AMENDED AND RESTATED DISTRIBUTION SERVICE AGREEMENT

Exhibit 10.8

AMENDED AND RESTATED DISTRIBUTION SERVICE AGREEMENT

This Amended and Restated Distribution Service Agreement is entered into effective as of August 1, 2008 (the “Restated Effective Date”) between The Pantry, Inc., a Delaware corporation (“The Pantry”) and McLane Company, Inc., a Texas corporation (“McLane”). The Pantry and McLane have entered into that certain Distribution Service Agreement dated as of October 10, 1999. The Pantry and McLane now desire to amend and fully restate that agreement in its entirety as set forth herein, effective as of the date first set forth above.

ARTICLE 1

SCOPE OF AGREEMENT

1.1         Exclusive Purchase and Supply . The Pantry Entities shall purchase from McLane, and McLane shall sell to The Pantry Entities and deliver to the Stores, all of the Stores’ requirements of products within the Contracted Categories during the term of this agreement. However, the preceding sentence will not prohibit or limit The Pantry from purchasing from sources other than McLane (i) any goods for which McLane is not an approved supplier, (ii) branded fast-food operations, (iii) traditional direct store delivery (DSD) products from DSD vendors, and (iv) all types of products being purchased from third parties other than full-line convenience wholesalers (it being understood that McLane may at any time propose for additional business by mutual agreement between the parties on terms competitive with such third parties’ prices and other terms). For purposes of this agreement:

(b)       “Affiliate” means, with respect to any entity, any other entity directly or indirectly controlling, controlled by, or under common control with that entity. Without limiting the generality of the preceding sentence, an entity will be deemed to control another if it owns or has the power to vote, directly or indirectly, more than 50 percent of the voting rights of that other entity.

(c)       “Store” means any convenience food store owned, operated or managed by any The Pantry Entity.

(d)       “Contracted Categories” means all categories of food products offered by McLane as of the Restated Effective Date and customarily supplied by convenience food wholesalers, as well as all categories of non-food general merchandise products (including cigarettes and tobacco products) as of the Restated Effective Date offered by McLane and customarily supplied by convenience food wholesalers. Contracted Categories include, but are not limited to, each of the product categories set forth on Exhibits A and B to this agreement.

1.2        Franchisees, Licensees and Other Third Party Stores . During the term of this agreement, The Pantry shall recommend McLane as the preferred supplier to any franchisees or licensees of The Pantry. However, nothing in this Section 1.2 is to be construed as a covenant by or obligation of The Pantry to require or otherwise cause any franchisee or licensee to purchase from McLane.

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1.3        Other Business of McLane . Nothing in this agreement will prohibit McLane from supplying and delivering products or services to any other customer or person. Nothing in this agreement will require McLane to pass to The Pantry, as a reduction in product cost or otherwise, the benefit of any backhaul income it generates at its own expense using its own or another authorized carrier.

1.4        New Stores . If any The Pantry Entity builds, acquires or otherwise commences operating or managing any Store (including any chain of Stores) during the term of this agreement that is not subject to a then-existing service agreement, that Store will be, upon such commencement of its operation or management by an The Pantry Entity, included within the definition of Stores and subject to the terms and conditions of this agreement. If the Store or chain of Stores is subject to a then-existing service agreement, the Store will be subject to this agreement upon the expiration or termination of such other agreement. However, The Pantry may renegotiate with the incumbent supplier as that other service agreement expires, provided that The Pantry shall provide McLane the opportunity to match the terms offered by such incumbent supplier for such acquired Stores. All Stores added to this agreement pursuant to this Section 1.4 will receive service allowances in accordance with Article 3 unless otherwise agreed between The Pantry and McLane.

ARTICLE 2

PRODUCT MIX, ORDERING AND SUPPLY

2.1        Core Item Mix . The Pantry shall develop a product mix for the Stores using the then-currently existing items in each applicable McLane division’s inventory mix, including store use items, together with The Pantry’s proprietary and other specialty or exclusive items (such proprietary and specialty items, “Pantry Items”), which items McLane hereby agrees to carry, provided the manufacturers of all such items (i) enter into, and remain in substantial compliance with, McLane’s standard vendor agreement and any other standard terms imposed by McLane from time to time for the applicable category (including any distribution fees or minimum wholesale program terms), and (ii) satisfy, and remain in substantial compliance with, McLane’s credit requirements.

