Exhibit 10.3

 

THE PANTRY, INC.

 

AWARD AGREEMENT

(Awarding Nonqualified Stock Option to Non-Employee Director)

 

THIS AWARD AGREEMENT (this “Agreement”) is entered into as of [Date] by and
between The Pantry, Inc., a Delaware corporation (the “Company”), and [Director]
(“Optionee”) pursuant to The Pantry, Inc. 2007 Omnibus Plan (the “Plan”). All
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Plan.

 

R E C I T A L S:

 

A.        Optionee is a member of the Board of Directors of the Company and the
Company considers it desirable to give Optionee an added incentive to advance
the interests of the Company and its shareholders.

 

B.        The Company now desires to grant Optionee the right to purchase shares
of common stock of the Company, par value $.01 per share (the “Shares”),
pursuant to the terms and conditions of this Agreement and the Plan.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the covenants hereinafter set forth, the
parties agree as follows:

 

1.         Option; Number of Shares. The Company hereby grants to Optionee the
right (the “Option”) to purchase up to a maximum of [Number] Shares at a price
of $[Option Price] per Share (the “Option Price”) to be paid in accordance with
Section 6 hereof. The Option and the right to purchase all or any portion of the
Shares are subject to the terms and conditions stated in this Agreement and in
the Plan. The Option is not intended to qualify for treatment as an Incentive
Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

2.         Vesting. Subject to Participant’s continuing to provide services to
the Company, the Option shall vest and become exercisable in full as to all the
Shares covered by the Option on the first anniversary of the Vesting
Commencement Date. The “Vesting Commencement Date” is [Vesting Commencement
Date].

 

3.         Term of Agreement. The Option, and Optionee’s right to exercise the
Option, shall terminate when the first of the following occurs:

                  

                            (a)       termination of this Agreement and the
Option pursuant to Article 17 of the Plan (Amendment, Modification, Suspension,
and Termination);

 

 

(b)

the expiration of seven (7) years from the date hereof; or

 

--------------------------------------------------------------------------------

 

                            (c)       90 days after the date of termination of
Optionee’s director relationship with the Company, unless such termination
results from Optionee’s death, Disability (within the meaning of Section
22(e)(3) of the Code), Involuntary Termination (for purposes of this Agreement,
defined as Optionee’s not being voted to a new term by the shareholders or voted
off the Board by fellow directors other than for Cause, as that term is
generally recognized under applicable law and the prior practices and policies
of the Company) or Optionee dies within 90 days after the date of termination of
Optionee’s director relationship with the Company, in which case this Agreement
and the Option shall terminate as follows:

       (i)        Death. If Optionee’s termination is as a result of Optionee’s
death, or Optionee dies within 90 days after the date of termination, the Option
shall terminate on the first anniversary of the date of termination.

 

       (ii)       Disability or Involuntary Termination. If Optionee’s
termination is as a result of Optionee’s Disability or Involuntary Termination,
the Option shall terminate on the third anniversary of the date of
termination.         

 

4.         Termination of Director Relationship. The termination of Optionee’s
director relationship with the Company other than as a result of death,
Disability or Involuntary Termination shall not accelerate the vesting of the
Option or otherwise affect the number of Shares with respect to which the Option
may be exercised, and the Option may only be exercised with respect to that
number of Shares that could have been purchased under the Option had the Option
been exercised by Optionee on the date of such termination. The termination of
Optionee’s director relationship with the Company as a result of death or
Disability shall automatically accelerate the vesting of the Option in full, and
the Option shall be exercisable as set forth in Section 5 hereof as to the full
number of Shares subject to the Option until the first to occur of the events
set forth in Section 3 above. The termination of Optionee’s director
relationship with the Company as a result of Involuntary Termination shall
automatically accelerate the vesting of the Option as to one twelfth (1/12th) of
the Shares subject to the Option for each full month of service rendered by
Optionee from the Vesting Commencement Date through the date of such termination
and the Option shall be exercisable as set forth in Section 5 hereof as to this
pro rated number of Shares until the first to occur of the events set forth in
Section 3 above.

