Document:

JOINDER TO SUBSIDIARY GUARANTY

JOINDER TO SUBSIDIARY GUARANTY

 

THIS JOINDER is executed as of
March 20, 2008 by the undersigned, each of which hereby agrees as follows:

1.         All capitalized terms
used herein and not defined in this Joinder shall have the meanings provided in
that certain Subsidiary Guaranty (the “Guaranty”) dated as of April 24, 2007
executed for the benefit of National City Bank, as agent for itself and certain
other lenders, with respect to a loan from the Lenders to Associated Estates
Realty Corporation (“Borrower”).

2.         As required by the
Credit Agreement described in the Guaranty, as such Credit Agreement has been
amended by a First Amendment thereto dated as of the date of this Joinder with
the consent of all of the Subsidiary Guarantors, each of the undersigned is executing
this Joinder to become a party to the Guaranty.

3.         Each and every term,
condition, representation, warranty, and other provision of the Guaranty, by
this reference, is incorporated herein as if set forth herein in full and the
undersigned agrees to fully and timely perform each and every obligation of a
Subsidiary Guarantor under such Guaranty.

AERC ARROWHEAD STATION, INC.

By:       /s/
Martin A. Fishman                

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907368

AERC BAY CLUB, INC.

By:        /s/
Martin A. Fishman                 

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907377

 

AERC BEDFORD COMMONS, INC.

By:        /s/
Martin A. Fishman                   

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907381

 

AERC STEEPLECHASE, LLC

By:       AERC Shiloh
Member, Inc.

             Its Managing
Member

By:        /s/
Martin A. Fishman                  

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907442

 

AERC WESTCHESTER, INC.

By:        /s/
Martin A. Fishman                       

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907374

ASPEN LAKES - AERC, INC.

By:        /s/
Martin A. Fishman                       

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1829742

 

AERC LANDINGS AT PRESERVE, LLC

By:       AERC Landings,
Inc.

             Its Managing
Member

By:        /s/
Martin A. Fishman                   

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907440

 

AERC BENNELL, INC.

By:        /s/
Martin A. Fishman                  

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907398

 

AERC LAKE FOREST, INC.

By:        /s/
Martin A. Fishman                  

Name:  Martin A. Fishman

Title:     Vice President

FEIN No. 34-1907417Exhibit 10.11

 

Summary of Material Terms of

The Pantry, Inc. 2008 Annual Incentive Program

 

The Pantry, Inc. 2008 Annual Incentive Program (the “Program”) is a compensatory program under The Pantry, Inc. 2007 Omnibus Plan that was established on February 7, 2008 by the Compensation and Organization Committee (the “Committee”) of the Board of Directors of The Pantry, Inc. (the “Company”). The Program provides for performance-based cash awards to certain of the Company’s employees, including its executive officers. Executive officers are eligible for awards under the Program based on threshold, target, and maximum performance levels set by the Committee, and the actual award amounts, if any, will therefore vary depending on the achievement of certain performance goals by the Company. The Program’s performance cycle is for the Company’s 2008 fiscal year, which began on September 28, 2007 and ends on September 25, 2008 (“fiscal 2008”). 

 

The Board approved the following performance measures and their respective weights for the Company’s executive officers because the Board believed these performance measures would be key indicators of the Company’s overall financial and operating results during fiscal 2008:

 

	
             
 	
            •
 	
            Adjusted EBITDA (weighted at 55%), which is defined as net income before interest expense, net, loss on extinguishment of debt, income taxes, and depreciation and amortization but including the lease payments the Company makes under its lease finance obligations as a reduction to Adjusted EBITDA.
 
	
             
 	
            •
 	
            Merchandise sales growth (weighted at 15%), which is defined as year-over-year growth in merchandise sales on a comparable store basis.
 
	
             
 	
            •
 	
            Gasoline gallons growth (weighted at 15%), which is defined as year-over-year growth in gasoline gallons on a comparable store basis.
 
	
             
 	
            •
 	
            Turnover (weighted at 15%), which is defined as the total number of employees (excluding those who were terminated in connection with the restructuring program the Company initiated in September 2007) who have left the Company in a given period of time to the number of employees in position at the end of the period.
 

 

Under the Program, each performance measure operates independently of the other measures. That is, an award may be paid when the threshold performance level is achieved for any single measure, without regard to results for the other measures. The Board approved the targets for each performance measure based upon the Company’s approved internal budget estimates.

 

Under the Program, the target award opportunity for the Company’s chief executive officer will be 75% of his annual base salary in effect on date the Program is adopted; the target award opportunity for each of the Company’s other executive officers will be 50% of his or her annual base salary in effect on the date the Program is adopted.