2.2        Slow-Moving Items . The Pantry shall review the Stores’ product mix at least quarterly and shall replace each slow-moving item with an item reflecting greater unit sales within each applicable McLane division. A slow-moving item is any item which, with respect to the applicable McLane division, does not meet a minimum of [***] per week, with a [***] comprising the [***] of [***] in the [***]. If the slow-moving item is a Pantry Item, or if any Pantry Item is discontinued for any reason, The Pantry shall purchase from McLane all of McLane’s on-hand inventory of that Pantry Item within [***] days after the end of the month in which that item should be replaced at a price equal to the cost McLane paid for those items [***] any mutually agreed [***] and [***]. Furthermore, upon expiration or termination of this agreement, The Pantry shall purchase from McLane all of McLane’s on-hand inventory of Pantry Items at a price determined in accordance with the preceding sentence.

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(a)       Each Store shall order once per week from McLane, and McLane shall supply and deliver to that Store once per week. However, The Pantry may designate up to [***] of Stores to receive twice-weekly deliveries at no additional charge. The Pantry may request an additional number of Stores (but not to exceed [***] of all Stores) to receive twice-weekly deliveries, subject to payment of a delivery fee of [***] per week for each such Store above the [***] level and less than the [***] level.

(b)       All Stores shall accept each delivery by McLane, and shall be available for those deliveries on a 24-hours-a-day, 7-days-a-week flexibility schedule, except where the Store’s hours of business or applicable local government ordinances restrict such unlimited availability, in which case The Pantry shall grant McLane the most flexible delivery window reasonably possible under the circumstances. McLane may park its delivery vehicles other either side of a Store in a manner to permit the trailer ramp to touch down on the Store’s sidewalk. McLane shall not block the Store’s entry or gas pumps at any time, nor shall McLane conduct its deliveries in a manner that unreasonably hinders customer parking at the Stores.

(c)       All transactions hereunder will be provided under McLane’s Self-Service Program, to which The Pantry transitioned (from Full-Service) as of May 30, 2008.

2.4        Service Level Commitments . Each four-week McLane accounting period (“Period”) during the term of this agreement, McLane shall measure its performance according to both of the criteria set forth in Sections 2.4(a), (b) and (c) below (the “Service Levels”).

(a)       “Delivery Service Rate” means an amount, expressed as a percentage, calculated by dividing the total dollar value of all products delivered by McLane for the applicable Period by the total dollar value of all Products ordered by The Pantry for that Period. McLane shall maintain a Delivery Service Rate of at least [***] McLane shall include in this measurement any undelivered products resulting from manufacturer outs.

(b)       “Order Quality” means an amount, expressed as a percentage, calculated by dividing the total dollar value of all products invoiced by McLane for the applicable Period by the total dollar value of all Products ordered by The Pantry for that Period. McLane shall maintain a Delivery Service Rate of at least [***]. McLane shall include in this measurement any undelivered products resulting from manufacturer outs.

(c)        “On-Time Delivery Rate” means an amount, expressed as a percentage, calculated by dividing the number of deliveries made by McLane within the Accepted Delivery Window(s) by the total number of deliveries made by McLane. “Accepted Delivery Window” means the period of time commencing two hours before the applicable Appointment Time and ending two hours after the applicable Appointment Time, and “Appointment Time” means the time of day that McLane is scheduled to deliver product to the Store, as scheduled in advance by McLane. McLane shall maintain a total On-Time Delivery Rate of at least [***].

The parties shall conduct joint reviews every four weeks to analyze McLane’s Service Level performance. If McLane fails to meet one or more of the foregoing Service Levels set forth in subsections (a), (b) and (c) above in any period, The Pantry may notify McLane in writing setting forth the details of any such failure. If McLane fails to bring the required Service Level back into

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compliance during the immediately succeeding eight-week period, The Pantry may require all deliveries to be made in delivery windows of [***], as of McLane’s next reroute date. In no event shall McLane be penalized or otherwise accountable for any non-performance due to force majeure, manufacturer outs or other production failures, Store mis-orders, or The Pantry new-item forecasting errors.

2.6        Item Maintenance and Store Traits . The Pantry shall perform store- and item- maintenance, using either the Licensed Technology (as defined below) or an alternative technology that is compatible with the McLane system and which has been approved by McLane, whose approval will not be unreasonably withheld. During the term of the Agreement, McLane shall make available to The Pantry at no charge from McLane the most current versions of the following software products (“Licensed Technology”): Quasar, M-Pulse and Document Direct software, or any other applications McLane may make available in the future.

