SUBSCRIPTION AND STANDBY COMMITMENT AGREEMENT
This
Subscription and Standby Commitment Agreement (this “Agreement”), dated as
of December 7, 2006, is entered into by and among WestPoint International, Inc.
(the “Company”)
and American Real Estate Holdings Limited Partnership (the “Purchaser”).
PRELIMINARY
STATEMENTS
A. Series A-1 Preferred Stock
Offer. The Company proposes to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 1,000,000 shares of Series A-1
Preferred Stock, par value $0.01 per share of the Company (the “Series A-1 Preferred
Stock”), for a purchase price of $100 per share (the “Per Share Purchase
Price”) and for an aggregate purchase price of $100 million (the “Series A-1 Aggregate
Purchase Price”), subject to the terms of this Agreement.
B. Series A-2 Preferred Stock
Offer. In addition, as described in the offering memorandum
attached hereto as Exhibit A (the “Offering
Memorandum”), the Company proposes to offer (the “Offer”) to each
holder of record that is an “accredited investor” (as defined below), as of the
close of business on December 4, 2006 (the “Record Date”), of
shares of its common stock, par value $0.01 per share (“Common Stock”), other
than the Purchaser or any of its direct or indirect subsidiaries that are
holders of record of Common Stock (such holders of record, other than the
Purchaser and such direct and indirect subsidiaries, being herein referred to as
the “Initial Series
A-2 Offerees”), the right to purchase such holder’s Percentage Interest
and Overallotment Interest (each term as defined in the Offering Memorandum) of
1,000,000 shares of Series A-2 Preferred Stock, par value $0.01 per share of the
Company (the “Series
A-2 Preferred Stock” and together with the Series A-1 Preferred Stock,
the “Preferred
Stock”)), for the Per Share Purchase Price and for an aggregate purchase
price of $100 million (the “Series A-2 Aggregate
Purchase Price” and together with the Series A-1 Aggregate Purchase
Price, the “Aggregate
Purchase Price”)). As acknowledged by the parties hereto and
as more fully described in the Offering Memorandum, the Initial Series A-2
Offerees may assign their rights to purchase Series A-2 Preferred Stock to their
wholly-owned subsidiaries so long as such entity is an accredited investor
(collectively with the Series A-2 Initial Offerees, the “Series A-2 Offerees”)
and the Series A-2 Offerees have the right to subscribe for shares of Series A-2
Preferred Stock in excess of their Percentage Interest if any other Series A-2
Offerees do not subscribe for their full Percentage Interest. The
Series A-2 Offerees are being given the opportunity to elect to collectively
purchase all of the Series A-2 Preferred Stock, but are not being given the
opportunity to, and shall not have the right to, purchase some but not all of
the Series A-2 Preferred Stock. If the Series A-2 Offerees do not
collectively purchase all of the shares of the Series A-2 Preferred Stock, the
Company proposes to sell to the Purchaser, all such shares for the Per Share
Purchase Price and for the Series A-2 Aggregate Purchase Price. The
Offer and sale of the Series A-2 Preferred Stock to the Series A-2 Offerees, the
sale of the Series A-2 Preferred Stock to the Purchaser in the event that not
all of the Series A-2 Preferred Stock is purchased by the Series A-2 Offerees,
and the sale of the Series A-1 Preferred Stock to the Purchaser, are
collectively referred to as the “Transactions” and,
December 19, 2006, which is the last day on which the Offer may be accepted by
the Series A-2 Offerees, is referred to as the “Expiration
Date.”
STATEMENT
OF AGREEMENT
In
consideration of the premises and the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. Series A-1 Preferred Stock
Commitment. Subject to the terms and conditions hereof, the
Purchaser agrees to purchase from the Company, and the Company agrees to issue
and sell to the Purchaser, 1,000,000 shares of Series A-1 Preferred Stock at the
Per Share Purchase Price per share, constituting in the aggregate the Series A-1
Aggregate Purchase Price (the “Series A-1
Commitment”).
2. Series A-2 Preferred Stock
Commitment.
