8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 12, 2007

THE PANTRY, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 000-25813

Delaware	56-1574463
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

1801 Douglas Drive

Sanford, North Carolina

27330-1410

(Address of principal executive offices)

Registrant’s telephone number, including area code: (919) 774-6700

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 12, 2007, The Pantry, Inc. (the “Company”) entered into an employment agreement with Frank G. Paci (the “Agreement”) pursuant to which Mr. Paci will serve as the Company’s Senior Vice President – Finance and Chief Financial Officer.

Mr. Paci, who is 49 years of age, has been employed with Blockbuster Inc. from 1999 to 2007, where he has most recently served as Executive Vice President, Strategic Planning & Business Development from 2006 to 2007 reporting directly to the CEO and advising on corporate strategic initiatives. Mr. Paci previously served in various roles with the Blockbuster finance organization ultimately leading to his role as Executive Vice President, Finance & Accounting, Strategic Planning & Development where he managed a staff of over 300 professionals with responsibilities for strategic planning, financial planning & analysis, external reporting, Sarbanes-Oxley implementation, and real estate development. Prior to joining Blockbuster in 1999 as a senior vice president, Mr. Paci held various other finance and operational roles with a number of leading companies, including Yum! Brands, Inc., Burger King Corporation, General Nutrition Centers, Inc., and The Pillsbury Company.

The term of the Agreement is two years commencing on July 2, 2007 and terminating on July 2, 2009, subject to automatic renewal for successive one-year terms unless either party gives the other notice of non-renewal or the agreement is otherwise terminated. Under the terms of the Agreement, Mr. Paci will receive a sign-on bonus of $100,000 (a prorated portion of which would be required to be repaid if Mr. Paci voluntarily terminates his employment during the first year of the initial two-year term) and his initial annual salary will be $420,000, subject to annual increases in the Company’s discretion in accordance with its policies, procedures and practices as they may exist from time to time. In addition, for the Company’s 2008 fiscal year, Mr. Paci will be eligible for a guaranteed bonus of the greater of (i) $150,000 or (ii) the amount he would receive under the Company’s 2007 Incentive Compensation Plan, which covers the 2008 fiscal year and was filed on May 8, 2007 with the Securities and Exchange Commission (the “SEC”) as Exhibit 10.2 to its quarterly report on Form 10-Q. For the 2009 fiscal year, Mr. Paci will be eligible for a guaranteed bonus of the greater of (i) $100,000 or (ii) the amount he would receive under the Company’s incentive plan for fiscal 2009, which has yet to be adopted by the Company. Mr. Paci will also be eligible to participate in all medical, dental, disability, insurance, 401(k), pension, vacation, relocation, and other employee benefit and incentive programs made available to Company employees at Mr. Paci’s level, with a minimum guarantee of four weeks of annual vacation that may not be carried over from year to year.

If Mr. Paci’s employment is terminated by the Company for Cause (as defined below) or if Mr. Paci terminates his employment without Cause or by notice of non-renewal, the Company’s obligation to compensate Mr. Paci will cease on the effective termination date except for amounts due at that time. If Mr. Paci is terminated by the Company by notice of non-renewal or without Cause, then in addition to amounts due Mr. Paci on the effective date of termination, Mr. Paci will be entitled to receive: (i) if such termination is after the first two years of employment, an amount equal to Mr. Paci’s then current monthly salary for twelve months, and (ii) if such termination is within the first two years of employment, an amount equal to the greater of Mr. Paci’s then current monthly salary for the remaining months in the initial term of the Agreement or Mr. Paci’s then current monthly salary for twelve months plus any guaranteed minimum bonus for the fiscal year in which the termination occurs, in each case, subject to reduction of the salary continuation in the event that Mr. Paci accepts alternative employment or consultancy within the twelve month period following termination.

For purposes of the Agreement, “Cause” is defined to mean:

• willful and continued failure by Mr. Paci to substantially perform his duties;

• insubordination in responding to any specific, reasonable instructions from the Company’s Chief Executive Officer or Board of Directors;

• conduct by Mr. Paci which is demonstrably and materially injurious to the Company, monetarily or otherwise; or

• conviction of Mr. Paci or entry of plea of guilty or nolo contendere by Mr. Paci to any crime involving moral turpitude or any felony.

