THE PANTRY, INC.PURCHASE AGREEMENT

Exhibit 10.1

 

 

THE PANTRY, INC.

(a Delaware corporation)

 

$135,000,000

 

3.00% Senior Subordinated Convertible Notes due 2012

 

PURCHASE AGREEMENT

 

Dated: November 16, 2005

 

Table of Contents

 

 

- i -

 

- ii -

 

- iii -

THE PANTRY, INC.

 

(a Delaware corporation)

 

$135,000,000

 

3.00% Senior Subordinated Convertible Notes Due 2012

 

PURCHASE AGREEMENT

 

November 16, 2005

 

Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Wachovia Capital Markets, LLC

c/o	Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

4 World Financial Center

New York, New York 10080

 

Ladies and Gentlemen:

 

The Pantry, Inc., a Delaware corporation (the “ Company ”), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ Merrill Lynch ”) and each of the other Initial Purchasers named in Schedule A hereto (collectively, the “ Initial Purchasers ,” which term shall also include any initial purchaser substituted as hereinafter provided in Section 11 hereof), for whom Merrill Lynch is acting as representative (in such capacity, the “ Representative ”), with respect to (i) the sale by the Company and the purchase by the Initial Purchasers, acting severally and not jointly, of the respective principal amounts at maturity set forth in said Schedule A of $135,000,000 aggregate principal amount at maturity of the Company’s Senior Subordinated Convertible Notes due 2012 (the “ Notes ”), (ii) the grant by the Company to the Initial Purchasers, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of an additional $15,000,000 aggregate principal amount at maturity of Notes to cover overallotments, if any, and (iii) the issue and sale by the Guarantors listed on Schedule C hereto (each a “ Guarantor ” and collectively, the “ Guarantors ”) and the purchase by the Initial Purchasers, acting severally and not jointly, of the senior subordinated guarantees (the “ Guarantees ”) of the Company’s obligations under the Notes. The aforesaid $135,000,000 aggregate principal amount at maturity of Notes (the “ Initial Securities ”) to be purchased by the Initial Purchasers, all or any part of the $15,000,000 aggregate principal amount at maturity of Notes subject to the option described in Section 2(b) hereof (the “ Option Securities ”) and the Guarantees are hereinafter called, collectively, the “ Securities .” The Securities are to be issued pursuant to an indenture to be dated as of November 22, 2005 (the “ Indenture ”) among the Company, the Guarantors and Wachovia Bank, National Association, as trustee (the “ Trustee ”). Securities issued in book-entry form will be issued to Cede & Co. as nominee of The Depository Trust Company (“ DTC ”).

 

The Notes are convertible into shares of common stock, par value $.01 per share (the “ Common Stock ”), of the Company in accordance with the terms of the Securities and the Indenture.

 

- 1 -

The Company and the Guarantors understand that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set forth herein and agree that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities to purchasers (“ Subsequent Purchasers ”) at any time after this Agreement has been executed and delivered. The Securities are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “ 1933 Act ”), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and the Indenture, investors that acquire Securities may only resell or otherwise transfer such Securities if such Securities are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available (including the exemption afforded by Rule 144A (“ Rule 144A ”) of the rules and regulations promulgated under the 1933 Act by the Securities and Exchange Commission (the “ Commission ”)).

 

The Company has prepared and delivered to each Initial Purchaser copies of a preliminary offering memorandum dated November 11, 2005 (which shall be deemed to include the information and documents incorporated by reference therein, the “ Preliminary Offering Memorandum ”) and has prepared and will deliver to each Initial Purchaser, on the date hereof or the next succeeding day, copies of a final offering memorandum dated November 16, 2005 (which shall be deemed to include the information and documents incorporated by reference therein, the “ Final Offering Memorandum ”), each for use by such Initial Purchaser in connection with its solicitation of purchases of, or offering of, the Securities. “ Offering Memorandum ” means, with respect to any date or time referred to in this Agreement, the most recent offering memorandum (whether the Preliminary Offering Memorandum or the Final Offering Memorandum, or any amendment or supplement to either such document), including exhibits thereto and any documents incorporated therein by reference, which has been prepared and delivered by the Company to the Initial Purchasers in connection with their solicitation of purchases of, or offering of, the Securities.

