Registration Rights Agreement

Exhibit 10.2


REGISTRATION RIGHTS AGREEMENT


dated as of November 22, 2005


among

The Pantry, Inc.,

Kangaroo, Inc.,


R.&H. Maxxon, Inc.,

and


Merrill Lynch, Pierce, Fenner & Smith Incorporated


and


Wachovia Capital Markets, LLC


REGISTRATION RIGHTS AGREEMENT


This Registration Rights Agreement is made and entered into this 22nd day of November, 2005, among The Pantry, Inc., a Delaware corporation (the " Company" ), Kangaroo, Inc. and R.&H. Maxxon, Inc. (collectively, the " Guarantors" ), and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wachovia Capital Markets, LLC (collectively, the " Initial Purchasers" ).


This Agreement is made pursuant to the Purchase Agreement, dated as of November 16, 2005, among the Company, the Guarantors and the Initial Purchasers (the " Purchase Agreement" ). The Purchase Agreement provides for (1) the sale by the Company to the Initial Purchasers of an aggregate of $135,000,000 principal amount at maturity of the Company' s 3.00% Senior Subordinated Convertible Notes due 2012 ($150,000,000 principal amount at maturity if the Initial Purchasers exercise their option in full) (collectively, the " Securities" ) and (2) the sale by the Guarantors to the Initial Purchasers of their guarantees of the Company' s Securities (the " Guarantees" ). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement.

In consideration of the foregoing, the parties hereto agree as follows:


1. Definitions .

As used in this Agreement, the following capitalized defined terms shall have the following meanings:

" 1933 Act" shall mean the Securities Act of 1933, as amended from time to time.


" 1934 Act" shall mean the Securities Exchange Act of l934, as amended from time to time.


" 1939 Act" shall mean the Trust Indenture Act of 1939, as amended from time to time.

" Additional Interest" shall have the meaning set forth in Section 2.4 herein.

" Agreement" shall mean this Registration Rights Agreement, as it may be amended, modified or supplemented from time to time in accordance with the terms thereof.

" Closing Date" shall mean the Closing Time as defined in the Purchase Agreement.

" Common Stock" shall mean any shares of common stock, $.01 par value, of the Company.


" Company" shall have the meaning set forth in the preamble and shall also include the Company' s successors.

" Depositary" shall mean The Depository Trust Company, or any other depositary appointed by the Company, provided, however, that such depositary must have an address in the Borough of Manhattan, in the City of New York.


" Effectiveness Period" shall have the meaning set forth in Section 2.1(b) herein.

" Free Writing Prospectus" shall have the meaning set forth in Rule 405 of the 1933 Act.

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" Guarantor" or " Guarantors" shall have the meaning set forth in the preamble and shall also include any Guarantor' s successors.


" Holder" shall mean an Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become owners, beneficial or otherwise, of Registrable Securities under the Indenture.


" Indenture" shall mean the Indenture relating to the Securities, dated as of November 22, 2005, among the Company, the Guarantors and Wachovia Bank, National Association, as trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof.


" Initial Purchaser" or " Initial Purchasers" shall have the meaning set forth in the preamble.

" Majority Holders" shall mean Holders holding over 50% of the aggregate principal amount at maturity of Securities outstanding; provided that, for purposes of this definition, (1) a Holder of shares of Common Stock that constitutes Registrable Securities which were issued upon conversion of Securities shall be deemed to hold an aggregate principal amount at maturity of Securities (in addition to the principal amount at maturity of any Securities held by such Holder) equal to the principal amount at maturity of Securities which were converted into such shares of Common Stock and (2) such Securities which were converted into such shares of Common Stock shall be deemed to be outstanding; provided, further, that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or any Affiliate (as defined in the Indenture) of the Company shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage amount.

" Person" shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

" Prospectus" shall mean the prospectus included in a Shelf Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein or deemed to be incorporated by reference therein.

" Purchase Agreement" shall have the meaning set forth in the preamble.


" Questionnaire" shall have the meaning set forth in Section 2.1(d) herein.


" Registrable Securities" shall mean all or any of the Securities issued from time to time under the Indenture in registered form, and the shares of Common Stock issued or issuable upon conversion of such Securities; provided, however, that any such Securities and shares of Common Stock issued or issuable upon conversion of such Securities shall cease to be Registrable Securities when (i) a Shelf Registration Statement with respect to such Securities and shares of Common Stock issued or issuable upon conversion of such Securities shall have been declared effective under the 1933 Act and such Securities and shares of Common Stock issued or issuable upon conversion of such Securities shall have been disposed of pursuant to such Shelf Registration Statement, (ii) such Securities and shares of Common


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Stock issued or issuable upon conversion of such Securities have been sold to the public pursuant to Rule l44 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) such Securities and shares of Common Stock issued or issuable upon conversion of such Securities shall have ceased to be outstanding or (iv) such Securities and shares of Common Stock issued or issuable upon conversion of such Securities may be sold or transferred, other than by the Company' s Affiliates, pursuant to Rule 144(k) (or any similar provision then in force) under the 1933 Act.

" Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, whether or not a Shelf Registration Statement becomes effective, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. (the " NASD" ) registration and filing fees, including, if applicable, the fees and expenses of any " qualified independent underwriter" (and its counsel) that is required to be retained by any holder of Registrable Securities in accordance with the rules and regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of the NASD, (iii) all expenses of the Company and the Guarantors in preparing or assisting in preparing, word processing, printing and distributing any Shelf Registration Statement, any Prospectus, any amendments or supplements thereto, any securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Company and the Guarantors and of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or " comfort" letters required by or incident to such performance and compliance, (vii) the reasonable fees and expenses of the Trustee and its counsel and of the registrar and transfer agent for the Common Stock, (viii) the reasonable fees and expenses up to $25,000 of one counsel to the Holders in connection with the Shelf Registration, blue sky qualification of the Registrable Securities and any filings with the NASD, which counsel shall be Fried, Frank, Harris, Shriver & Jacobson LLP or such other counsel as may be selected by the Majority Holders, and (ix) any fees and expenses of any special experts retained by the Company and the Guarantors in connection with any Shelf Registration Statement, but excluding any underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.


" SEC" shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission.

" Shelf Registration" shall mean a registration effected pursuant to Section 2.1 hereof.

" Shelf Registration Statement" shall mean a " shelf" registration statement of the Company pursuant to the provisions of Section 2.1 of this Agreement which covers any of the Registrable Securities (including without limitation all Registrable Securities where Holders thereof have requested such Securities to be included in the Shelf Registration Statement) on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein or deemed to be incorporated by reference therein.

" Suspension Period" shall have the meaning set forth in Section 2.5 herein.


" Trustee" shall mean the trustee with respect to the Securities under the Indenture.


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2. Registration Under the 1933 Act .


2.1 Shelf Registration .

(a) The Company and the Guarantors shall, at their cost, no later than 90 days after the Closing Date, file with the SEC, and thereafter shall use reasonable best efforts to cause to be declared effective as promptly as practicable but no later than 210 days after the Closing Date, a Shelf Registration Statement on Form S-3 or other appropriate form relating to the offer and sale of the Registrable Securities by the Holders that have provided the information pursuant to Section 2.1(d).

(b) The Company and the Guarantors shall, at their cost, use their reasonable best efforts, subject to Section 2.5, to keep the Shelf Registration Statement continuously effective, supplemented and amended in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration Statement is declared effective by the SEC, or for such shorter period that will terminate when all Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or cease to be outstanding or otherwise to be Registrable Securities (the " Effectiveness Period" ).


(c) Notwithstanding any other provisions hereof, the Company and the Guarantors shall use their reasonable best efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any supplement thereto complies in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.


(d) Notwithstanding any other provision hereof, no Holder of Registrable Securities may include any of its Registrable Securities in the Shelf Registration Statement pursuant to this Agreement unless the Holder furnishes to the Company a notice and questionnaire in the form attached as Annex A to the Offering Memorandum (the " Questionnaire" ) and such other information in writing as the Company may reasonably request in writing for use in connection with the Shelf Registration Statement or Prospectus included therein and in any application to be filed with or under state securities laws. In order to be named as a selling securityholder in the Prospectus at the time of effectiveness of the Shelf Registration Statement, each Holder must, before the effectiveness of the Shelf Registration Statement and no later than the 20 th day after the issuance of a press release by the Company announcing the initial filing of the Shelf Registration Statement (or the filing of the first amendment to the Shelf Registration Statement in the event the Company promptly files the Shelf Registration Statement following the date of this Agreement), furnish the completed Questionnaire and such other information that the Company may reasonably request in writing, if any, to the Company in writing and the Company will include the information from the completed Questionnaire and such other information, if any, in the Shelf Registration Statement and the Prospectus in a manner so that upon effectiveness of the Shelf Registration Statement the Holder will be permitted to deliver the Prospectus to purchasers of the Holder' s Registrable Securities. In connection with all such written requests for information from Holders of Registrable Securities, the Company must notify such Holders of the requirements in the prior sentence.