If Mr. Paci’s employment is terminated within 18 months following a Change in Control (as defined below) either by the Company without Cause, or for the willful and continued failure by Mr. Paci to substantially perform his duties, or by Mr. Paci for Good Reason (as defined below), he would receive salary continuation and health insurance for a period of 24 months from the termination date or until such time as he engages in other employment, after which he will be entitled to receive the difference, if any, between his previous salary with the Company and his new salary, and if such termination is within the first two years of employment, he would also receive his guaranteed minimum bonus for the fiscal year in which the termination occurs.

A “Change of Control” will occur if:

• any “person” (which could include two or more persons acting as a partnership, limited partnership, syndicate or other group), other than (i) the Company, (ii) a trustee or other fiduciary holding securities under one of the Company’s employee benefit plans (iii) a company owned by the Company’s stockholders, or (iv) the existing holders of the Company’s common stock, is or becomes the “beneficial owner” (as defined under the federal securities laws) of securities of the Company representing more than 50% of the Company’s outstanding voting power;

• the Company consummates certain mergers or consolidations; or

• the Company is liquidated or it sells or disposes of all or substantially all of its assets.

“Good Reason” includes:

• an adverse alteration in the nature of Mr. Paci’s position or responsibility;

• a reduction in Mr. Paci’s annual base salary;

• requiring Mr. Paci to be based more than 50 miles from the Company’s current office location;

• the failure to pay Mr. Paci any portion of his current compensation or compensation under any deferred compensation program within seven days of the due date;

• the failure to provide Mr. Paci with benefits substantially similar to those enjoyed by him under any Company plans that he was participating in at the time of a Change in Control; or

• the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement.

The Agreement contains other terms and provisions that are customary for employment agreements of this nature, including a covenant prohibiting Mr. Paci from, during his employment and for twelve (12) months following the termination of his employment, participating in the convenience store business in North Carolina or Florida or soliciting the Company’s employees for employment.

The description of the Agreement contained herein is qualified in its entirety by reference to the Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.

As previously disclosed in a Current Report on Form 8-K filed by the Company with the SEC on April 13, 2007, effective with the commencement of Mr. Paci’s employment on July 2, 2007, Mr. Daniel J. Kelly shall no longer serve as the Company’s Vice President, Finance, Chief Financial Officer, and Secretary and shall, pursuant to the Amended and Restated Employment Agreement between Mr. Kelly and the Company, become a “Consultant” to the Company.

A copy of the press release announcing Mr. Paci’s employment is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description of Exhibit
10.1	Employment Agreement dated June 12, 2007 by and between Frank G. Paci and the Company
99.1	Press Release dated June 15, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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

Date: June 15, 2007

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Employment Agreement dated June 12, 2007 by and between Frank G. Paci and the Company
99.1	Press Release dated June 15, 2007

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by THE PANTRY, INC., a Delaware corporation (the “Corporation”) and FRANK G. PACI (the “Employee”).

The Corporation desires to employ Employee and Employee desires to accept such employment on the terms set forth below.

In consideration of the mutual promises set forth below and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the Corporation and Employee agree as follows:

1. EMPLOYMENT. The Corporation employs Employee and Employee accepts employment on the terms and conditions set forth in this Agreement. Employee shall serve as Senior Vice President – Finance and Chief Financial Officer and have such responsibilities and authority as the Corporation may assign from time to time. Employee, at the Corporation’s discretion, may be reassigned or transferred to different units or locations.

1.1 Employee shall perform all duties and exercise all authority in accordance with, and otherwise comply with, all Corporation policies, procedures, practices and directions.

1.2 Employee shall devote all working time and best efforts to successfully perform his duties and advance the Corporation’s interests. During his employment, Employee shall not engage in any other business activities of any nature whatsoever (including board memberships) for which he receives compensation without the Corporation’s prior consent; provided, however, this provision does not prohibit him from personally owning and trading in stocks, bonds, securities, real estate, commodities or other investment properties for his own benefit which do not create actual or potential conflicts of interest with the Corporation.