 

It is also understood and acknowledged that holders (including subsequent transferees) of the Securities and the shares of Common Stock issuable upon the conversion thereof will have the registration rights set forth in the registration rights agreement (the “ Registration Rights Agreement ”), by and among the Company, the Guarantors and the Initial Purchasers to be dated as of Closing Time (as defined in Section 2(c) hereof), in a form to be agreed upon by the parties hereto. Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree (i) to file with the Commission a registration statement on the appropriate form under the 1933 Act relating to the resale of the Securities and the shares of Common Stock issuable upon the conversion thereof by certain holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement and Rule 415 under the Act (the “ Shelf Registration Statement ”) and (ii) to use their reasonable efforts to cause any such Shelf Registration Statement to be declared effective.

 

All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” in the Offering Memorandum (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Offering Memorandum; and all references in this Agreement to amendments or supplements to the Offering Memorandum shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934 (the “ 1934 Act ”) which is incorporated by reference in the Offering Memorandum.

 

SECTION 1. Representations and Warranties .

 

(a) Representations and Warranties by the Company and the Guarantors. The Company and each of the Guarantors represents and warrants to each Initial Purchaser as of the date hereof (with such representations and warranties being made as of the date hereof), as of the Closing Time referred to

 

- 2 -

Section 2(c) hereof (with such representations and warranties being made as of the Closing Time), and as of each Date of Delivery (if any) referred to in Section 2(b) hereof (with such representations and warranties being made as of the Date of Delivery), and agrees with each Initial Purchaser, as follows:

 

(i) Offering Memorandum . The Preliminary Offering Memorandum and the Final Offering Memorandum as of their respective dates do not, and at the Closing Time (and, if any Option Securities are purchased, at the Date of Delivery) will 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 the light of the circumstances under which they were made, not misleading. The representations and warranties in this subsection shall not apply to statements in or omissions from the Offering Memorandum made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser through Merrill Lynch expressly for use in the Offering Memorandum.

 

(ii) Incorporated Documents . The Offering Memorandum as delivered from time to time shall incorporate by reference the most recent Annual Report of the Company on Form 10-K filed with the Commission including those portions of the Company’s most recent definitive proxy statement on Schedule 14A incorporated therein (the “ Form 10-K ”) and each Quarterly Report of the Company on Form 10-Q and each Current Report of the Company on Form 8-K filed with the Commission since the end of the fiscal year to which the Form 10-K relates (collectively, the “ Incorporated SEC Reports ”). The Incorporated SEC Reports at the time they were or hereafter are filed with the Commission complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the “ 1934 Act Regulations ”) and, when read together with the other information in the Offering Memorandum, at the time the Offering Memorandum was issued and at the Closing Time (and, if any Option Securities are purchased, at the Date of Delivery), did not and will not 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.

 

(iii) Independent Accountants . The accountants who certified the financial statements and supporting schedules included in the Offering Memorandum are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. Deloitte & Touche LLP has not provided to the Company or its subsidiaries any non-audit services, the provision of which is prohibited by applicable law or accounting standards.

 

(iv) Financial Statements . The historical financial statements of the Company incorporated by reference in the Offering Memorandum, together with the related schedules and notes, present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statements of operations, shareholders’ equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved. The summary historical financial data included in the Offering Memorandum, and the selected historical financial data incorporated by reference in the Offering Memorandum, present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements incorporated by reference in the Offering Memorandum. The pro forma, pro forma as adjusted and pro forma last-twelve-month financial information included in the Offering Memorandum presents fairly the information shown therein and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All financial statements and pro forma financial statements

 

- 3 -

which would be required to be included in a Registration Statement on Form S-3 that was filed on the date hereof pursuant to the 1933 Act, the 1933 Act Regulations and Regulation S-X have been included or incorporated by reference in the Offering Memorandum

 

(v) No Material Adverse Change in Business . Since the respective dates as of which information is given in the Offering Memorandum, except as otherwise stated therein, (A) there has been no material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

 

(vi) Good Standing of the Company . The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

 

(vii) Good Standing of Subsidiaries . Each subsidiary of the Company (each a “ Subsidiary ” and, collectively, the “ Subsidiaries ”) (including each of the Guarantors) has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; except as otherwise disclosed in the Offering Memorandum, all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity (except for restrictions on transfer imposed by federal or state securities laws); none of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive rights of any securityholder of such Subsidiary. The only subsidiaries of the Company are Kangaroo, Inc., a Georgia corporation, D. & D. Oil Co., Inc., a Georgia corporation, and R. & H. Maxxon, Inc., a South Carolina corporation. D. & D. Oil Co., Inc. has no indebtedness and has less than $100,000 in assets.

 

(viii) Capitalization . The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company.

