Document:

Incentive Compensation Plan

 Exhibit 10.2 
 THE PANTRY, INC. 
 INCENTIVE COMPENSATION PLAN 

 TABLE OF CONTENTS 
  

			
	 	  	Page
	 ARTICLE I - PURPOSE
	  	1
		
	 ARTICLE II - DEFINITIONS
	  	1
		
	 ARTICLE III - ADMINISTRATION
	  	3
		
	 ARTICLE IV - PARTICIPATION
	  	4
		
	 ARTICLE V - AWARDS
	  	4
		
	 ARTICLE VI - PAYMENT OF AWARDS
	  	6
		
	 ARTICLE VII - MISCELLANEOUS
	  	7

 ARTICLE I 
 PURPOSE 
 The purpose of The Pantry, Inc. Incentive Compensation Plan (the “Plan”) is to
promote outstanding Company performance and align the interests of Participants with those of Company stockholders by linking the payment of annual cash bonuses to the achievement of specific annual performance goals derived from the Company’s
business plan. 
 ARTICLE II 
 DEFINITIONS 
 The following definitions are applicable to the Plan: 
 1. “Administrator”: The Committee. 
 2. “Award”: A cash bonus payable to a Participant hereunder. 
 3. “Award Target per Performance
Measure”: The portion of a Participant’s Total Award Target attributable to performance as measured against a particular Performance Measure. Each Participant’s Total Award Target is determined annually by the Administrator and
communicated to the Participant in writing at the outset of the Year. 
 4. “Code” means the Internal Revenue Code of 1986,
as amended from time to time. 
 5. “Company”: The Pantry, Inc., or any successor to it in the ownership of substantially
all of its assets. 
 6. “Committee”: The Compensation and Organization Committee of the Company’s board of directors.

 7. “EBITDA”: For a given Year, the sum of each of the following, each of which shall be determined in accordance with
GAAP: (a) net income from continuing operations (excluding extraordinary gains or losses or any cumulative effect from a change in accounting principle) for such Year, plus (b) an amount which, in the determination of net income for such
Year, has been deducted for (i) interest expense, (ii) income taxes, (iii) depreciation expense, and (iv) amortization expense. “Region EBITDA” means EBITDA determined with respect to one of the Company’s regions
after adjusting for allocations of corporate overhead in accordance with Company practices. “Division EBITDA” means EBITDA determined with respect to one of the Company’s divisions after adjusting for allocations of corporate overhead
in accordance 

 
with Company practices. The target Region EBITDA and Division EBITDA for a given Year are based on the Company’s approved Region EBITDA and Division
EBITDA budget estimates, respectively, for that Year as revised from time to time for current-year acquisitions based on management’s reasonable growth estimates. 
 8. “EPS”: Diluted earnings per share for a given Year on a consolidated basis for such Year for the Company and its subsidiaries determined in accordance with GAAP. The target EPS for a given Year is
based on the Company’s approved EPS budget estimates for that Year as revised from time to time for current-year acquisitions based on management’s reasonable growth estimates. 
 9. “GAAP”: Accounting principles generally accepted in the United States, consistently applied. 
 10. “Gasoline Gallons Growth”: For a given Year, Growth in gallons sold. “Region Gasoline Gallons Growth” means Gasoline
Gallons Growth within a specific region. “Division Gasoline Gallons Growth” means Gasoline Gallons Growth within a specific division. The target Gasoline Gallons Growth, Region Gasoline Gallons Growth and Division Gasoline Gallons
Growth for a given Year are based on the Company’s approved budget estimates for that Year. 
 11.
“Growth”: Year-over-year increase calculated by including only retail convenience stores continuously operated by the Company, Region, or Division, as applicable, throughout the entire prior Year and the entire current
Year. For the avoidance of doubt, this term includes only organic growth and excludes the effect of stores that were acquired or disposed of during the previous or the current Year. 
 12. “Maximum Performance Level”: As defined in Article V, Section 4. 
 13. “Merchandise Sales Growth”: For a given Year, Growth in merchandise sales. “Region Merchandise Sales Growth” means
Merchandise Sales Growth within a specific region. “Division Merchandise Sales Growth” means Merchandise Sales Growth within a specific division. The target Merchandise Sales Growth, Region Merchandise Sales Growth and Division
Merchandise Sales Growth for a given Year are based on the Company’s approved budget estimates for that Year. 
 14.
“Participant”: An employee of the Company or its subsidiaries who is selected pursuant to Article IV hereof to be eligible to receive an Award under the Plan. 
  