2. COMPENSATION.

2.1 Base Salary. Employee’s annual salary for all services rendered shall be Four Hundred and Twenty Thousand and 00/100 Dollars ($420,000.00) (less applicable withholdings) payable in accordance with the Corporation’s policies, procedures and practices as they may exist from time to time. Employee’s salary periodically may be subject to annual increases in the Corporation’s discretion in accordance with its policies, procedures and practices as they may exist from time to time.

2.2 Bonuses.

2.2.1 Guaranteed Bonus. For the Corporation’s fiscal year 2008, Employee shall be entitled to receive a guaranteed bonus of the greater of One Hundred and Fifty Thousand and 00/100 Dollars ($150,000.00) (less applicable withholdings) or the amount Employee would receive under the Corporation’s incentive plan for the Corporation’s fiscal year ending September 25, 2008. For fiscal year 2009, Employee shall receive a bonus equal to the greater of One Hundred Thousand and 00/100 Dollars ($100, 000.00) (less applicable

withholdings) or the amount Employee would receive under the Corporation’s incentive plan for the Corporation’s fiscal year ending September 24, 2009. Such bonuses shall be paid in accordance with the terms of the Corporation’s regular incentive programs and Employee must be employed by the Corporation at the time payment of such bonuses would be made. For fiscal years 2010 and following, Employee will be eligible to participate in the Corporation’s regular incentive plans and programs.

2.2.2 “Sign-On” Bonus. Upon the execution of this Agreement, Employee shall be entitled to receive a sign-on bonus of One Hundred Thousand and 00/100 Dollars ($100,000.00) (less applicable withholdings). Such bonus shall be paid within thirty (30) days of the commencement of the term of employment under this Agreement. If Employee should voluntarily terminate his employment hereunder during the first twelve (12) months of the term of this Agreement, then Employee hereby agrees to repay a prorated portion of the sign-on bonus, prorated for the number of full months Employee works during that twelve (12) month period.

2.3 Relocation Expenses. The Corporation will assist Employee in relocating to North Carolina by providing a mutually agreeable temporary housing allowance for up to six (6) months and by purchasing Employee’s current principal residence in accordance with the terms of the Corporation’s regular relocation practices and policies. In addition, the Corporation will reimburse Employee for incidental expenses related to his relocation which would not otherwise be reimbursable under the Company’s regular relocation practices and policies.

2.4 Bonus Programs. Employee may participate in any incentive program which may be made available from time to time to the Corporation’s employees at Employee’s level; provided, however, that Employee’s participation is subject to the applicable terms, conditions and eligibility requirements of the program, as they may exist from time to time, and provided that for Employee’s first and second years of employment hereunder, his bonus entitlement shall be as described in Section 2.2.1 above.

2.5 Benefits. Employee may participate in all medical, dental, disability, insurance, 401(k), pension, vacation and other employee benefit plans and programs which may be made available from time to time to Corporation employees at Employee’s level; provided, however, that Employee’s participation is subject to the applicable terms, conditions and eligibility requirements of these plans and programs, some of which are within the plan administrator’s discretion, as they may exist from time to time. Notwithstanding the foregoing, Employee shall be entitled to a minimum of four (4) weeks of annual vacation. Subject to applicable state law, accrued, unused vacation may not be carried over from year to year.

2.6 Benefit Plans Subject to Amendment. Nothing in this Agreement shall require the Corporation to create, continue or refrain from amending, modifying, revising or revoking any of the plans, programs or benefits set forth in Sections 2.3, 2.4 and 2.5. Employee acknowledges that the Corporation, in its sole discretion, may amend, modify, revise or revoke any such plans, programs or benefits. Any amendments, modifications, revisions and revocations of these plans, programs and benefits shall apply to Employee. Nothing in this Agreement shall afford Employee any greater rights or benefits with regard to these plans, programs and benefits than are afforded to him under their applicable terms, conditions and eligibility requirements, some of which are within the plan administrator’s discretion, as they may exist from time to time.

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2.7 Offset for Disability Payments. If at any time during which Employee is receiving salary or post-termination payments from the Corporation, he receives payments on account of mental or physical disability from any Corporation-provided plan, then the Corporation, in its discretion, may reduce his salary or post-termination payments by the amount of such disability payments.