 

(ix) Authorization of the Purchase Agreement and the Registration Rights Agreement . This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors. The Registration Rights Agreement has been duly authorized by the

 

- 4 -

Company and each of the Guarantors and, when executed and delivered by the Company and each of the Guarantors, will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(x) Authorization of the Indenture . The Company and each of the Guarantors has full corporate power and authority to enter into the Indenture. The Indenture has been duly authorized by the Company and each of the Guarantors and, when executed and delivered by the Company and each of the Guarantors and the Trustee, will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(xi) Authorization of the Securities . The Company has full corporate power and authority to issue, sell and deliver the Notes to the Initial Purchasers as provided herein and therein. The Notes have been duly authorized by the Company and, at Closing Time, the Notes (in the form of the global note) will have been duly executed by the Company and, when the Notes are authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, the Notes will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.

 

Each of the Guarantors has full corporate power and authority to issue, sell and deliver the Guarantees to the Initial Purchasers as provided herein and therein. The Guarantees have been duly authorized by each of the Guarantors and, at Closing Time, the Guarantees will have been duly executed by each of the Guarantors and, when the Notes are authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, the Guarantees will constitute valid and binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.

 

(xii) Description of the Securities, the Indenture and the Registration Rights Agreement . The terms of the Securities, the Indenture and the Registration Rights Agreement will conform in all material respects to the respective statements relating thereto contained in the Offering Memorandum.

 

- 5 -

(xiii) Description and Authorization of Common Stock . The Common Stock conforms to all statements relating thereto contained in the Offering Memorandum and such description conforms to the rights set forth in the instruments defining the same. Upon issuance and delivery of the Notes in accordance with this Agreement and the Indenture, the Notes will be convertible at the option of the holder thereof for shares of Common Stock in accordance with the terms of the Notes and the Indenture; the shares of Common Stock issuable upon conversion of the Notes have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action and such shares, when issued upon such conversion according to the terms of the Notes and Indenture, will be validly issued and will be fully paid and non-assessable; no holder of such shares will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares of Common Stock upon such conversion will not be subject to the preemptive or other similar rights of any security holder of the Company and the Common Stock will not be subject to any restriction upon the voting or transfer thereof pursuant to applicable law or the Company’s certificate of incorporation, bylaws or governing documents or any agreement to which the Company or any of its subsidiaries is a party or by which any of them may be bound. All corporate action required to be taken by the Company for the issuance and delivery of the shares of Common Stock issuable upon conversion of the Notes has been duly and validly taken by the Company. The Company has authorized and reserved, and covenants to continue to reserve free of any preemptive rights or similar rights, a sufficient number of authorized but reserved shares of Common Stock to satisfy the conversion rights of the Notes. Except as set forth in the Offering Memorandum or the documents incorporated by reference in the Offering Memorandum, there are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or rights related to or entitling any person to purchase or otherwise to acquire any shares of, or any security convertible into or exchangeable or exercisable for, the capital stock of, or other ownership interest in, the Company or any of its subsidiaries.

 

(xiv) Absence of Defaults and Conflicts . Neither the Company nor any of its subsidiaries is in violation of their respective charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is subject (collectively, “ Agreements and Instruments ”) except for such violations or defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Indenture and the Securities and the consummation of the transactions contemplated herein and in the Offering Memorandum (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption “Use of Proceeds” and the issuance of the shares of Common Stock issuable upon conversion of the Notes) and compliance by the Company with its obligations hereunder and under the Registration Rights Agreement, the Indenture and the Securities have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance (“ Lien ”) upon any property or assets of the Company or any subsidiary pursuant to, or require any consent under or permit any third party to terminate, any of the Agreements and Instruments, except for such breaches, defaults, Repayment Events, Liens, consents or terminations that would not result in a Material

 

- 6 -

Adverse Effect, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their assets, properties or operations. As used herein, a “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary.

 

(xv) Absence of Labor Disputes . Other than as set forth in the Offering Memorandum or the documents incorporated by reference therein, no labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary’s principal suppliers or vendors, which, in either case, may reasonably be expected to result in a Material Adverse Effect.

 

(xvi) Absence of Proceedings . Other than as set forth in the Offering Memorandum or the documents incorporated by reference therein, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against the Company or any subsidiary, which is required to be disclosed in the Offering Memorandum (other than as disclosed therein), or which would result in a Material Adverse Effect, or which would materially and adversely affect the consummation of the transactions contemplated in this Agreement or the performance by the Company or any of the Guarantors of their obligations hereunder or under the Registration Rights Agreement, the Indenture and the Securities. The aggregate of all pending legal or governmental proceedings to which the Company or any subsidiary is a party or of which any of their respective property or assets is the subject which are not described in the Offering Memorandum or the documents incorporated by reference therein, including ordinary routine litigation incidental to the business, would not result in a Material Adverse Effect.