 

Actual award payouts for the Company’s executive officers can vary from 25% of target awards for achieving or exceeding the threshold performance level to 200% of target awards for achieving the maximum performance level. For any performance greater than the threshold 

 

performance level and less than the maximum performance level but not equal to the target performance level, the appropriate payout percentage will be interpolated on a straight-line basis accordingly. For any performance below the threshold performance level, the appropriate payout percentage is 0%.

 

The Committee may make award payouts or otherwise increase, reduce, or eliminate payouts that would otherwise be made under the Program in its sole discretion. Executive officers who join the Company during fiscal 2008 will have any award amounts prorated, except that no executive officer hired after the end of the third quarter of fiscal 2008 will be eligible to receive an award under the Program. Participants must be employed on the date awards are paid in order to receive a payout, except that participants whose employment is terminated due to death or disability or as otherwise determined by the Committee in its discretion may have their award amounts prorated and paid on the date other awards are paid in the discretion of the Committee.

 

 

2Exhibit 10.12

 

SEVERANCE AGREEMENT AND GENERAL RELEASE

 

This SEVERANCE AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and entered into by The Pantry, Inc. (the “Company”) and David M. Zaborski (“Zaborski”).  Throughout the remainder of the Agreement, the Company and Zaborski may be collectively referred to as “the parties.”

 

The Company currently employs Zaborski as Senior Vice President, Operations, pursuant to an amended and restated employment agreement with an effective date of November 21, 2007 (“Employment Agreement”).  Zaborski’s employment is being terminated by the Company pursuant to Section 3.2 of the Employment Agreement.  

 

The provision of severance benefits under the Employment Agreement is conditioned upon Zaborski’s execution of a release of all claims and his compliance with Section 5, “Competitive Business Activities, Trade Secrets, Confidential Information and Corporation Property,” of the Employment Agreement.  The parties desire to terminate their employment relationship and avoid all litigation relating to the employment relationship and its termination.

 

Zaborski represents that he has carefully read this entire Agreement, understands its consequences, and voluntarily enters into it.

 

In consideration of the above and the mutual promises set forth below, the Company and Zaborski agree as follows:

 

1.   TERMINATION.  Zaborski’s employment with the Company will terminate pursuant to Section 3.2 of the Employment Agreement, effective March 31, 2008 (the “Effective Date”).

 

2.   SEVERANCE BENEFITS.  The Company will pay Zaborski an amount equal to his current monthly salary (less any applicable taxes and withholdings) for twelve (12) months, payable in substantially equal installments on the last business day of each applicable month (“Severance Payments”) beginning with the first month after the revocation period set forth in Section 8 below expires provided, however, that all payments will be made by no later than March 15, 2009.  If, during the twelve (12) month period following termination, Zaborski accepts employment or consultancy with another entity or becomes self-employed, then he must notify the Company before such employment or consultancy begins and the Severance Payments shall be reduced by the
amount of compensation to be paid to him in connection with such employment or consultancy.  If Zaborski does not so notify the Company, the Company’s obligation to make the Severance Payments shall cease.

 

In addition, the Company will permit Zaborski to retain for his own use the computer provided to him by the Company and will transfer to Zaborski, at no cost to him, the title to the Company automobile that he currently uses.  The fair market value of the computer and the automobile will be counted as taxable compensation to Zaborski.  After the Effective Date, Zaborski will be solely responsible for registration, licensing, and insurance for the automobile.

 

In addition, unless Zaborski obtains comparable group health insurance coverage from a subsequent employer, then, for the twelve (12) month period following the termination of his employment, he may elect to continue participation in the Company’s group health insurance plan in which he participated at termination of employment under the Consolidated Omnibus 

 

Budget Reconciliation Act (“COBRA”) and the Company shall reimburse him for that portion of the COBRA premiums in excess of the amount he paid for group health plan coverage immediately prior to termination of employment.  In the event that he prefers to obtain coverage under an individual health insurance policy that is less expensive than COBRA coverage, then the Company shall, for twelve (12) months, reimburse him for that portion of the premium payments that are in excess of the amount he paid for group health plan coverage immediately prior to termination of employment.  All such reimbursements shall be paid as soon as reasonably practicable following Zaborski’s submission of proof of timely premium payments to the Company; provided, however, that all such claims for reimbursement shall be submitted by Zaborski and paid by the Company no later than fifteen (15) months following
Zaborski’s termination of employment.  The value of any reimbursements made by the Company under this section will be considered taxable income to Zaborski.  

