, other than by the Corporation for "just cause" as defined in Section
5.1(a), Employer shall be entitled to a lump payment of funds sufficient to
transport all of Employee's household effects and two automobiles to California.
8. Covenants.
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(a) Non-competition Covenant. During Employee's employment and
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extending through the period ending on the later of (A) 18 months after
termination or (B) the date in which Employee is no longer receiving severance
benefits, Employee shall not, either individually or on behalf of another,
directly or indirectly, as employer, employee, owner, stockholder, investor,
consultant, independent contractor, agent, or otherwise enter into or in any
manner participate in the convenience store business in North Carolina, South
Carolina, Tennessee, Georgia, Florida, Kentucky or Indiana or within any other
state in which the Corporation or its affiliates operate ten (10) or more
convenience stores upon the date of termination of employment.
(b) No Interference with Employees. Employee agrees that during
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Employee's employment and extending through the period ending on the later of
(A) 18 months after termination or (B) the date in which Employee is no longer
receiving severance benefits, Employee will not directly or indirectly, request
or induce any other employee of the Corporation or its affiliates or any person
who was employed by the Corporation or its affiliates in the six months prior to
the request or inducement to: (i) terminate employment with the Corporation, or
(ii) accept employment with another business entity, or (iii) become engaged in
the convenience store business in competition with the Corporation.
(c) Trade Secrets; Confidential Information.
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(i) General. Employee recognizes and acknowledges that
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Employee will have access to certain highly sensitive, special, unique
information of the Corporation that is confidential or proprietary. Employee
hereby covenants and agrees during the term of this Agreement and at all times
thereafter not to use or disclose any Confidential Information (as hereinafter
defined) or trade secrets except for the benefit of the Corporation and to
authorized representatives of the Corporation or except as required by any
governmental or judicial authority; provided, however, that the foregoing
restrictions shall not apply to items that, through no fault of Employee's, have
entered the public domain.
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(ii) Confidential Information. For purposes of this
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Agreement, "Confidential Information" means any data or information with respect
to the business conducted by the Corporation, that is material to the
Corporation and not generally known by the public. To the extent consistent
with the foregoing definition, Confidential Information includes without
limitation: (A) reports, pricing, sales manuals and training manuals, selling
and pricing procedures, and financing methods of the Corporation, together with
any techniques utilized by the Corporation in designing, developing,
manufacturing, testing or marketing its products or in performing services for
clients, customers and accounts of the Corporation; and (B) the business plans
and financial statements, reports and projections of the Corporation.
(iii) Ownership Return. Employee acknowledges that all trade
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secrets and Confidential Information are and shall remain the sole, exclusive
and valuable property of the Corporation and that Employee has and shall acquire
no right, title or interest therein. Any and all printed, typed, written or
other material which Employee may have or obtain with respect to trade secrets
or Confidential Information (including without limitation all copyrights
therein) shall be and remain the exclusive property of the Corporation, and any
and all material (including any copies) shall, upon request of the Corporation,
be promptly delivered by Employee to the Corporation.
(d) Validity of Covenants. Employee agrees that the restrictive
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covenants contained in this Agreement are reasonably necessary to protect the
legitimate business and other interests of the Corporation, and reasonable with
respect to time and territory, and do not interfere with the interests of the
public.
(e) Specific Performance. Employee agrees that a breach or
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violation of any of the covenants under this Agreement will result in immediate
and irreparable harm to the Corporation in an amount which will be impossible to
ascertain at the time of the breach or violation and that the award of monetary
damages will not be adequate relief to the Corporation. Therefore, the failure
on the part of Employee to perform all of the covenants established by this
Agreement shall give rise to a right of the Corporation to obtain enforcement of
this Agreement in a court of equity by a decree of specific performance or other
injunctive relief. This remedy, however, shall be cumulative and in addition to
any other remedy the Corporation may have.
9. Notices. Any and all notices, designations, consents, offers,
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acceptances, or any other communications provided for herein shall be given in
writing and shall be deemed given three (3) days after the date postmarked if
sent by first class, United States mail or by registered or certified mail,
return receipt requested; or on the date actually received if sent by express
mail or other similar overnight delivery or if hand delivered, which shall be
addressed to the Corporation at its principal office and to the Employee at his
last address as shown on the records of the Corporation.
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10. Governing Law. This Agreement shall be subject to and governed by the
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laws of the State of North Carolina.
11. Invalid Provision. The invalidity or unenforceability of any
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particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
12. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Corporation and Employee and their respective heirs, legal
representatives, executors, administrators, successors and assigns, provided
that Employee may not assign his rights or delegate his obligations hereunder.
13. Entire Agreement.
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(a) This Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes any and all other
agreements, either oral or in writing, among the parties hereto with respect to
the subject matter hereof.
(b) This Agreement may not be changed orally, but may be amended,
revoked, changed or modified at any time by a written agreement executed by the
Employee and the Corporation.
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year set forth above.
THE PANTRY, INC.
By: /s/William T. Flyg
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Title: Senior Vice President, Finance,
Chief Financial Officer and
Secretary
/s/ Peter J. Sodini
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Peter J. Sodini
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