(a) Series A-2
Commitment. Subject to the terms and conditions hereof and in
the event that all of the shares of Series A-2 Preferred Stock are not
subscribed for on or prior to the Expiration Date and paid for by the Series A-2
Offerees on or prior to 5:00 p.m. on the first day following the Expiration Date
(or if such day is not a business day, the next succeeding business day) (the
“Funding
Date”), the Purchaser agrees to purchase from the Company and the Company
agrees to issue and sell to the Purchaser, all of the shares of Series A-2
Preferred Stock at the Per Share Purchase Price per share, constituting in the
aggregate the Series A-2 Aggregate Purchase Price (the “Series A-2
Commitment” and together with the Series A-1 Commitment, the “Commitment”).
(b) Expiration Date; Funding
Date. Without the prior written consent of the Purchaser,
which may be withheld in its sole and absolute discretion, neither the
Expiration Date nor the Funding Date will be extended.
(c) Notification of Series A-2
Preferred Stock to be Purchased. As soon as practicable
following the expiration of the exercise period of the Offer and promptly
following its determination of the number of shares of Series A-2 Preferred
Stock validly subscribed for by the Series A-2 Offerees in accordance with the
terms of the Offer, the Company shall notify the Purchaser in
writing of the number of shares of Series A-2 Preferred Stock validly
subscribed for by the Series A-2 Offerees. If all of the Series A-2
Preferred Stock has been validly subscribed for by the Expiration Date by the
Series A-2 Offerees, then promptly following the Funding Date, the Company shall
notify the Purchaser in writing whether it has received $100 million as payment
for the Series A-2 Preferred Stock by the Series A-2 Offerees and whether the
Purchaser is required to purchase the Series A-2 Preferred Stock pursuant to the
Series A-2 Commitment.
(d) Satisfaction of
Commitment. The Purchaser may, in its sole discretion, satisfy
the Commitment directly and/or indirectly through one or more of its direct or
indirect subsidiaries (each, a “Purchaser Designee”);
provided, however, any such
Purchaser Designee shall be required to make the representations and warranties
set forth in Section
5 to the Company and assume the obligations of the Purchaser hereunder,
and the Purchaser shall remain liable under this Agreement as set forth
herein.
3. Closing; Payment of Purchase
Price and Fees.
(a) Closing; Closing
Date. The delivery of and payment for the shares of Preferred
Stock shall take place at the offices of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day
following the satisfaction and/or waiver of all of the conditions set forth
herein (other than such conditions by their nature to be satisfied at
consummation) or at such other place and time as is mutually agreed to in
writing by the parties hereto (the “Closing” and such
date, the “Closing
Date”).
(b) Company
Deliverables. On the Closing Date the Company shall deliver to
the Purchaser the following:
(i) stock
certificates representing the shares of Preferred Stock purchased by the
Purchaser and the Purchaser Designees pursuant to the Commitment, in the
denominations and registered in the names of the Purchaser and, subject to the
restrictions set forth herein, such Purchaser Designees, as designated in
writing by the Purchaser not later than five (5) business days prior to the
Closing Date;
(ii) a
certificate, dated as of the Closing Date, executed by an officer of the Company
certifying as to the fulfillment of the closing conditions specified in Sections 9(a)(i) and
9(a)(ii);
-
2-
(iii) a
certificate, dated as of the Closing Date, and signed by a secretary or
assistant secretary of the Company as to the Company’s organizational documents,
and the Company’s adoption of resolutions as to the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby; and
(iv) such
other written instruments or documentation as may be reasonably necessary or
appropriate in order to document the satisfaction or waiver of the applicable
closing conditions set forth in Section 9, as
reasonably requested by the Purchaser.
(c) Purchaser
Deliverables. On the Closing Date the Purchaser shall deliver
to the Company the following:
(i) the
Series A-1 Aggregate Purchase Price, and if applicable, the Series A-2 Aggregate
Purchase Price, by wire transfer of immediately available funds to an account
designated by the Company;
(ii) a
certificate, dated as of the Closing Date, executed by an officer of the
Purchaser certifying as to the fulfillment of the closing conditions specified
in Sections 9(b)(i)
and 9(b)(ii); and
(iii) such
other written instruments or documentation as may be reasonably necessary or
appropriate in order to document the satisfaction or waiver of the applicable
closing conditions set forth in Section 9, as
reasonably requested by the Company.