 

(xvii) Accuracy of Exhibits . There are no contracts or documents which are required under the 1933 Act or the 1934 Act or the rules and regulations thereunder to be filed as exhibits to the documents incorporated by reference in the Offering Memorandum which have not been so filed as required.

 

(xviii) Possession of Intellectual Property . The Company and its subsidiaries own or possess, have the right to use or can acquire adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “ Intellectual Property ”) necessary to carry on the business now operated by them, except where the failure to own, possess, have the right to use or have the ability to acquire any such Intellectual Property would not have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.

 

- 7 -

(xix) Absence of Further Requirements . No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company and the Guarantors of their obligations hereunder or under the Registration Rights Agreement, the Indenture or the Securities, in connection with the offering, issuance or sale of the Securities hereunder, the issuance of shares of Common Stock upon conversion of the Notes or the consummation of the transactions contemplated by this Agreement, the Registration Rights Agreement, the Indenture or the Securities (including the use of the proceeds of the sale of the Securities as described in the Offering Memorandum under “Use of Proceeds”) (except for the filing of the Form T-1 by the trustee, the resale registration statement on Form S-3 required under the Registration Rights Agreement).

 

(xx) Possession of Licenses and Permits . The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “ Governmental Licenses ”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, except where the failure to possess such Governmental Licenses would not have a Material Adverse Effect; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

 

(xxi) Title to Property . The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in, or incorporated by reference into, the Offering Memorandum or (b) do not, singly or in the aggregate, materially affect the value of such property, do not interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries and would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in, or incorporated by reference into, the Offering Memorandum, are in full force and effect, and neither the Company nor any subsidiary has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims which would not, singly or in the aggregate, result in a Material Adverse Effect.

 

(xxii) Investment Company Act . The Company and each of the Guarantors is not, and following the sale of the Securities as contemplated herein, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “ 1940 Act ”).

 

- 8 -

(xxiii) Environmental Laws . Except as described in the Offering Memorandum or in a document incorporated by reference therein, and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “ Hazardous Materials ”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “ Environmental Laws ”), (B) the Company and its subsidiaries have all permits, licenses, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events, facts or circumstances that might reasonably be expected to form the basis of any order, decree, plan or agreement requiring clean-up or remediation, or any action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to any Hazardous Materials or any Environmental Laws.

 

(xxiv) Registration Rights . There are no persons with registration rights or other similar rights to have any securities (1) registered pursuant to the shelf registration statement to be filed in accordance with the Registration Rights Agreement or (2) otherwise registered by the Company under the 1933 Act (except as described in the Offering Memorandum or in a document incorporated by reference therein).

 

(xxv) Stabilization or Manipulation . Neither the Company, the Guarantors nor any of their executive officers, directors or, to their knowledge, controlling persons has taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale of the Securities.

 

(xxvi) Accounting Controls and Disclosure Controls . Subject to the disclosure in the Offering Memorandum or in the documents incorporated by reference therein, the Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Subject to the disclosure in the Offering Memorandum or in the documents incorporated by reference therein, the Company and its consolidated subsidiaries employ disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate to allow timely decisions regarding disclosure.

 

- 9 -

(xxvii) Tax Returns . The Company and its subsidiaries have filed all federal, state, local and foreign tax returns that are required to have been filed by them pursuant to applicable foreign, federal, state, local or other law or have duly requested extensions thereof, except insofar as the failure to file such returns or request such extensions would not reasonably be expected to result in a Material Adverse Effect, and has paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its Subsidiaries, except for such taxes or assessments, if any, as are being contested in good faith and as to which adequate reserves have been provided or where the failure to pay would not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability of the Company and each subsidiary for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not reasonably be expected to result in a Material Adverse Effect.

 

(xxviii) Suppliers . To the Company’s knowledge, no supplier of merchandise or gasoline to the Company or any of its subsidiaries has ceased shipments of merchandise to the Company or indicated to the Company or an executive officer of the Company an interest in decreasing or ceasing its sales to the Company or otherwise materially modifying its relationship with the Company, other than in the normal and ordinary course of business consistent with past practices between the Company and such supplier and that would result in a Material Adverse Effect.