3. TERM OF EMPLOYMENT AND TERMINATION. The term of employment under this Agreement shall be for a two (2) year period commencing on July 2, 2007 and terminating on July 2, 2009 subject to the following provisions:

3.1 Automatic Renewal. Upon the expiration of the original term or any renewal term of employment, Employee’s employment shall be automatically renewed for a one (1) year period unless, at least sixty (60) days prior to the renewal date, either party gives the other party written notice of its intent not to continue the employment relationship. During any renewal term of employment, the terms, conditions and provisions set forth in this Agreement shall remain in effect unless modified in accordance with Section 8.

3.2 Without Cause. During the original or any extension term, the employment relationship hereunder shall be terminated without cause thirty (30) days after either the Corporation or Employee gives notice of such termination to the other party.

3.3 With Cause. The Corporation may terminate Employee’s employment immediately without notice at any time for the following reasons which shall constitute “Cause”: (i) the willful and continued failure by Employee to substantially perform his duties with the Corporation; (ii) Employee’s insubordination in responding to any specific, reasonable instructions from either the Corporation’s Chief Executive Officer or Board of Directors; (iii) conduct by the Employee which is demonstrably and materially injurious to the Corporation, monetarily or otherwise; or (iv) the conviction of Employee of, or the entry of a plea of guilty or nolo contendere by Employee to, any crime involving moral turpitude or any felony. Prior to a termination pursuant to Section 3.3(i), Employee shall be given written notice of the manner in which he has failed to perform and a thirty (30) day opportunity to cure such failure.

3.4 Death or Disability. The Corporation may terminate Employee’s employment without notice in the event of Employee’s death or “Disability” which shall mean Employee’s physical or mental inability to perform the essential functions of his duties with or without reasonable accommodation for a period of 180 consecutive days or 180 days in total within a 365-day period as determined by the Corporation in its reasonable discretion and in accordance with applicable law.

3.5 Survival. Section 4 (Compensation Upon Termination), Section 5 (Competitive Business Activities, Trade Secrets, Confidential Information and Corporation Property), and Section 6 (Change in Control) shall survive the expiration or termination of this Agreement, regardless of the reasons for such expiration or termination, until the obligations set forth therein have been satisfied.

4. COMPENSATION UPON TERMINATION.

4.1 By Corporation For Cause or Employee Without Cause. If Employee’s employment is terminated by the Corporation for Cause or by Employee without cause or by

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notice of non-renewal, the Corporation’s obligation to compensate Employee ceases on the effective termination date except as to amounts due at that time.

4.2 By Corporation by Non-Renewal or Without Cause.

4.2.1 If the Corporation terminates Employee’s employment by notice of non-renewal or without Cause, then Employee shall be entitled to receive: (i) amounts due on the effective termination date; and (ii) an amount equal to Employee’s then current monthly salary for twelve (12) months, less applicable withholdings and payable in accordance with the Corporation’s regular payroll periods or, at the Corporation’s option, a lump sum.

4.2.2 However, if the Corporation terminates Employee’s employment without Cause during the first two (2) years of employment under this Agreement, then Employee shall be entitled to receive: (i) amounts due on the effective termination date; (ii) an amount equal to the greater of Employee’s then current monthly salary for the then remaining months in the initial term of this Agreement or for twelve (12) months, less applicable withholdings and payable in accordance with the Corporation’s regular payroll periods or, at the Corporation’s option, a lump sum; and (iii) the guaranteed minimum bonus, as set forth in Section 2.2.1 above, for the fiscal year in which said termination occurs.

4.2.3 During the twelve (12) month period following termination, if Employee accepts employment or a consultancy with another entity or becomes self-employed, then he must notify the Corporation before such employment or consultancy begins and the salary continuation payments shall be reduced by the amount of compensation to be paid to him in connection with such employment, consultancy or self-employment. If Employee does not notify the Corporation in accordance with this provision, then its obligation to make payments or further payments pursuant to this Section shall cease.