4. Representations and
Warranties of the Company. The Company represents and warrants
to the Purchaser as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Good Standing
and Qualifications. The Company is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Delaware. The Company is duly licensed or qualified to do business
as a foreign corporation and is in good standing under the laws of any other
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing is not,
individually or in the aggregate, reasonably expected to have a Material Adverse
Effect. A “Material Adverse Effect” means (i) the effect of any event
or circumstance that, taken alone or in conjunction with any other events or
circumstances, has or could reasonably be expected to have a material adverse
effect on the business, operations, results of operations, properties,
liabilities or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole or (ii) the impairment of the Company’s ability to
perform its obligations under the Transaction Documents (as defined below);
provided, however, that (A) a
material adverse change in (I) the global, United States or regional economy
generally, (II) home fashion textile manufacturing, distribution or marketing
conditions generally or (III) global or United States securities markets, (B) a
change in applicable law or (C) a change caused by any announcement of any of
the transactions contemplated by this Agreement, shall not, in and of itself, be
deemed to have a Material Adverse Effect. The Company has all
requisite corporate power and authority to own, operate, and lease its
properties and carry on its businesses as now conducted in all material
respects.
(b) Subsidiaries. Each
of the material subsidiaries of the Company is duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
organization. All of the outstanding shares of capital stock of each
of the Company’s subsidiaries is authorized, validly issued, fully paid and
nonassessable and all such shares are owned by the Company or another wholly
owned subsidiary of the Company.
(c) Corporate Authority; Binding
and Enforceable. The Company has the requisite corporate power
and authority to execute and deliver this Agreement, the Offering Memorandum and
any other documents that are executed and delivered in connection with this
Agreement, the Transactions and the transactions contemplated hereby and thereby
(the “Transaction
Documents”) and all requisite power, authority and financial ability to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby, subject to the Stockholder
Approval (as defined below). The Transactions, the Transaction
Documents and the consummation and performance by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action of the Company, subject to the Stockholder
Approval. This Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except to
the extent the enforceability of which may otherwise be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting the enforcement of creditors’ rights generally, and general
equitable principles.
-
3-
(d) Capital
Structure. The authorized capital stock of the Company
consists of 200,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock. As of the Record Date 19,498,389 shares of Common
Stock are issued and outstanding and 10,501,611 shares of Common Stock are
reserved for issuance pursuant to outstanding subscription rights to purchase
such number of shares of Common Stock. There is current litigation
relevant to the ownership of the capital stock of the Company as more fully
described in the Offering Memorandum. The Company has issued stock
appreciation rights, and may issue additional stock appreciation rights, to
certain executives of the Company pursuant to management stock appreciation
plans approved by the Board of Directors of the Company. Except as
set forth above, as of the date hereof, no share of capital stock or other
equity or voting securities of the Company are issued, reserved for issuance or
outstanding. In addition, except as set forth above, there are no
issued, outstanding or authorized options, warrants, rights, calls, convertible
instruments, phantom stock, stock appreciation or similar rights or other
agreements or commitments or preemptive rights to which the Company is a party
or which is binding upon the Company providing for the issuance, disposition or
acquisition of any of its capital stock or any other debt or equity security, or
voting rights, rights of first refusal, subscription, stock restriction or
similar rights.
(e) No Organic or Legal
Violations. The execution and delivery of this Agreement by
the Company does not and the consummation of the transactions contemplated
hereby will not conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or to
a loss of a benefit under, or result in the creation of any lien upon any of the
properties or assets of the Company or any of its subsidiaries under (A) the
certificate of incorporation, bylaws or other organizational documents of the
Company; or (B) any law or agreement applicable to the Company or by which any
property or asset of the Company is bound or affected; or (C) any note, bond,
mortgage, indenture, lease, license, permit or franchise to which the Company is
a party except, in the case of clauses (B) and (C), for any such conflicts,
violations, breaches, defaults, events, losses, payments, cancellations,
encumbrances, or other occurrences that are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect.
(f) Compliance with
Law. The Company is in compliance with any law or agreement
applicable to the Company or by which any property or asset of the Company is
bound or affected, except for such noncompliance that is not, individually or in
the aggregate, reasonably expected to have a Material Adverse
Effect.