 

(xxix) Similar Offerings . Neither the Company nor any of its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each, an “ Affiliate ”), has, directly or indirectly, solicited any offer to buy, sold or offered to sell or otherwise negotiated in respect of, or will solicit any offer to buy, sell or offer to sell or otherwise negotiate in respect of, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the offered Securities to be registered under the 1933 Act.

 

(xxx) Rule 144A Eligibility . The Securities are eligible for resale pursuant to Rule 144A and will not be, at Closing Time, of the same class as securities listed on a national securities exchange registered under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer quotation system.

 

(xxxi) No General Solicitation . None of the Company, its Affiliates or to the Company’s knowledge any person acting on its or any of their behalf (other than the Initial Purchasers and their Affiliates, as to whom the Company makes no representation) has engaged or will engage, in connection with the offering of the offered Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act.

 

(xxxii) No Registration Required . Subject to compliance by the Initial Purchasers with the procedures set forth in Section 6 hereof it is not necessary in connection with the offer, sale and delivery of the offered Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement and the Offering Memorandum to register the Securities under the 1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the “ 1939 Act ”).

 

- 10 -

(xxxiii) Reporting Company . As of the date hereof, the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the 1934 Act and is eligible to file a registration statement on Form S-3 for resales of the Securities and shares of Common Stock issuable upon conversion of the Notes.

 

(xxxiv) Listing of Common Stock . The Company’s Common Stock is registered pursuant to Section 12(g) of the 1934 Act and is listed on the Nasdaq National Market and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the 1934 Act or delisting the Common Stock from the Nasdaq National Market, nor has the Company received any notification that the Commission or the Nasdaq National Market is contemplating terminating such registration or listing.

 

(xxxv) Common Stock Certificates . The certificates for the shares of Common Stock (including the shares of Common Stock issuable upon conversion of the Notes) conform to the requirements of the Nasdaq National Market and the Delaware General Corporation Law.

 

(b) Officer’s Certificates. Any certificate signed by any officer of the Company, any Guarantor or any of their respective subsidiaries delivered to the Representative or to counsel for the Initial Purchasers at the Closing Time or any Date of Delivery (if any) shall be deemed a representation and warranty by the Company, such Guarantor or any such subsidiary to each Initial Purchaser as to the matters covered thereby.

 

SECTION 2. Sale and Delivery to Initial Purchasers; Closing .

 

(a) Initial Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Initial Purchaser, severally and not jointly, and each Initial Purchaser, severally and not jointly, agrees to purchase from the Company, at the price set forth in Schedule B, the aggregate principal amount at maturity of Initial Securities set forth in Schedule A opposite the name of such Initial Purchaser, plus any additional principal amount at maturity of Initial Securities which such Initial Purchaser may become obligated to purchase pursuant to the provisions of Section 11 hereof.

 

(b) Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Initial Purchasers, severally and not jointly, to purchase up to an additional $15,000,000 principal amount at maturity of Option Securities at the same price set forth in Schedule B for the Initial Securities, plus accrued interest, if any, from the Closing Time to the Date of Delivery (as defined below). The option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in part from time to time on one or more occasions only for the purpose of covering overallotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by Merrill Lynch to the Company setting forth the number of Option Securities as to which the several Initial Purchasers are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (a “ Date of Delivery ”) shall be determined by Merrill Lynch, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time, as hereinafter defined. If the option is exercised as to all or any portion of the Option Securities, each of the Initial Purchasers, acting severally and not jointly, will purchase that proportion of the aggregate principal amount at maturity of Option Securities then being purchased which the principal amount at maturity of Initial Securities set forth in Schedule A opposite the name of such Initial Purchaser bears to the aggregate principal amount at maturity of Initial Securities.

 

- 11 -

(c) Payment. Payment of the purchase price for, and delivery of the global certificates for, the Initial Securities shall be made at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004, or at such other place as shall be agreed upon by the Representative and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if pricing occurs after 4:30 P.M. (Eastern Time) on any given day) business day after the date hereof (unless postponed by the provisions of Section 11) or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery being herein called “ Closing Time ”).

 

In addition, in the event that any or all of the Option Securities are purchased by the Initial Purchasers, payment of the purchase price for, and delivery of certificates for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representative and the Company, on each Date of Delivery as specified in the notice from the Representative to the Company.