 

The severance benefits afforded under this Agreement are in lieu of any other compensation or benefits to which Zaborski otherwise might be entitled.

 

3.   ACCRUED VACATION.  The Company will pay Zaborski for any accrued but untaken vacation.

 

4.   RELEASE.  In consideration of the benefits conferred by this Agreement, ZABORSKI (ON BEHALF OF HIMSELF AND HIS ASSIGNS, HEIRS AND OTHER REPRESENTATIVES) RELEASES THE COMPANY, ITS PREDECESSORS, SUCCESSORS AND ASSIGNS AND ITS AND/OR THEIR PAST, PRESENT AND FUTURE OWNERS, PARENTS, SUBSIDIARIES, AFFILIATES, PREDECESSORS, SUCCESSORS, ASSIGNS, OFFICERS, DIRECTORS, EMPLOYEES, EMPLOYEE BENEFIT PLANS (TOGETHER WITH ALL PLAN ADMINISTRATORS, TRUSTEES, FIDUCIARIES AND INSURERS) AND AGENTS (“RELEASEES”) FROM ALL CLAIMS AND WAIVES ALL RIGHTS KNOWN OR UNKNOWN, HE MAY HAVE OR CLAIM TO HAVE RELATING TO HIS
EMPLOYMENT WITH THE COMPANY, ITS PREDECESSORS, SUBSIDIARIES OR AFFILIATES OR HIS SEPARATION THEREFROM arising before the execution of the Agreement, including but not limited to claims:  (i) for discrimination, harassment or retaliation arising under federal, state or local laws prohibiting age (including but not limited to claims under the Age Discrimination in Employment Act of 1967 (ADEA), as amended, and the Older Workers Benefit Protection Act of 1990 (OWBPA)), sex, national origin, race, religion, disability, veteran status or other protected class discrimination, harassment or retaliation for protected activity; (ii) for compensation and benefits (including but not limited to claims under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), and similar federal, state, and local laws); (iii) under federal, state or local law of any nature whatsoever (including but not limited
to constitutional, statutory, tort, express or implied contract or other common law); and (iv) for attorneys’ fees.  The release of claims set forth in this Section does not apply to claims for workers’ compensation benefits or unemployment benefits filed with the applicable state agencies.

 

5.   COVENANT NOT TO SUE.  Zaborski will not sue Releasees on any matters relating to his employment arising before the execution of this Agreement, including but not limited to claims under the ADEA, or join as a party with others who may sue Releasees on any such claims; provided, however, this Section will not bar a challenge under the OWBPA to the enforceability of the waiver and release of ADEA claims set forth in this Agreement or claims for workers’ compensation or unemployment benefits referenced in Section 4 above.  If Zaborski does not abide by this Section 5, then (i) he will return all monies received under this Agreement and indemnify Releasees for all expenses they incur in defending the action, and (ii) Releasees will
be relieved of their obligations hereunder.

 

2

 

 

6.   AGENCY CHARGES/INVESTIGATIONS.  Nothing in this Agreement shall prohibit Zaborski from filing a charge or participating in an investigation or proceeding conducted by the U.S. Equal Employment Opportunity Commission or other governmental agency with jurisdiction concerning the terms, conditions and privileges of his employment; provided, however, by signing this Agreement, Zaborski waives his right to, and shall not seek nor accept, any monetary or other relief of any nature whatsoever in connection with any such charges, investigations or proceedings.  And, Zaborski may not file or be a party to any lawsuit asserting claims or causes of action waived and released by him pursuant to this Agreement.  

 

7.   COMPANY INFORMATION AND PROPERTY AND ACKNOWLEDGMENT OF NON-COMPETITION OBLIGATIONS.  Zaborski shall not at any time after his employment terminates disclose, use or aid third parties in obtaining or using any confidential or proprietary Company information.  Confidential or proprietary information is information relating to the Company or any aspect of its business which is not generally available to the public, the Company’s competitors, or other third parties, or ascertainable through common sense or general business or technical knowledge.  Nothing in this Agreement shall relieve him from any obligations under any previously executed confidentiality, proprietary information or secrecy agreements or the Employment Agreement, and
Zaborski specifically acknowledges his non-competition and confidentiality obligations under the Employment Agreement.

 

All records, files or other materials maintained by or under the control, custody or possession of the Company or its agents in their capacity as such shall be and remain the Company’s property.  Zaborski shall:  (i) return all Company property (including, but not limited to, credit cards; keys; cell phones; computer software; records, files, documents, company manuals, and other documents in whatever form they exist, whether electronic, hard copy or otherwise and all copies, notes or summaries thereof) which he received in connection with his employment; (ii) bring all such records, files, and other materials up to date before returning them; and (iii) fully cooperate with the Company in winding up his work and transferring that work to those individuals designated by the Company.