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 15. “Participant Level”: The employment level of each Participant as set forth in
Exhibit A hereto. 
 16. “Performance Measure”: A goal established for measuring the performance of the Company, or one of
its regions or divisions, used for the purpose of computing an Award for a Participant. The Administrator has the discretion to determine both the projected and the actual figures for each Performance Measure, and to make adjustments for
acquisitions, offerings or other events that occur during the Year, as it deems appropriate in its discretion. 
 17.
“Plan”: The Incentive Compensation Plan of the Company as contained herein, and as may be amended from time to time. 
 18.
“Target Performance Level”: As defined in Article V, Section 4. 
 19. “Threshold Performance Level”:
As defined in Article V, Section 4. 
 20. “Total Award Target”: The dollar amount of the Award a Participant may
receive for a Year if Target Performance Levels are attained for each Performance Measure. This amount is generally expressed as a percentage of a Participant’s base pay. Each Participant’s Total Award Target is determined annually by the
Administrator and communicated to the Participant in writing at the outset of the Year. The actual amount of a Participant’s Award may be larger or smaller than his or her Total Award Target depending on actual performance and as otherwise
determined by the Administrator in its discretion. 
 21. “Year”: The Company’s fiscal year. 
 ARTICLE III 
 ADMINISTRATION

 The Plan shall be administered by the Administrator. Except as otherwise provided herein, the Administrator shall have sole and
complete authority to: (1) select the Participants; (2) establish and adjust (either before or during the relevant Year) a Participant’s Participant Level; (3) establish and adjust (either before or during the relevant Year) a
Participant’s Performance Measures, their relative weight in determining a Participant’s Award, and the performance criteria necessary for attainment of various Performance Levels; (4) determine the total payout under the Plan;
(5) approve Awards; (6) establish from time to time regulations for the administration of the Plan; and (7) interpret the Plan, making all determinations deemed necessary or advisable for the administration of the Plan. 
  

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 A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present
at any meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Committee without a meeting, shall be the acts of such Committee. 
 ARTICLE IV 
 PARTICIPATION 
 Each Year, the Administrator shall select from among the existing employees of the Company and its subsidiaries those who shall be Participants in the
Plan and shall determine each such Participant’s Participant Level on the basis of his or her job responsibilities and potential to make significant contributions to Company’s success. No employee shall at any time have a right to be
selected as a Participant in the Plan for any Year or, having been selected as a Participant for one Year, have the right to be selected as a Participant in any other Year. 
 ARTICLE V 
 AWARDS 
 1. Calculating the Awards. To calculate the Award for each Level One, Level Two, Level Three and Level Four Participant, the Administrator will
determine the relevant Performance Measures for the Participant, the Award Target for each Performance Measure and the Performance Level achieved for each Performance Measure. Then, for each relevant Performance Measure, the Administrator will
multiply the Award Target for that Performance Measure by the appropriate percentage given the Performance Level achieved for that Performance Measure, and add the totals, as explained below. The Administrator has discretion to revise the result of
this calculation upwards or downwards as it deems appropriate. 
 2. Determining the Relevant Performance Measures. 
 A. The Performance Measures used in determining Awards of Level One and Level Two Participants are (i) EPS, (ii) Merchandise Sales Growth and
(iii) Gasoline Gallons Growth. 
 B. The Performance Measures used in determining the Awards of Level Three Participants are
(i) Region EBITDA, (ii) Region Merchandise Sales Growth and (iii) Region Gasoline Gallons Growth. 
  