 

Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representative for the respective accounts of the Initial Purchasers of certificates for the Initial Securities or the Option Securities, if any, to be purchased by them. It is understood that each Initial Purchaser has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Initial Securities and the Option Securities, if any, which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Initial Purchasers, may (but shall not be obligated to) make payment of the purchase price for the Initial Securities or the Option Securities, if any, to be purchased by any Initial Purchaser whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Initial Purchaser from its obligations hereunder.

 

(d) Denominations; Registration. Certificates for the Initial Securities and the Option Securities, if any, shall be in such denominations ($1,000 or integral multiples of $1,000 in excess thereof) and registered in such names as the Representative may request in writing at least two full business days before the Closing Time or relevant Date of Delivery, as the case may be. The certificates representing the Initial Securities and the Option Securities, if any, will be made available for examination and packaging by the Initial Purchasers in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time or relevant Date of Delivery, as the case may be.

 

SECTION 3. Covenants of the Company . The Company covenants with each Initial Purchaser as follows:

 

(a) Offering Memorandum . The Company, as promptly as possible, will furnish to each Initial Purchaser, without charge, such number of copies of the Preliminary Offering Memorandum and the Final Offering Memorandum and any amendments and supplements thereto and documents incorporated by reference therein as such Initial Purchaser may reasonably request, which Preliminary Offering Memorandum and Final Offering Memorandum shall be in form and substance reasonably satisfactory to the Initial Purchasers.

 

(b) Notice and Effect of Material Events . The Company will immediately notify each Initial Purchaser, and confirm such notice in writing, of (x) any filing made by the Company or any Guarantor of information relating to the offering of the Securities with any securities exchange or any other regulatory body in the United States or any other jurisdiction, and (y) prior to the Closing Time or Date of Delivery, as appropriate, any material changes in or affecting the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise

 

- 12 -

which (i) make any statement in the Preliminary Offering Memorandum or Final Offering Memorandum (or any amendment or supplement) false or misleading or (ii) are not disclosed in the Offering Memorandum. In such event or if during such time any event shall occur as a result of which it is necessary, in the reasonable opinion of any of the Company, its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement the Preliminary Offering Memorandum or Final Offering Memorandum in order that the Preliminary Offering Memorandum or Final Offering Memorandum not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances then existing, the Company will forthwith amend or supplement the Preliminary Offering Memorandum or Final Offering Memorandum by preparing and furnishing to each Initial Purchaser an amendment or amendments of, or a supplement or supplements to, the Preliminary Offering Memorandum or Final Offering Memorandum (in form and substance satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so that, as so amended or supplemented, the Preliminary Offering Memorandum or Final Offering Memorandum will 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 existing at the time it is delivered to a Subsequent Purchaser, not misleading.

 

(c) Amendment to Offering Memorandum and Supplements . The Company will advise each Initial Purchaser promptly of any proposal to amend or supplement the Preliminary Offering Memorandum or Final Offering Memorandum (including an amendment by filing a document with the Commission which is incorporated by reference in the Preliminary Offering Memorandum or Final Offering Memorandum) and will not effect such amendment or supplement without the consent of the Initial Purchasers. Neither the consent of the Initial Purchasers, nor the Initial Purchaser’s delivery of any such amendment or supplement, shall constitute a waiver of any of the conditions set forth in Section 5 hereof.

 

(d) Blue Sky Qualifications . The Company will use its best efforts, in cooperation with the Initial Purchasers, to qualify the offered Securities and the shares of Common Stock issuable upon conversion of the Notes for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Initial Purchasers may designate and to maintain such qualifications in effect as long as required for the sale of the Securities; provided , however , that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will also supply the Initial Purchasers with such information as is necessary for the determination of the legality of the Securities for investment under the laws of such jurisdiction as the Initial Purchasers may request.

 

(e) DTC. The Company will cooperate with the Initial Purchasers and use its reasonable efforts to permit the offered Securities to be eligible for clearance and settlement through the facilities of DTC and will comply with all of the terms and conditions set forth in the representation letter of the Company to DTC relating to the approval of the Securities by DTC for book-entry transfer.

 

(f) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Offering Memorandum under “Use of Proceeds.”