(g) Financial
Information. The Company has previously provided to the
Purchaser the audited consolidated balance sheets and statements of operations
and changes in stockholders’ equity and cash flows of the Company and its
subsidiaries as of and for the year ended December 31, 2005 (the “Audited Financial
Statements”) and the unaudited consolidated balance sheet and the
unaudited consolidated statements of operations and changes in stockholders’
equity and cash flows of the Company and its subsidiaries as of and for the
ten-month period ended November 4, 2006 (the “Unaudited Financial
Statements,” and together with the Audited Financial Statements, the
“Financial
Statements”). The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles (“GAAP”) applied on a
consistent basis throughout the periods covered thereby (subject, in the case of
the Unaudited Financial Statements to normal recurring year-end adjustments and
the absence of all required footnotes thereto); and (C) fairly present in all
material respects the consolidated financial condition, results of operations
and cash flows of the Company and its subsidiaries as of the respective dates
thereof and for the periods referred to therein. Neither the Company
nor any of its subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations reflected on the Unaudited Financial Statements or
that were incurred after November 4, 2006 in the ordinary course of business
consistent with past practice.
(h) Ordinary
Course. Since November 4, 2006, the Company and its
subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and there has not been:
-
4-
(i) any
effect, event, change or condition which has had or is reasonably expected to
have a Material Adverse Effect, other than the Company’s continuing operating
losses;
(ii) any
material damage, destruction or loss to any material asset or property owned by
the Company or any of its subsidiaries, whether or not covered by
insurance;
(iii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company’s
capital stock (other than in accordance with its terms) or any repurchase,
redemption or other acquisition by the Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of the Company or any of
its subsidiaries;
(iv) any
change in accounting methods, principles or practices by the Company or any of
its subsidiaries, except for changes resulting from changes in GAAP;
or
(v) any
agreement, commitment, arrangement or undertaking by the Company or any of its
subsidiaries to perform any action described in clauses (i) through
(iv).
(i) Due Authorization; Valid
Issuance. The Company has duly authorized and reserved a
sufficient number of shares of Common Stock for issuance upon conversion of the
Preferred Stock. Upon delivery of the shares of Preferred Stock to
the Purchaser and payment therefor as contemplated hereunder such shares shall
be, and, if and when issued, any shares of Preferred Stock issued to pay
dividends on the Preferred Stock and any Common Stock issued upon conversion of
the Preferred Stock shall be, duly authorized, validly issued, fully paid and
nonassessable, and free and clear of all liens, preemptive rights, rights of
first refusal, subscription and similar rights. Based, in part, on
the representations and warranties of the Purchaser in Section 5 and the
representations and warranties to be provided by any Series A-2 Offerees in
connection with the Offer, the Offer and the sale and issuance of the shares of
Preferred Stock are exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the “Securities Act”) and
the securities or blue sky laws in any applicable state.
(j) Fees. Except
for the fee to be paid to Gordian Group LLC pursuant to the Engagement Letter,
dated as of November 7, 2006 between Gordian Group LLC and the Company (the
“Gordian Engagement
Letter”), no broker, investment banker, financial advisor or other
person, is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company or
any of its subsidiaries.
5. Representations and
Warranties of Purchaser. The Purchaser, represents and
warrants to the Company as of the date hereof and as of the Closing Date as
follows:
(a) Due Organization and Good
Standing. The Purchaser is duly organized, validly existing,
and in good standing under the laws of the state of its
organization.
(b) Corporate Authority; Binding
and Enforceable. The Purchaser has all requisite power and
authority to execute and deliver this Agreement, and all requisite power,
authority and financial ability to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all requisite action of the
Purchaser. This Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except to the extent the enforceability of this Agreement may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting the enforcement of creditors’ rights generally, and
general equitable principles.
-
5-
(c) No Organic or Legal
Violations. The execution and delivery of this Agreement by
the Purchaser does not and the consummation of the transactions contemplated
hereby will not conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or to
a loss of a benefit under, or result in the creation of any lien upon any of the
properties or assets of the Purchaser or any of its subsidiaries under (A) the
certificate of incorporation, bylaws or other organizational documents of the
Purchaser; (B) any law or agreement applicable to the Purchaser or by which any
property or asset of the Purchaser is bound or affected; or (C) any note, bond,
mortgage, indenture, lease, license, permit or franchise to which the Purchaser
is a party except, in the case of clauses (B) and (C), for any such conflicts,
violations, breaches, defaults, events, losses, payments, cancellations,
encumbrances, or other occurrences that are not, individually or in the
aggregate, reasonably expected to prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement. No filing
or other action by the Purchaser is required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976 in connection with the Agreement, the
Transactions or the transactions contemplated hereby and thereby.