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 C. The Performance Measures used in determining the Awards of Level Four Participants are
(i) Division EBITDA, (ii) Division Merchandise Sales Growth and (iii) Division Gasoline Gallons Growth. 
 3. Determining
the Award Target per Performance Measure. Each Year, the Administrator shall determine the Award Target for each Performance Measure used with respect to each Participant. Essentially, these Award Targets reflect the relative weight assigned to
each Performance Measure. These relative weights may vary from one Participant to another within a Participant Level and from one Participant Level to another, in each case as the Administrator determines in its discretion. Further, the
Administrator shall be free to determine not to use a particular Performance Measure with a particular Participant Level or a particular Participant, in which case the relative weight assigned to that Performance Measure, and thus the Award Target
for that Performance Measure, will be zero (0). 
 4. Determining Performance Levels per Performance Measure. There are three levels
of performance related to each Performance Measure: threshold, target, and maximum. The threshold level of performance (“Threshold Performance Level”) is attained at 90% of a Performance Measure; the target level of performance
(“Target Performance Level”) is attained at 100% of a Performance Measure; and the maximum level of performance (“Maximum Performance Level”) is attained at 120% of a Performance Measure. 
 5. Determining the Appropriate Payout Percentage Given Performance Level. The appropriate payout percentage varies with the performance level
attained for each Performance Measure. 
 A. For Participants in Level One, where the Threshold Performance Level is attained for a given
Performance Measure, the appropriate payout percentage is 25%; where the Target Performance Level is attained, the appropriate payout percentage is 100%; and where the Maximum Performance Level is attained or exceeded, the appropriate payout
percentage is 200%. 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%. 
 B. For Participants
in Levels Two through Four, where the Threshold Performance Level for a given Performance Measure is attained, the appropriate payout 

  

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percentage is 50%; where the Target Performance Level is attained, the appropriate payout percentage is 100%; and where the Maximum Performance Level is
attained or exceeded, the appropriate payout percentage is 150%. 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%. 
 6. Change of Job Status. At the discretion of the Administrator, employees may become Participants during a Year based on promotions and may receive an Award pro rated for the length of time served in the
qualifying job and the Performance Measures achieved while in the qualifying job. Similarly, at the discretion of the Administrator, employees who cease to be Participants during a year because they move to a non-qualifying job may receive an award
pro rated for the length of time served in the qualifying job and the performance measures achieved while in the qualifying job. 
 7. New
Participants. Any Award that is earned during the Year of selection shall be pro rated based on the length of time served in the qualifying job; provided, however, that employees hired after the end of the Company’s third fiscal quarter
will not be eligible to participate in that Year. 
 8. Reduction of Award Amount. In the event of documented performance deficiencies
of a Participant during a Year, the Administrator, in its discretion, may reduce the Award payable to such Participant for such Year. 
 ARTICLE VI 
 PAYMENT OF AWARDS 
 1. Payment of Awards. Awards under the Plan shall generally be paid within 30 days of the
receipt of audited financial statements but in no case later than March 15th following the close of the Year
for which the Awards are being paid. Awards shall not be deemed earned under the Plan unless and until actually paid. 
 2. Termination of
Employment. Except as otherwise determined by the Administrator in its discretion, if the employment of a Participant terminates prior to the date on which Awards are paid, then the Participant shall not receive a Plan Award, except that where a

  