 

(g) Restriction on Sale of Common Stock. During a period of 60 days from the date of the Final Offering Memorandum, the Company and its subsidiaries will not, without the prior written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or

 

- 13 -

otherwise transfer or dispose of any share of Common Stock, par value $0.01 per share, of the Company or any securities convertible into or exercisable or exchangeable for Common Stock or other securities of the Company or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock or any other securities of the Company whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Securities to be sold hereunder or any shares of Common Stock issuable upon conversion of the Securities, (B) any shares of Common Stock issued by the Company upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof and referred to in the Offering Memorandum or the Final Offering Memorandum (or in a document incorporated therein by reference), (C) any shares of Common Stock issued or options to purchase Common Stock granted pursuant to existing employee benefit plans of the Company referred to in the Offering Memorandum (or in a document incorporated therein by reference in the Offering Memorandum) or (D) the entering into of, and the issuance of shares of the Company’s Common Stock pursuant to the terms of, the Convertible Note Hedge Confirmation and the Warrant Confirmation. Notwithstanding the foregoing, if (1) during the last 17 days of the 60-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs or (2) prior to the expiration of the 60-day restricted period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 60-day restricted period, the restrictions imposed in this clause (g) shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

(h) Stabilization and Manipulation . The Company has not taken and will not take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Securities to facilitate the sale or resale of the Securities. Except as permitted by the 1933 Act, the Company will not distribute any final offering memorandum other than the Final Offering Memorandum, any preliminary offering memorandum other than the Preliminary Offering Memorandum, or any other offering material in connection with the offer and sale of the Securities.

 

(i) PORTAL Designation . The Company will use its reasonable efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. (“ NASD ”) relating to trading in the PORTAL Market.

 

(j) Listing of Common Stock on the Nasdaq National Market . The Company will use its reasonable best efforts to effect the listing of the Common Stock issuable upon the conversion of the Securities on the Nasdaq National Market and will file with the Nasdaq National Market all documents and notices required by the Nasdaq National Market of companies that have securities that are traded in the over the counter market and quotations for which are reported by the Nasdaq National Market, including, when required, a notification of change in the number of shares of common stock outstanding.

 

(k) Reporting Requirements . Until the offering of the Securities is complete, which shall be deemed to be the Closing Time unless notified otherwise by the Initial Purchasers, the Company will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations.

 

(l) Registration Rights Agreement and Indenture. The Company agrees to enter into and comply with all the terms and conditions of the Registration Rights Agreement and the Indenture.

 

- 14 -

(m) Qualification Under the Trust Indenture Act . The Company agrees that simultaneously with any registration of the Securities pursuant to the Registration Rights Agreement, or at such earlier time as may be required, the Indenture shall be qualified under the 1939 Act and any necessary supplemental indentures will be entered into in connection therewith.

 

(n) Reservation of Shares of Common Stock . The Company will, at all times, reserve and keep available, free of preemptive rights, enough shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue shares of Common Stock upon conversion of the Notes.

 

(o) No Advisory or Fiduciary Relationship . The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Initial Purchasers, on the other hand, (ii) in connection with the offering contemplated hereby and the process leading to such transaction each Initial Purchaser is and has been acting solely as a principal and is not the agent or fiduciary of the Company or its stockholders, creditors, employees or any other party, (iii) no Initial Purchaser has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the Company on other matters) and no Initial Purchaser has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (iv) the Initial Purchasers and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, and (v) the Initial Purchasers have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

SECTION 4. Payment of Expenses .

 

(a) Expenses. The Company will pay all expenses incident to the performance of their obligations under this Agreement, including (i) the preparation and printing of the Preliminary Offering Memorandum and the Final Offering Memorandum (including financial statements and exhibits) and of each amendment or supplement thereto, (ii) the printing and delivery to the Initial Purchasers of this Agreement and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities or the issuance or delivery of the Common Stock issuable upon conversion thereof, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Initial Purchasers and the certificates for the Common Stock issuable upon conversion thereof, including any stock or other transfer taxes, any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Initial Purchasers or the issuance or delivery of the Common Stock issuable upon conversion thereof and any charges of DTC in connection therewith, (iv) the fees and disbursements of the Company’s and Guarantors’ counsel, accountants and other advisors, (v) the qualification of the Securities and the Common Stock issuable upon conversion thereof under securities laws of such states and other jurisdictions (domestic or foreign) as the Initial Purchasers may designate in accordance with the provisions of Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery to the Initial Purchasers of copies of each Preliminary Offering Memorandum and Final Offering Memorandum and any amendments or supplements thereto, (vii) the preparation, printing and delivery to the Initial Purchasers of copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (ix) the costs and expenses of the Company relating to investor presentations undertaken in

 

- 15 -

connection with the marketing of the Securities including, without limitation, expenses associated with the production of slides and graphics, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of aircraft and other transportation used by the Company in connection with the investor presentation, (x) any fees payable in connection with the rating of the Securities, (xi) the fees and expenses of any transfer agent or registrar for the Common Stock issuable upon conversion of the Notes, (xii) the fees and expenses incurred in connection with the listing of the Common Stock issuable upon conversion of the Notes on the Nasdaq National Market, and (xiii) any fees and expenses payable in connection with the initial and continued designation of the Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322. The Initial Purchasers agree to reimburse a portion of the Company’s expenses in an amount equal to 0.25% of the aggregate principal amount of the Notes sold pursuant to this offering.