 

8.   RIGHT TO REVIEW AND REVOKE.  The Company hand-delivered this Agreement to Zaborski on February 18, 2008 and desires that he have adequate time and opportunity to review and understand the consequences of entering into it.  Accordingly, the Company advises him to consult with his attorney prior to executing it and that he has at least twenty-one (21) days within which to consider it.  Zaborski may not execute this Agreement prior to the Effective Date.  In the event that he does not return an executed copy of the Agreement to the Company by the later of the Effective Date or the 22nd day following receipt of the Agreement, the Agreement and the obligations of the Company herein shall become null and void.  Zaborski may revoke the
Agreement during the seven (7) day period immediately following his execution of it.  The Agreement will not become effective or enforceable until the revocation period has expired.  To revoke the Agreement, a written notice of revocation must be delivered to Melissa Anderson, 1807 Douglas Drive, Sanford, North Carolina 27330.

 

9.   CONFIDENTIALITY AND NONDISPARAGEMENT.  Zaborski represents and warrants that since receiving this Agreement he has not disclosed, and going forward will not disclose, the terms and conditions of this Agreement to third parties, except as required by law.  Notwithstanding the above, he may reveal the terms and provisions of this Agreement to members of his immediate family or to an attorney whom he may consult for legal advice, provided that such persons agree to maintain the confidentiality of the Agreement.  Zaborski represents and warrants that since receiving this Agreement, he (i) has not made, and going 

 

3

 

forward will not make, disparaging, defaming or derogatory remarks about the Company or its products, services, business practices, directors, officers, managers or employees to anyone; nor (ii) taken, and going forward will not take, any action that may impair the relations between the Company and its vendors, customers, employees, or agents or that may be detrimental to or interfere with, the Company or its business.

 

10. STIPULATION.   Zaborski acknowledges, agrees and hereby stipulates to the following facts:  (1) during his employment with the Company, he was allowed to take all leave and afforded all rights to which he was entitled under the Family Medical Leave Act (“FMLA”); and (2) the Company has not interfered with, restrained, or denied his exercise of or attempt to exercise any FMLA rights, nor terminated or otherwise discriminated against Zaborksi for exercising or attempting to exercise any such rights.

 

11. OTHER.  Except as expressly provided in this Agreement, this Agreement supersedes all other understandings and agreements, oral or written, between the parties and constitutes the sole agreement between the parties with respect to its subject matter.  Each party acknowledges that no representations, inducements, promises or agreements, oral or written, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and no agreement, statement or promise not contained in the Agreement shall be valid or binding on the parties.  No change or modification of this Agreement shall be valid or binding on the parties unless such change or modification is in writing and is signed by the parties.  The
Company’s or Zaborski’s waiver of any breach of a provision of this Agreement shall not waive any subsequent breach by the other party.  If a court of competent jurisdiction holds that any provision or sub-part thereof contained in this Agreement is invalid, illegal or unenforceable, that invalidity, illegality or unenforceability shall not affect any other provision in this Agreement.

 

This Agreement is intended to avoid all litigation relating to Zaborski’s employment with the Company and his separation therefrom; therefore, it is not to be construed as the Company’s admission of any liability to him – liability which the Company denies.

 

This Agreement shall apply to, be binding upon and inure to the benefit of the parties’ successors, assigns, heirs and other representatives and be governed by North Carolina law and the applicable provisions of federal law, including but not limited to ADEA.

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IN WITNESS WHEREOF, the parties have entered into this Agreement on the day and year written below.

 

ZABORSKI REPRESENTS THAT HE HAS CAREFULLY READ THE ENTIRE AGREEMENT, UNDERSTANDS ITS CONSEQUENCES, AND VOLUNTARILY ENTERS INTO IT.

 

 

	
            /s/ David M. Zaborski
 
	
            David M. Zaborski
 
	
             
 	
             
 
	
            Date:
 	
            3-31-08
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
            THE PANTRY, INC.
 
	
             
 	
             
 
	
             
 	
             
 
	
            By:
 	
            /s/ Frank G. Paci
 
	
             
 	
             
 
	
            Date:
 	
            2-20-2008
 
	
            Name:
 	
            Frank G. Paci
 
	
            Title:
 	
            CFO & SVP, Finance
 
	
             
 	
             
 

 

 

 

 

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