(d) Compliance with
Law. The Purchaser is in compliance with any law or agreement
applicable to the Purchaser or by which any property or asset of the Purchaser
is bound or affected, except for such noncompliance that is not, individually or
in the aggregate, reasonably expected to prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement.
(e) Accredited
Investor. The Purchaser is an “accredited investor” within the
meaning of Rule 501 of Regulation D under the Securities Act.
(f) Sophistication. The
Purchaser is (A) knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares representing
an investment decision like that involved in the purchase of the shares of
Preferred Stock, including investments in securities issued by the Company and
comparable entities, (B) is able to bear the economic risk associated with the
purchase of the shares of Preferred Stock including a total loss of its
investment, and (C) has had the opportunity to request, receive, review and
consider all information it deems relevant in making an informed decision to
purchase the shares of Preferred Stock. The Purchaser acknowledges
that the Company has not given Purchaser any investment advice, credit
information or opinion on whether the purchase of its portion of the shares of
Preferred Stock is prudent.
(g) Investment. The
Purchaser is acquiring the shares of Preferred Stock in the ordinary course of
its business and for its own account for investment only and with no present
intention of distributing any of such shares or entering into any arrangement or
understanding with any other persons regarding the distribution of such
shares.
(h) Compliance with Securities
Act. The Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the shares of
Preferred Stock, or the shares of Common Stock issuable upon conversion of such
shares, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and any applicable state securities
laws.
(i) Exemption from
Registration. The Purchaser understands that the shares of
Preferred Stock are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of the Securities Act and state
securities laws and that the Company is relying, in part, upon the truth and
accuracy of, and the Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of
the Purchaser set forth herein in order to determine the availability
of such exemptions and the eligibility of the Purchaser to acquire the
shares.
(j) Restricted
Securities. The Purchaser understands that, until such time as
its shares of Preferred Stock are sold pursuant to a registration statement that
has been declared effective under the Securities Act or pursuant to Rule 144
under the Securities Act without any restriction as to the number of securities
as of a particular date that can then be immediately sold, the shares will bear
a restrictive legend in substantially the following form:
“The
shares evidenced by this certificate and the shares into which they are
convertible have not been registered under the Securities Act of 1933, as
amended (the ‘Securities Act’), or the securities laws of any state or other
jurisdiction. None of such shares may be offered, sold, pledged or
otherwise transferred except (1) pursuant to an exemption from registration
under the Securities Act or (2) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with all applicable
securities laws of the states and other jurisdictions, and in the case of a
transaction exempt from registration, unless the issuer has received an opinion
of counsel reasonably satisfactory to it that such transaction does not require
registration under the Securities Act and such other applicable
laws.”
-
6-
Certificates
representing the shares of Common Stock into which the Preferred Stock is
convertible shall bear a comparable legend to the legend set forth
above.
(k) Regulation
D. The Purchaser shall not, and shall not permit any of its
directors, officers, employees, affiliates and agents to, engage in any activity
in connection with the Transactions that constitutes a “general solicitation” or
would otherwise cause the Company to fail to satisfy the manner of offering
limitations set forth in Rule 502(c) of Regulation D under the Securities Act in
connection with the Transactions; provided, that the
Purchaser shall have no responsibility with respect to the actions of the
Company or its subsidiaries.
6. Covenants of the
Company. The Company agrees that:
(a) Offering
Memorandum. The Company shall prepare and circulate (or cause
the preparation and circulation of) the Offering Memorandum to the Series A-2
Offerees. Except as may be required by applicable securities law, the
Company will not modify or amend the Offering Memorandum without the consent of
the Purchaser (which consent may be withheld in its sole and absolute
discretion)
(b) Transactions. The
Company shall conduct the Transactions in compliance with the Securities
Act and all other applicable local, state or federal securities
laws. The Company shall not modify or amend the terms of the
Transactions without the consent of the Purchaser (which consent may be withheld
in its sole and absolute discretion).