2.7        Reclamation . Commencing September 1, 2008, The Pantry may return out-of-date non-tobacco merchandise purchased hereunder to McLane provided the Manufacturer participates in the McLane reclamation program and guarantees the return [***] to McLane. [***], with the [***], [***] and the [***]. As of the Restated Effective Date, such [***] imposed by the [***] and [***] under this Section 2.7 on [***]; McLane shall give The Pantry prior notice of any change in [***]. McLane shall assist The Pantry in training its Store managers, excluding Stores in Virginia, in the reclamation process and procedures.

2.8        Smart Handheld Devices . McLane shall make Smart Handheld units available to The Pantry under McLane’s Electronic Order System unit user agreements at a charge of [***] per Store per week for the [***]. The Pantry will be entitled to purchase an [***] license to use McLane’s premium-level software product for such devices, including the most current enhancements or replacements thereto, on an enterprise-wide (i.e., all Stores) basis for the duration of this agreement for an [***] license fee of $[***], [***] for the duration of this agreement ([***]).

ARTICLE 3

PRICING AND PAYMENT TERMS

3.1        Product Pricing . Unless a higher price is required by the Manufacturer under a written resale price maintenance policy (in which case that higher price will apply and McLane will provide The Pantry with as much prior written notice thereof as reasonably possible under the circumstances), the applicable price for Products will be determined in accordance with this Section 3.1.

(a)        Products Other than Cigarettes. The applicable price for any Product (as defined below) other than cigarettes, is the amount calculated in accordance with the following: (i) Cost (as defined below), plus (ii) the percentage markup for the applicable UIN department or category as set forth on the billing plan attached as Exhibit A, minus (iii) the amount of any promotional deals and allowances granted by a Manufacturer (as defined below) specifically to

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retailers for the time period provided by the Manufacturer, [***] by the Manufacturer and [***] by the Manufacturer. For purposes of this agreement:

(1)       “Cost” means List Price based on the buying bracket in which McLane normally buys that product for the McLane division or subsidiary servicing the applicable Store, plus (A) the gross amount of any Wholesale Taxes paid or payable by McLane, and (B) any applicable freight charges from the Manufacturer’s shipping point to the applicable McLane division or subsidiary (including unloading and sort-and-segregation charges).

(2)       “Product” means any product supplied under this agreement to any Store, whether or not such product is within the Contracted Categories.

(3)       “List Price” means, except as set forth in the following sentence, the higher of (A) the applicable Manufacturer’s then-current published or publicly-quoted delivered list price, or (B) if McLane purchases the Product from a source other than the Manufacturer, such seller’s then-current delivered list price, in either case at date of delivery of Products to that Store without regard to any cash discounts, volume discounts or rebates the Manufacturer or seller may provide to McLane.

(4)       “Manufacturer” means the person that manufactures or causes others to manufacture products that are marketed under brands or labels controlled by that person, or any Affiliate of that person.

(5)       “Wholesale Tax” means any tax, assessment, or charge imposed or collected at any time by any governmental entity or political subdivision thereof on a product or its sale or distribution, whether designated as a sales tax, excise tax, gross receipts tax, occupational or privilege tax, value-added tax, or similar imposition, but does not include any tax based on McLane’s personal property or net income.

(b)        Cigarettes. The price charged by McLane and to be paid by The Pantry for cigarettes shall be the [***] (as defined below); plus , any applicable [***] (as defined below); plus, all applicable [***] (including all [***] and any per-carton or per-pack [***] on cigarettes); plus any applicable [***] (as defined below). If applicable and to the extent allowed by law, McLane shall pay The Pantry the rebates (if any) set forth in Exhibit B. For purposes of this Agreement:

(1)       [***] means the applicable Manufacturer’s [***] to McLane at date of delivery of Products to the applicable Store, less all then-current and applicable [***] that are required by the Manufacturer to be passed to The Pantry.

(2)       [***] means the then-applicable per-carton [***] (if any) assessed by McLane which amounts, as of the Effective Date, are as set forth in Exhibit B to this agreement. However, in the event of any post-Effective Date increase or decrease in the [***] to McLane, or [***] to McLane (or both), from a cigarette Manufacturer related to the purchase of cigarettes from such Manufacturer by McLane, then McLane may [***], as applicable, the [***] on affected brands by an amount equal to the per-carton change in such Manufacturer’s terms.

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(3)       [***] means, with respect to any jurisdiction having a minimum-price law applicable to cigarette wholesale transactions, an amount calculated by multiplying (A) the applicable product’s [***] (or similar defined term) as defined by such applicable law by (B) the statutory [***] prescribed by such applicable law.

(c)       [***] shall provide [***] with [***] provided to [***] on [***] in [***] occurring during the term of this agreement.