4.3 Death or Disability. If Employee’s employment is terminated because of Employee’s death, then the Corporation shall pay to the estate of Employee the then-current monthly salary (less applicable withholdings) which would otherwise be payable to Employee for six (6) months from the date of Employee’s death. If Employee’s employment is terminated because of Disability, then the Corporation shall continue to pay Employee his then-current monthly salary (less applicable withholdings) until the earlier of: (i) six (6) months from the date of termination; or, (ii) the date on which Employee begins receiving long term disability insurance benefits in accordance with the Corporation’s long term disability plan.

4.4 Severance Pursuant to Agreement. The Corporation’s obligation to provide the payments under Section 4.2 and 4.3 (except in the event of termination because of Employee’s death) is conditioned upon Employee’s execution of an enforceable release of all claims and his compliance with Section 5 hereof (specifically including the return of all Corporation property). The required release shall contain a non-disparagement clause. If Employee chooses not to execute such a release or fails to comply with Section 5 of this Agreement, then the Corporation’s obligation to compensate him ceases on the effective termination date except as to amounts due at that time.

Employee is not entitled to receive any compensation or benefits upon his termination except as: (i) set forth in this Agreement; (ii) otherwise required by law; or (iii) otherwise required by any employee benefit plan in which he participates; provided, however,

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that the terms and conditions afforded Employee under this Agreement are in lieu of any severance benefits to which he otherwise might be entitled pursuant to a severance plan, policy or practice. Nothing in this Agreement, however, is intended to waive or supplant any death, disability, retirement, 401(k) or pension benefits to which Employee may be entitled under employee benefit plans in which Employee participates.

5. COMPETITIVE BUSINESS ACTIVITIES, TRADE SECRETS, CONFIDENTIAL INFORMATION AND CORPORATION PROPERTY. Employee acknowledges that by virtue of Employee’s employment and position with the Corporation, Employee (i) has or will have access to trade secrets and Confidential Information (as defined in Section 5.2.2) of the Corporation including valuable information about its business operations and entities with whom it does business in various locations, and (ii) has developed or will develop relationships with parties with whom it does business in various locations. Employee also acknowledges that the trade secrets, Confidential Information and Competitive Business Activities provisions set forth in this Agreement are reasonably necessary to protect the Corporation’s legitimate business interests, are reasonable as to the time, territory and scope of activities which are restricted, do not interfere with public policy or public interest and are described with sufficient accuracy and definiteness to enable him to understand the scope of the restrictions imposed on him.

5.1 Competitive Business Activities. Without the Company’s prior written approval, during Employee’s employment and extending through any period in which Employee is receiving severance from the Company, and in any event for twelve (12) months following a termination by the Corporation for Cause or by Employee without cause or by notice of non-renewal:

5.1.1 Employee shall not, either individually or on behalf of another, directly or indirectly, as employer, employee, owner, partner, stockholder, independent contractor, agent, or otherwise enter into or in any manner participate in the convenience store business in North Carolina or Florida. Notwithstanding the foregoing, Employee’s ownership, directly or indirectly, of not more than one percent of the issued and outstanding stock of a corporation the shares of which are regularly traded on a national securities exchange or in the over-the-counter market shall not violate Section 5.1.1.

5.1.2 Employee will not directly or indirectly, request or induce any other employee of the Corporation 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.

5.2 Trade Secrets; Confidential Information.

5.2.1 Employee hereby covenants and agrees not to use or disclose any Confidential Information (as hereinafter defined) or trade secrets except 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.

5.2.2 Confidential Information. For purposes of this Agreement, “Confidential Information” means any data or information with respect to the business conducted by the Corporation, other than trade secrets, that is material to the Corporation and

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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, financial statements, reports and projections of the Corporation, and the Corporation’s prospective strategic or expansion plans.

5.2.3 Corporation Property. Employee acknowledges that all trade 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 and 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 such material (including any copies) and all other Corporation property shall, upon request of the Corporation, be promptly delivered by Employee to the Corporation.

5.3 Other Agreements. Nothing in this Agreement shall terminate, revoke or diminish Employee’s obligations or the Corporation’s rights and remedies under law or any agreements relating to trade secrets, confidential information, or non-competition which Employee has executed in the past or may execute in the future or contemporaneously with this Agreement.