(c) Amendment to the
Bylaws. The Company shall take any and all actions necessary
on its part to make effective, as of the Closing, the Amended and Restated
By-Laws of the Company attached hereto as Exhibit B (the “Restated
By-Laws”). The Restated By-Laws shall be and remain effective
from the Closing and until thereafter amended in compliance with the terms
thereof and applicable law.
(d) Amendment to the Certificate
of Incorporation. Subject to the Stockholder Approval, the
Company shall take any and all actions necessary on its part to make effective
as of the Closing, and subject to the completion of the Transactions, the
Restated Certificate of Incorporation of the Company in the form attached hereto
as Exhibit C
(the “Restated
Charter”). The Restated Charter shall be and remain effective
from the Closing and until thereafter amended in compliance with the terms
thereof and applicable law.
(e) Certificate of
Designation. The Company shall take any and all actions
necessary on its part to make effective, as of the Closing, the Certificate of
Designation in the form attached hereto as Exhibit D (the “Certificate of
Designation”). The Certificate of Designation shall be and
remain effective from the Closing and until thereafter amended in compliance
with the terms thereof and applicable law.
(f) Board
Reconstitution. The Company shall take any and all actions
necessary on its part (including obtaining the resignation of directors) to
cause the directors comprising the full Board of Directors from and after the
Closing, (i) to consist of four directors elected by the holders of Common Stock
in three classes as follows: Xxxxxx Xxxxxxxxxx to serve as a director
of the Company for a term starting at the time that the Restated Charter becomes
effective and expiring at the annual meeting of stockholders to be held in 2007,
Xxxxx Xxxxxxx to serve as a director of the Company for a term starting at the
time that the Restated Charter becomes effective and expiring at the annual
meeting of stockholders to be held in 2008 and Xxxxxxx X. Xxxxxxxx and Xxxx X.
Icahn to serve as directors of the Company for a term starting at the time that
the Restated Charter becomes effective and expiring at the annual meeting of
stockholders to be held in 2009, (ii) three directors elected by holders of
Series A-1 Preferred Stock and (iii) three directors elected by holders of
Series A-2 Preferred Stock, consistent with the Restated Charter, the Restated
By-Laws and the Certificate of Designation (the “Board
Reconstitution”).
-
7-
(g) Stockholder
Approval. The Company shall, in accordance with applicable
law, its certificate of incorporation and by-laws, call for the annual meeting
of stockholders to be scheduled for no later than December 20, 2006 for the
purpose of obtaining approval of the Restated Charter pursuant to Section 242 of
the Delaware General Corporation Law and electing the directors consistent with
the Board Reconstitution (the “Stockholder
Approval”).
(h) Information. The
Company shall furnish the Purchaser with such information regarding itself and
its subsidiaries as the Purchaser may reasonably request.
7. Covenants of the
Purchaser. The Purchaser agrees to cause its affiliates that
are record holders of Common Stock to be present in person or by proxy at the
stockholder meeting duly called by the Company to obtain the Stockholder
Approval, and at any adjournment or postponement thereof, and to cause such
affiliates to vote all shares of Common Stock held by them in support of the
Restated Charter and Restated Bylaws
8. Covenants of both the
Company and the Purchaser. Each of the Company and the
Purchaser agrees that:
(a) Cooperation. It
will use reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things reasonably necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated hereby.
(b) Notice. It
will promptly deliver to the other parties hereto written notice of any matter,
event or development that is or could (A) render any representation or warranty
made by it herein inaccurate or incomplete in any respect or (B) constitute or
result in a breach by it of, or a failure by it to comply with, any covenant
herein.
(c) Registration Rights
Agreement. Contemporaneously with or as soon as practicable
following the Closing, the Company and the Purchaser shall each execute and
deliver the Registration Rights Agreement set forth on Exhibit E
hereto.
9. Conditions to
Closing.