(d)       McLane may impute cash discounts of up to two percent, or more if a higher discount is standard for that category of product, or any portion thereof that is not allowed by the Manufacturer to McLane, and to do so based upon Cost or Manufacturer’s List, as applicable.

3.2        Additional Fees . In addition to the item markups described in the first sentence of Section 3.1(a), the fees and charges described in Exhibit C will apply to the respective services, if applicable, utilized by The Pantry.

3.3        Tote and Canister Charges . McLane shall charge The Pantry $[***] for each net tote delivered to each Store (and credit The Pantry $[***] for each net tote picked up from each Store). McLane shall charge The Pantry $[***] for each net CO ₂ canister delivered to each Store (and credit The Pantry $[***] for each CO ₂ canister picked up from each Store). McLane shall charge or credit, as applicable, all balances on each invoice in accordance with McLane’s standard tote and canister exchange policies. The parties acknowledge and agree that, as of December 19, 2007, The [***] maintained [***], which amount [***] as of such date.

3.4       [***]. The parties acknowledge and agree that, as of December 19, 2007, [***] commenced [***] to the [***] hereunder. [***] has [***], and shall continue to [***], [***], once [***], as well as the [***] (as defined below), to [***] as a [***] through April 21, 2010. For purposes of this Section 3.4, [***] means the [***] and [***] to the applicable [***] set forth in [***] by the amount of [***] by [***] described in the [***] of this Section 3.4 Following April 21, 2010, [***] shall [***] to [***] an [***].

3.5        Payment Terms . For all Products purchased and services received by the Stores, The Pantry shall cause payment to be made by ACH Credit (or ACH Debit if approved by McLane) or wire transfer to McLane not later than 12:00 Noon, Central Time, [***] days from statement date. For purposes of this agreement, statement date is [***] for all Products delivered from the [***] through such [***]. Each payment shall be in the full amount of the statement to which they relate. Any amounts not paid when due will bear interest at the lesser of (a) 18 percent per annum, or (b) the maximum rate allowed by applicable law. McLane may offset any or all rebates or other amounts due The Pantry against any amounts due and owing McLane pursuant to this agreement, including any interest accrued thereon.

ARTICLE 4

FINANCIAL CONSIDERATIONS

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(1)       Within 10 days after the end of each McLane accounting quarter (“Quarter”) ending prior to [***], McLane shall pay The Pantry an amount of $[***] per Store for each of the 66 Stores acquired by The Pantry from Petro Express Inc. in 2007 (the “Petro Express Stores”), provided each such Store remains owned and operated by The Pantry as of such Quarterly payment date. The service allowance amounts described in Section 4.1(a)(2) shall not apply to such Stores.

(2)       As to all Stores other than (i) those described in Section 4.1(a)(i), and (ii) any Store for which a prepaid and unamortized balance existed as of the Restated Effective Date as set forth in Section 4.5, McLane shall pay The Pantry a [***] within 10 days after the beginning of [***] ending prior to [***] an amount of $[***] per Store, based on the number of Stores in operation and subject to this agreement as of the last day of the preceding [***].

(b)        On and After [***] . Within 10 days after the beginning of each [***] ending after on or after [***], McLane shall pay The Pantry an amount of $[***] per Store for each Store in operation and subject to this agreement as of the last day of the preceding [***].

(c)        Additional Quarterly Lump-Sum Amounts . In addition to the amounts set forth in Sections 4.1(a) or 4.1(b), as applicable, McLane shall pay The Pantry the Quarterly lump-sum service allowance amount set forth in the third column of the attached Exhibit D.

4.2        Renewal Incentive . In consideration for The Pantry’s renewal and extension of the term of this agreement as set forth in Section 6.1, McLane shall pay The Pantry the following amounts:

(a)       Within 10 days after the beginning of each Quarter, McLane shall pay The Pantry the applicable amount set forth in the fourth column on the attached Exhibit D; and

(b)       On or before [***] and each [***] thereof, McLane shall pay The Pantry a year-end allowance payment of $[***].

4.3        Marketing Allowance . McLane shall pay The Pantry a marketing allowance in the amount of $[***] per Store at the beginning of each McLane accounting quarter for each Store in operation as of such quarter commencement date.

4.4        Volume Incentive Rebate on Certain Purchases . The Pantry shall earn and McLane shall pay a volume incentive rebate of [***] of the Stores’ [***] (as defined below) during the term of this Agreement. For purposes of this Section, (i) [***] means the [***], by the Stores from McLan