6. Change in Control.

6.1 Definition of Change in Control. For purposes of this Agreement, a “Change in Control” shall mean:

(A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than: (i) the Corporation; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation; (iii) 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 (iv) 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 fifty percent (50%) of the combined voting power of the Corporation’s then outstanding securities; or

(B) the consummation of a merger, share exchange, consolidation or reorganization involving the Corporation and any other corporation or other entity as a result of which less than fifty percent (50%) of the combined voting power of the Corporation or of the surviving or resulting corporation or entity after such transaction is held in the aggregate by the holders of the combined voting power of the outstanding securities of the Corporation immediately prior to such transaction; or

(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.

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6.2 Termination Following a Change in Control. After the occurrence of a Change in Control, Employee shall be entitled to receive payments and benefits pursuant to this Agreement if Employee’s employment is terminated within eighteen (18) months following the Change in Control either by the Corporation by notice of non-renewal, without Cause, or with Cause as defined in Section 3.3(i) (failure to perform) hereof, or by Employee for Good Reason. For purposes of this Agreement, “Good Reason” shall exist for Employee to terminate his employment if Employee resigns within six (6) months of any of the following occurrences:

(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;

(C) the Corporation’s requiring Employee to be based more than fifty (50) 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 compensation, welfare or benefit plan in which Employee is participating at the time of a Change in Control without substituting plans providing Employee with substantially similar or greater benefits, or the taking of any action by the Corporation which would adversely affect Employee’s participation in or materially reduce Employee’s benefits under any such plans or deprive Employee of any material fringe benefit enjoyed by Employee at the time of the Change in Control;

(F) the failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement.

6.3 Severance Pay and Benefits. If Employee’s employment with the Corporation terminates under circumstances as described in Section 6.2 above, Employee shall be entitled to receive all of the following:

(A) all accrued compensation through the termination date;

(B) a severance payment equal to Employee’s then current monthly salary for twenty-four (24) months (less applicable withholdings), payable in accordance with the Corporation’s regular payroll periods or, at the Corporation’s option, a lump sum. During the twenty-four (24) month period following termination, if Employee accepts employment or a consultancy with another entity or becomes self-employed, then he must notify the Corporation before such employment or consultancy begins and the payments made pursuant to this Section 6.3(B) shall be reduced by the amount of compensation to be paid to him in connection with such employment, consultancy or self-employment. If Employee does not notify the Corporation in

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accordance with this provision, then its obligation to make payments or further payments pursuant to this Section 6.3(B) shall cease;

(C) unless the Employee obtains comparable medical insurance coverage from a subsequent employer, then, for the twenty-four (24) months following the termination of Employee’s employment, he may continue to participate, to the extent permitted by the plan, in the medical insurance plan in which he participated on the effective termination of employment date. The Corporation will pay or, at the Corporation’s option, reimburse the Employee for the premiums actually paid, to continue coverage under the medical insurance plan during that period. In the event that the Employee is ineligible to participate in such medical insurance plan following termination of employment, the Corporation shall arrange to provide the Employee with substantially similar medical insurance benefits, at no greater cost to the Employee than the cost he paid for such benefits immediately prior to termination.

(D) if the termination occurs during the first two (2) years of employment under this Agreement, then Employee shall also be entitled to receive the guaranteed minimum bonus, as set forth in Section 2.2.1 above, for the fiscal year in which the termination occurs.

7. WAIVER OF BREACH. The Corporation’s or Employee’s waiver of any breach of a provision of this Agreement shall not waive any subsequent breach by the other party.

8. ENTIRE AGREEMENT. Except as expressly provided in this Agreement, this Agreement: (i) supersedes all other understandings and agreements, oral or written, between the parties with respect to the subject matter of this Agreement; and (ii) constitutes the sole agreement between the parties with respect to this subject matter. Each party acknowledges that: (i) 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 (ii) no agreement, statement or promise not contained in this Agreement shall be valid. No change or modification of this Agreement shall be valid or binding upon the parties unless such change or modification is in writing and is signed by the parties.

9. SEVERABILITY. 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. Additionally, if any of the provisions, clauses or phrases in the Competitive Business Activities, Trade Secrets, Confidential Information and Corporation Property provisions set forth in this Agreement are held unenforceable by a court of competent jurisdiction, then the parties desire that such provisions, clauses or phrases be “blue-penciled” or rewritten by the court to the extent necessary to render them enforceable.