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Participant’s termination of employment is as a result of disability or death, the Participant, or his or her estate or personal representative in the
event of death, shall have the right to receive the Participant’s Award, pro rated for the length of time during the Year the Participant worked. Any payments made following a Participant’s termination of employment shall be paid on the
date on which they would otherwise have been paid, or on such later date as may be necessary to satisfy the requirements of Section 409A of the Code. 
 3. Payment of Awards to Covered Employees. To the extent Awards payable under the Plan are payable to a “Covered Employee” as that term is defined in Section 162(m) of the Code, such Awards shall
be paid through the Company’s 2007 Omnibus Plan, which expressly permits payments of performance-based compensation to Covered Employees provided that such payments (i) do not exceed five million dollars ($5,000,000) per Participant per
Year and (ii) are based on certain specified performance measures, which include the Performance Measures set forth herein. 
 ARTICLE
VII 
 MISCELLANEOUS 
 1. Assignments and Transfers. The rights and interests of a Participant under the Plan may not be assigned, encumbered or transferred except by will or the laws of descent and distribution. 
 2. Employee Rights Under the Plan. No Company employee or other person shall have any claim or right to be granted an Award under the Plan or any
other incentive bonus or similar plan of the Company. Neither the Plan, participation in the Plan nor any action taken thereunder shall be construed as giving any employee any right to be retained in the employ of the Company or any successor.

 3. Withholding. The Company shall have the right to deduct from all amounts paid in cash any taxes required by law to be withheld
with respect to such cash payments. 
 4. Amendment or Termination. The Administrator may in its sole discretion amend, suspend or
terminate the Plan or any portion thereof at any time. 
 5. Governing Law. This Plan shall be construed and governed in accordance
with the laws of the State of North Carolina. 
  

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 6. Effective Date. This Plan shall be effective as of January 31, 2007. 
 7. Entire Agreement. This document (including any exhibits attached hereto and any future amendments to said exhibits that may be made by the
Administrator) sets forth the entire Plan. 
  

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 EXHIBIT A 
 PARTICIPANT LEVELS 
 Level One Participants 
 President, Chief Executive Officer and Director 
 Senior Vice President, Administration 
 Vice President, Finance and Chief Financial Officer 
 Senior Vice President, Operations 
 Senior
Vice President, Fuels 
 Senior Vice President, Human Resources 
 Level Two Participants 
 Group Vice Presidents 
 Corporate Vice Presidents 
 Corporate
Directors 
 Managers/Professional Staff 
 Supervisor/Technical/Administrative 
 Level Three Participants 
 Region Vice Presidents 
 Level Four Participants 
 Division Directors 
  

 9Form of Award Agreement

 Exhibit 10.4 
 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 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 (the “Shares”) of the common stock of the Company 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. The Option shall vest and become exercisable in three
(3) equal installments of one-third (1/3) of the Shares covered by the Option on each of the first, second and third anniversaries 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 Section 17.1 of the Plan; 
 (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 or disability (within the meaning of Section 22(e)(3) of the Code) 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 180 days after the date of termination of Optionee’s director relationship with the Company. 
 4. Termination of Director Relationship. The termination of Optionee’s director relationship with the Company other than as a result of death or disability 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 (within the meaning of Section 22(e)(3) of the Code) 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. 
 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 (within the meaning of Section 22(e)(3) of the Code), a designee of Optionee
(or the 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 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;

  

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 (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); and 
 (c) cash or its equivalent in the amount reasonably requested by the Company to satisfy the Company’s withholding obligations, if any, under federal, state or other applicable tax laws with respect to the taxable
income recognized by Optionee in connection with the exercise, in whole or in part, of the Option (unless the Company and Optionee shall have made other arrangements to have such amount deducted or withheld from other income paid to Optionee by the
Company and such arrangements satisfy the requirements of applicable tax laws); 
 7. No Rights as a Shareholder. Optionee shall have
none of the rights of a shareholder 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. This Agreement Subject to 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, requests and other 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 mails, 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): 
  

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		 	 If to the Company:
  
 The Pantry, Inc.
 1801 Douglas Drive
 Sanford, North Carolina 27330
 Facsimile: (919) 774-3329
 Attention: President
  
 If to Optionee:
	 	
			
		 	 	 	
			
		 	 	 	
			
		 	 	 	

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

			
	THE PANTRY, INC.
		
	By:	 	  
		 	 Peter J. Sodini
 President and Chief Executive
Officer

		 	
		 	 OPTIONEE:

		 	  
		 	  
		 	Print Name

  

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