 

5.         No Assignment; Death of Optionee. The rights of Optionee under this
Agreement may not be assigned or transferred except by will or the laws of
descent or distribution and may be exercised during the lifetime of Optionee
only by such Optionee; provided, however, that in the event of Optionee’s
Disability, a designee of Optionee (or Optionee’s legal representative if
Optionee has not designated anyone) may exercise the Option on behalf of
Optionee (provided the Option would have been exercisable by Optionee) until the
right to exercise the Option expires pursuant to Section 3 hereof. The Option
shall not be subject, in whole or in part, to attachment, execution, or levy of
any kind, and any attempt to sell, pledge, assign, hypothecate, transfer or
otherwise dispose of the Option in contravention of this Agreement or the Plan
shall be void. If Optionee should die while Optionee is engaged in a director
relationship with the Company or within 90 days of the termination of such
relationship, (provided the Option would

 

2

 

--------------------------------------------------------------------------------

have been exercisable by Optionee) Optionee’s designee, legal representative, or
legatee, the successor trustee of Optionee’s inter vivos trust or the person who
acquired the right to exercise the Option by reason of the death of Optionee
(individually, a “Successor”) shall succeed to Optionee’s rights under this
Agreement. After the death of Optionee, only a Successor may exercise the
Option.

 

6.         Exercise of Option. On or after the vesting of the Option in
accordance with Sections 2 and 4 hereof and until termination of the Option in
accordance with Section 3 hereof, the Option may be exercised by Optionee (or
such other person specified in Section 5 hereof) to the extent exercisable as
determined under Sections 2 and 4 hereof, upon delivery of the following to the
Company at its principal executive offices:

 

                            (a)       a written notice of exercise which
identifies this Agreement and states the number of Shares with respect to which
the Option is to be exercised; and

 

                            (b)       cash or its equivalent in the amount of
the aggregate Option Price (or payment of the aggregate Option Price in such
other form of lawful consideration as the Committee may approve from time to
time under the provisions of Sections 6.5 and 6.6 of the Plan).

 

7.         No Rights as a Stockholder. Optionee shall have none of the rights of
a stockholder with respect to Shares covered by the Option until the date (the
“Exercise Date”) an entry evidencing such ownership is made in the stock
transfer books of the Company. Except as may be provided under Sections 4.4, 14
and 17.2 of the Plan, the Company will make no adjustment for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the Exercise
Date.

 

8.         Limitation of Company’s Liability for Nonissuance. The inability of
the Company to obtain, from any regulatory body having jurisdiction, authority
reasonably deemed by the Company’s counsel to be necessary for the lawful
issuance and sale of any Shares hereunder and under the Plan, including without
limitation registration of the Shares on Form S-8 under the Securities Act of
1933, as amended, shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority shall
not have been obtained.

 

9.         The Plan. This Agreement is made under the provisions of the Plan and
shall be interpreted in a manner consistent with it. To the extent that any
provision in this Agreement is inconsistent with the Plan, the provisions of the
Plan shall control. A copy of the Plan is available to Optionee at the Company’s
principal executive offices upon request and without charge. The good faith
interpretation of the Committee of any provision of the Plan, the Option or this
Agreement, and any determination with respect thereto or hereto by the
Committee, shall be final, conclusive and binding on all parties.

 

10.       Notices. All notices by Optionee or Optionee’s assignees shall be
addressed to The Pantry, Inc., 1801 Douglas Drive, Sanford, North Carolina
27330, Facsimile: (919) 774-3329, Attention: Human Resources, or such other
address as the Company may from time to

 

3

 

--------------------------------------------------------------------------------

time specify. All notices to Optionee shall be addressed to Optionee at
Optionee’s address in the Company’s records.

 

11.       Governing Law. This Agreement shall be construed under and governed by
the laws of the State of Delaware without regard to the conflict of law
provisions thereof.

 

12.       Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall be deemed one
Agreement.

 

 

4

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement as of
the date first above written.

 

THE COMPANY:

 

THE PANTRY, INC.

 

By:_____________________________

 

Peter J. Sodini

 

Chairman and Chief Executive Officer

 

 

OPTIONEE:

 

__________________________________

[Director]

 

5