 

(b) Termination of Agreement. If this Agreement is terminated by the Representative in accordance with the provisions of Section 5 or Section 10(a)(i) hereof, the Company and the Guarantors shall reimburse the Initial Purchasers for all of their reasonable out-of-pocket expenses incurred, including the reasonable fees and disbursements of counsel for the Initial Purchasers.

 

SECTION 5. Conditions of the Initial Purchasers’ Obligations . The obligations of the several Initial Purchasers hereunder are subject to the accuracy of the representations and warranties of the Company and the Guarantors contained in Section 1 hereof or in certificates of any officer of the Company or any Guarantor, to the performance by the Company and the Guarantors of their respective covenants and other obligations hereunder, and to the following further conditions:

 

(a) Opinion of Counsel for Company and the Guarantors. At Closing Time, the Initial Purchasers shall have received the favorable opinions, dated as of Closing Time, of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., counsel for the Company, Bingham McCutchen, New York counsel for the Company, Leath, Bouch & Crawford LLP, South Carolina counsel to the Company, Smith Hulsey & Busey, Florida counsel to the Company, and Whelchel & Dunlap, LLP, Georgia counsel to the Company, in each case in form and substance reasonably satisfactory to counsel for the Initial Purchasers, in the form set forth in Exhibits A, B, C, D and E hereto and to such further effect as counsel to the Initial Purchasers may reasonably request. Such counsel may state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, the Guarantors and their respective subsidiaries and certificates of public officials.

 

(b) Opinion of Counsel for Initial Purchasers. At Closing Time, the Initial Purchasers shall have received the favorable opinion, dated as of Closing Time, of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the Initial Purchasers, with respect to the matters set forth in clauses (i), (iv), (v), (ix) (solely as to preemptive or other similar rights arising by operation of law or under the charter or by-laws of the Company), (xvii) and the first full paragraph following clause (xviii) of Exhibit A hereto and with respect to the matters set forth in clauses (i) and (ii) of Exhibit B hereto. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Initial Purchasers. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, the Guarantors and their respective subsidiaries and certificates of public officials.

 

(c) Officers’ Certificates. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Offering Memorandum, any material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects

 

- 16 -

of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Initial Purchasers shall have received a certificate of the President or a Vice President of the Company and each Guarantor (solely with respect to such Guarantor) and of the chief financial or chief accounting officer of the Company and each Guarantor (solely with respect to such Guarantor), dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1 hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, and (iii) the Company and each Guarantor has complied with all agreements and satisfied all conditions on its part to be performed or satisfied under this Agreement at or prior to Closing Time.

 

(d) Accountant’s Comfort Letter. At the time of the execution of this Agreement, the Initial Purchasers shall have received from Deloitte & Touche LLP a letter in the form of Annex A hereto, dated as of such date, in form and substance satisfactory to the Initial Purchasers, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to initial purchasers with respect to the financial statements and certain financial information contained in the Offering Memorandum.

 

(e) Bring-down Comfort Letter. At Closing Time, the Initial Purchasers shall have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (d) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time.

 

(f) PORTAL. At Closing Time, the Securities shall have been designated for trading on PORTAL.

 

(g) Approval of Listing . At Closing Time, the shares of Common Stock issuable upon conversion of the Notes shall have been approved for quotation on the Nasdaq National Market, subject only to official notice of issuance.

 

(h) Registration Rights Agreement and Indenture . At Closing Time, the Company and each of the Guarantors shall have entered into the Registration Rights Agreement and the Indenture in form and substance satisfactory to the Initial Purchasers.

 

(i) Lock-up Agreements. At Closing Time, the Initial Purchasers shall have received an agreement substantially in the form of Exhibit F hereto signed by the persons listed on Schedule D hereto.

 

(j) Third Party Consents. All third party consents necessary for consummation of the offer and sale of the Securities, in form and substance satisfactory to the Initial Purchasers, shall have been received by the Company.

 

(k) Conditions to Purchase of Option Securities . In the event that the Initial Purchasers exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securit