From and after the date that the Registration Statement is first declared effective by the SEC, upon receipt of a completed Questionnaire and such other information that the Company may reasonably request in writing, if any, the Company and the Guarantors will use their reasonable best efforts, but in

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any event within 20 Business Days of such receipt, to file any amendments or supplements to the Shelf Registration Statement necessary for such Holder to be named as a selling securityholder in the Prospectus contained therein to permit such Holder to deliver the Prospectus to purchasers of the Holder' s Securities (subject to the Company' s and the Guarantors' right to suspend the Shelf Registration Statement as described in Section 2.5 below) and, if the Company files a post-effective amendment to the Shelf Registration Statement, use its reasonable best efforts to cause such post-effective amendment to be declared effective as promptly as reasonably practicable, provided that if under applicable law the Company has more than one option as to the type or manner of making any such filing, it make the required filing or filings in the manner or of the type that is reasonable expected to result in the earliest availability of the Prospectus for making resales of Registrable Securities. The Shelf Registration Statement shall include the disclosures required by Rule 430B of the 1933 Act in order to enable the Company and the Guarantors to add selling securityholders onto the Shelf Registration Statement pursuant to the filing of prospectus supplements. The Company and the Guarantors shall not be required to file more than one post-effective amendment to the Shelf Registration Statement in any calendar quarter for all such Holders.

Holders that do not deliver a completed written Questionnaire and such other information, as provided for in this Section 2.1(d), will not be named as selling securityholders in the Prospectus. Each Holder named as a selling securityholder in the Prospectus agrees to promptly furnish to the Company all information required to be disclosed in order to make information previously furnished to the Company by the Holder not materially misleading and any other information regarding such Holder and the distribution of such Holder' s Registrable Securities as the Company may from time to time reasonably request in writing.

(e) Each Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration Statement without delivering, or causing to be delivered, a Prospectus to the purchaser thereof to the extent required by law.

The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company and the Guarantors, if required by the 1933 Act, and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC.


2.2 Expenses . The Company and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2.1. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder' s Registrable Securities pursuant to the Shelf Registration Statement.


2.3 Effectiveness . A Shelf Registration Statement pursuant to Section 2.1 hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Shelf Registration Statement will be deemed not to have been effective during the period of such interference, until the offering of Registrable Securities pursuant to such Shelf Registration Statement may legally resume.

2.4 Interest . In the event that (a) a Shelf Registration Statement is not filed with the SEC on or before the 90th calendar day following the Closing Date, (b) a Shelf Registration Statement is not declared effective on or prior to the 210th calendar day following the Closing Date, (c) after effectiveness, subject to Section 2.5, the Shelf Registration Statement fails to be effective or usable by the Holders


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without being succeeded within five business days by a post-effective amendment or a report filed with the SEC pursuant to the 1934 Act that cures the failure to be effective or usable or (d) the Shelf Registration Statement is unusable by the Holders for any reason, and the aggregate number of days in any consecutive three-month or twelve-month period for which the Shelf Registration Statement shall not be usable exceeds the Suspension Period (as defined in Section 2.5 hereof) (each such event being a " Registration Default" ), additional interest (" Additional Interest" ) will accrue at a rate per annum of one-quarter of one percent (0.25%) of the principal amount of the Securities for the first 90-day period from the day following the Registration Default, and thereafter at a rate per annum of one-half of one percent (0.50%) of the principal amount of the Securities, provided that in no event shall Additional Interest accrue at a rate per annum exceeding one half of one percent (0.50%) of the issue price of the Securities. Upon the cure of all Registration Defaults then continuing, the accrual of Additional Interest will automatically cease and the interest rate borne by the Securities will revert to the original interest rate at such time. Additional Interest shall be computed based on the actual number of days elapsed in each 90-day period in which the Shelf Registration Statement is not effective or is unusable. Holders who have converted Securities into Common Stock will not be entitled to receive any Additional Interest with respect to such Common Stock or the issue price of the Securities converted.


The Company and the Guarantors shall notify the Trustee within ten business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid. Additional Interest shall be paid by depositing with the Trustee, in trust, for the benefit of the Holders of Registrable Securities, on or before the applicable semiannual interest payment date, immediately available funds in sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date to the record Holder of Registrable Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. Each obligation to pay Additional Interest shall be deemed to accrue from and including the day following the Registration Default to but excluding the day on which the Registration Default is cured.


A Registration Default under clause (a) above shall be cured on the date that the Registration Statement is filed with the SEC. A Registration Default under clause (b) above shall be cured on the date that the Registration Statement is declared effective by the SEC. A Registration Default under clauses (c) or (d) above shall be cured on the date an amended Registration Statement is declared effective by the SEC or the Company and the Guarantors otherwise declare the Registration Statement and the Prospectus useable, as applicable. The Company and the Guarantors will have no liabilities for monetary damages with respect to any Registration Default for which Additional Interest is expressly provided for herein.

All obligations of the Company and the Guarantors set forth in this Section 2.4 that are outstanding with respect to any Registrable Securities at the time such Securities cease to be Registrable Securities shall survive until such time as all obligations with respect to such Securities have been satisfied in full.


The Company and the Guarantors agree with the Initial Purchasers and for the benefit of the Holders that the Additional Interest provided for in this Section 2.4 constitutes a reasonable estimate of the damages that may be incurred by Holders of Registrable Securities and do not constitute a pen ...