(a) Conditions of Purchaser’s
Obligations. The obligation of the Purchaser to purchase the
shares of Preferred Stock and consummate the transactions contemplated herein
shall be subject to the satisfaction (or waiver by the Purchaser) of each of the
following conditions:
(i) the
representations and warranties of the Company contained in Section 4 that are
qualified as to materiality shall be true and correct in all respects on and as
of the date hereof and the date of the consummation of the Transactions, with
the same force and effect as though made on and as of such date, except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation or warranty shall be true and correct as of such
specified date, and the representations and warranties that are not so qualified
shall be true and correct in all material respects on and as of the date hereof
and the date of the consummation of the Transactions, with the same force and
effect as though made on and as of such date, except to the extent that any
representation or warranty is made as of a specified date, in which case such
representation or warranty shall be true and correct in all material respects as
of such specified date;
(ii) the
Company shall have performed or complied, in all material respects, with its
covenants required to be performed or complied with under this
Agreement;
(iii) no
injunction, order or decree of a court of competent jurisdiction shall: (A)
modify, restrict or prohibit, in whole or in part, (x) the terms of, or
consummation of, the Transactions or the transactions contemplated hereby, or
(y) the Board Reconstitution, or the election (to be effective simultaneously
with the Closing, by written consent of the holders of Series A Preferred Stock)
of the 3 directors to be elected by the holders of the Series A-1 Preferred
Stock and the Series A-2 Preferred Stock, or (B) otherwise frustrate the purpose
of the Transactions, including the acquisition of certain bed products
manufacturing facilities from Manama Textile Xxxxx WLL in Bahrain (the “Bahrain
Acquisition”);
-
8-
(iv) the
Offer shall have expired;
(v) the
Company shall have performed or complied with its obligations under Sections 6(a) – 6(h)
and the matters stated in Sections 6(a) – 6(h)
shall have occurred;
(vi) the
Company and the other parties thereto shall have executed and delivered a
definitive agreement regarding the Bahrain Acquisition;
(vii) the
Company is ready willing and able to engage in the Closing and deliver the items
required to be delivered pursuant to Section 3(b);
and
(viii) either
(a) all of the shares of the Series A-2 Preferred Stock have been subscribed for
on or prior to the Expiration Date and paid for by the Series A-2 Offerees on or
prior to the Funding Date or (b) the Company is ready, willing and able to
deliver the certificates of Series A-2 Preferred Stock to the Purchaser pursuant
to Section 3(b) for purchase by the Purchaser hereunder.
(b) Conditions of the Company’s
Obligations. The obligation of the Company to issue and sell
the shares of Preferred Stock and consummate the transactions contemplated
herein shall be subject to the satisfaction (or waiver by the Company) of each
of the following conditions:
(i) the
representations and warranties of the Purchaser contained in Section 5 that are
qualified as to materiality shall be true and correct in all respects on and as
of the date hereof and the date of the consummation of the Transactions, with
the same force and effect as though made on and as of such date, except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation or warranty shall be true and correct as of such
specified date, and the representations and warranties that are not so qualified
shall be true and correct in all material respects on and as of the date hereof
and the date of the consummation of the Transactions, with the same force and
effect as though made on and as of such date, except to the extent that any
representation or warranty is made as of a specified date, in which case such
representation or warranty shall be true and correct in all material respects as
of such specified date;
(ii) the
Purchaser shall have performed or complied, in all material respects, with its
covenants required to be performed or complied with under this
Agreement;
(iii) no
injunction, order or decree of a court of competent jurisdiction shall: (A)
modify, restrict or prohibit, in whole or in part, (x) the terms of, or
consummation of, the Transactions or the transactions contemplated hereby or,
(y) the Board Reconstitution, or the election (to be effective simultaneously
with the Closing, by written consent of the holders of Series A Preferred Stock)
of the 3 directors to be elected by the holders of the Series A-1 Preferred
Stock and the Series A-2 Preferred Stock, or (B) otherwise frustrate the purpose
of the Transactions, including the Bahrain Acquisition;
(iv) the
Offer shall have expired;
(v) the
matters stated Sections 6(c) – 6(g)
shall have occurred; and
(vi) the
Company and the other parties thereto shall have executed and delivered a
definitive agreement regarding the Bahrain Acquisition.
10. Termination.
(a) Mutual
Consent. This Agreement may be terminated at any time prior to
Closing by mutual written consent of the Company and the Purchaser.