10. PARTIES BOUND. The terms, provisions, covenants and agreements contained in this Agreement shall apply to, be binding upon and inure to the benefit of the Corporation’s successors and assigns. The Corporation, at its discretion, may assign this Agreement. Employee may not assign this Agreement.

11. REMEDIES. Employee acknowledges that his breach of this Agreement would cause the Corporation irreparable harm for which damages would be difficult, if not impossible, to ascertain and legal remedies would be inadequate. Therefore, in addition to any legal or other

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relief to which the Corporation may be entitled by virtue of the Employee’s breach or threatened breach of this Agreement, the Corporation may seek equitable relief, including but not limited to preliminary and injunctive relief, and such other available remedies.

12. GOVERNING LAW. This Agreement and the employment relationship created by it shall be governed by North Carolina law without giving effect to North Carolina choice of law provisions.

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

/s/ Frank G. Paci		6/12/07
Frank G. Paci		Date
THE PANTRY, INC.
By:	/s/ Melissa H. Anderson	6/12/07
		Date

EX-99.1

Exhibit 99.1

For Immediate Release	Contact: Melissa H. Anderson
	Vice President, Human Resources
June 15, 2007	(919) 774-6700

THE PANTRY NAMES FRANK G. PACI CHIEF FINANCIAL OFFICER

Sanford, North Carolina, June 15, 2007—The Pantry, Inc. (NASDAQ: PTRY), the leading independently operated convenience store chain in the southeastern U.S., today announced that it has named Frank G. Paci as its new Chief Financial Officer, effective July 2, 2007. He will replace Daniel J. Kelly, who recently announced his intent to retire from The Pantry, effective November 2007.

Mr. Paci, 49, joins The Pantry from Blockbuster Inc., where he was Executive Vice President and had varying responsibilities including Finance & Accounting, Strategic Planning and Business Development. Before joining Blockbuster in 1999, he was with Yum! Brands where he served for three years as Vice President in charge of Pizza Hut’s “nontraditional location” business, and later in Strategic Planning. Prior to that, Mr. Paci was with Burger King Corp. in a variety of roles for seven years. Early in his career, he was also with Pillsbury Co. and General Nutrition Centers, Inc. He received his B.A. degree in Economics from Yale University, and holds an MBA from the University of Pittsburgh’s Katz School of Business.

Peter J. Sodini, Chairman and Chief Executive Officer of The Pantry, said, “We are delighted to welcome Frank to The Pantry’s management team. He brings with him a broad range of experience in finance and strategic planning with several large public companies. In addition, he has spent virtually all of his career in the specialty retailing and quick service restaurant industries, both of which are highly relevant to the convenience store business. We believe this remarkable combination of professional experience and industry knowledge will enable Frank to bring a truly unique perspective to his new role as The Pantry’s CFO.”

About The Pantry

Headquartered in Sanford, North Carolina, The Pantry, Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest

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independently operated convenience store chains in the country, with revenues for fiscal 2006 of approximately $6.0 billion. As of April 19, 2007, the Company operated 1,638 stores in eleven states under select banners, including Kangaroo Express^(SM), its primary operating banner. The Pantry’s stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers.

Safe Harbor Statement

Statements made by the Company in this press release relating to future plans, events, or financial performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the Company’s current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation: the ability of the Company to take advantage of expected synergies in connection with acquisitions; the actual operating results of stores acquired; the ability of the Company to integrate acquisitions into its operations; fluctuations in domestic and global petroleum and gasoline markets; realizing expected benefits from our fuel supply agreements; changes in the competitive landscape of the convenience store industry, including gasoline stations and other non-traditional retailers located in the Company’s markets; the effect of national and regional economic conditions on the convenience store industry and the markets we serve; the effect of regional weather conditions on customer traffic; financial difficulties of suppliers, including our principal suppliers of gas and merchandise, and their ability to continue to supply our stores; environmental risks associated with selling petroleum products; governmental regulations, including those regulating the environment; and acts of war or terrorist activity. These and other risk factors are discussed in the Company’s Annual Report on Form 10-K and in its other filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release are based on the Company’s estimates and plans as of June 15, 2007. While the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so.

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