<SEQUENCE>3

<FILENAME>dex1039.txt

<DESCRIPTION>DISTRIBUTION SERVICE AGREEEMENT

<TEXT>

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                         DISTRIBUTION SERVICE AGREEMENT



         This Distribution Service Agreement (the "Agreement") is made and

entered into and is effective as of the 10th day of October, 1999, by and

between The Pantry, Inc., a Delaware corporation ("Pantry") and Lil' Champ Food

Stores, Inc., a Florida corporation ("Lil' Champ) (Pantry and Lil' Champ are

hereinafter sometimes referred to collectively as the "Company") and McLANE

COMPANY, INC., a Texas corporation (hereinafter referred to as "McLane").



                                    RECITALS



         WHEREAS, Company is in the business of operating retail convenience

food stores; and



         WHEREAS, McLane is in the business of wholesale distribution of food

and non-food/general merchandise products throughout the United States of

America;



         NOW, THEREFORE, in consideration of the foregoing premises and the

mutual covenants contained herein, the parties hereto agree as follows:



                                    ARTICLE I



                               SCOPE OF AGREEMENT



         1.1 Company Stores. For purposes of this Agreement, the term "stores"

means the owned or managed convenience food stores of Company. Should Company

build new or otherwise acquire additional stores after the date of this

Agreement, such additional stores shall be included within the definition of

stores.



         1.2 Franchisees and Licensees. During the term of this Agreement,

Company agrees to recommend McLane as the supplier to any franchisees and

licensees of Company, if any.



         1.3 Purchase of Products and Services. During the term of this

Agreement Company will purchase from McLane, and McLane will sell to Company,

all of Company's requirements of wholesale food and non-food/general merchandise

products customarily supplied by convenience food wholesalers; provided,

however, that the foregoing shall have no effect upon products purchased by

Company from other vendors for whom McLane is not an approved supplier for

existing and future branded fast food operations; and further, provided, that

Company may purchase (i) traditional DSD products from DSD (direct store

delivery) vendors, and (ii) all types of products currently being purchased from

other vendors other than full-line convenience food wholesalers (it being

understood that McLane may at any time propose for additional business). Such

products to be purchased from



* Selected portions have been deleted as confidential pursuant to Rule 24b-2.

Complete copies of the entire exhibit have been filed with the Securities and

Exchange Commission and marked "CONFIDENTIAL TREATMENT."





                                       1



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McLane shall include those standard convenience food store items, including, but

not limited to, the following (the "Products"):



(a) Groceries, including coffee, tea, cereal, canned meats, condiments, juice,

baby food, canned and dry goods and eggs;



(b) Deli foods, including meats and salads, breakfast foods, nachos and bulk

sausage, franks, cheese and fish;



(c) Frozen foods, such as fruits, vegetables and juices;



(d) Frozen fast foods, such as burritos, pizza, pizza pieces, frozen sandwiches

and salads;



(e) Candy, snacks and popcorn;



(f) Cigarettes and tobacco products;



(g) Cold packaged meats, lunch meats and cheeses;



(h) Shortening, breading and kitchen supplies;



(i) Private or controlled label soft drinks and beverages;



(j) Post mix products;



(k) Store supply items, i.e., bags, wraps, fast food supplies (including

napkins, individual condiments and cleaners);



(l) Cooler items, i.e., cheese, biscuits, dips, cultured products, butter and

margarine;



(m) Health and beauty aids, hosiery, and film and flash; and,



(n) General merchandise items, including motor oil, other automotive products,

housewares, hardware, electrical supplies, baby supplies, sunglasses, lighters,

toys and pet supplies.



McLane, by and through its divisions and/or subsidiaries, shall supply and

deliver those products described hereinabove which are ordered by Company on a

weekly basis according to those prices outlined in the Billing Plans attached

hereto as Exhibit "A" and made a part hereof. The foregoing described product

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