-
9-
(b) By the
Company. The Company shall be entitled to terminate this
Agreement at any time prior to Closing by giving written notice thereof to the
Purchaser in the event that (i) the Purchaser materially breaches this
Agreement; provided that the
Purchaser has not cured such breach within 10 days following receipt of written
notice thereof from the Company or such breach is not curable, or (ii) the
Transactions and the transactions contemplated hereby shall not have been
consummated on or before December 31, 2006, other than such failure resulting
from any breach by the Company of its obligations hereunder.
(c) By the
Purchaser. The Purchaser shall be entitled to terminate this
Agreement at any time prior to Closing by giving written notice thereof to the
Company in the event that (i) the Company materially breaches this Agreement;
provided that
the Company has not cured such breach within 10 days following receipt of notice
thereof from the Purchasers or such breach is not curable, or (ii) the
Transactions and the transactions contemplated hereby shall not have been
consummated on or before December 31, 2006, other than due to the any failure
resulting from any breach by the Purchaser of its obligations
hereunder.
(d) Effect of
Termination. Upon termination of this Agreement by the Company
pursuant to Section 10(b) or
by the Purchaser pursuant to Section 10(c), this
Agreement shall terminate upon delivery of such notice as described in Section 10(b) or
Section 10(c),
as applicable, and no party hereto shall have any liability or obligation
hereunder; provided however, upon
termination under Section 10(b) or Section 10(c), the covenants and agreements
made by the parties herein under this Section and Section 20 shall survive
indefinitely in accordance with their terms; provided, also, that no such
termination shall relieve the Purchaser or the Company from liability for breach
or non-performance of any representation, warrant, covenant or agreement
hereunder prior to the date of such termination.
11. Existing
Rights. At the time of the sale of assets of WestPoint
Xxxxxxx, Inc. in August of 2005 in connection with its bankruptcy
reorganization, it was contemplated that a rights offering would take place for
the issuance of Common Stock at a purchase price of $8.772 per share (the “Existing
Rights”). In connection therewith the Purchaser agreed to
purchase and the Company agreed to sell to the Purchaser, at the same $8.772
price per share (the aggregate of the actual amount required to be paid by the
Purchaser following the completion of the rights offering being referred to
herein as the “Aggregate Payment
Amount”) a number of shares of Common Stock equal to that number of
shares of Common Stock with respect to which Existing Rights were not exercised
in the rights offering (such purchase by the Purchaser being referred to herein
as the “Post-Rights
Offering Purchase”). In the event that the Purchaser or a
Purchaser Designee acquires Series A-2 Preferred Stock in accordance with this
Agreement, and if the Post-Rights Offering Purchase is to occur, then in lieu of
the Purchaser paying cash to acquire all or a portion of the Common Stock in the
Post-Rights Offering Purchase, the Company will, if so requested by the
Purchaser (which request the Purchaser may make or refrain from making in its
sole and absolute discretion) exchange Common Stock at the rate specified below
for up to a number of shares of Series A-2 Preferred Stock having an Accrued
Preference Amount (which term as used here and throughout this Agreement, shall
mean the sum of (A) Stated Value (as defined in the Certificate of Designation)
and (B) an amount equal to all accrued and unpaid dividends on the Series A-2
Preferred Stock to be exchanged through the date of such exchange) equal to the
Aggregate Payment Amount (or any amount thereof not paid by the Purchaser in
cash), thereby satisfying in a cashless transaction both the redemption
obligation of the Company referred to above and the Aggregate Payment Amount
obligation (or any amount thereof not paid by Purchaser in cash) of the
Purchaser in a Post-Rights Offering Purchase. Such exchange will be
at a rate of one share of Common Stock for each $8.772 of Accrued Preference
Amount of the Series A-2 Preferred Stock so exchanged (subject to any
adjustments to the $8.772 exercise price of the Existing Rights for stock
splits, combinations, subdivisions or other similar structural changes to the
Common Stock as set forth in the Existing Rights).
For the avoidance of doubt, the parties
hereto acknowledge and agree that the rights under this Section 11 may only
be exercised by, and are for the exclusive benefit of, American Real Estate
Partnership, L.P., American Real Estate Holdings Limited Partnership and their
subsidiaries.
For
example: If the amount of Common Stock to be acquired by the
Purchaser following the rights offering was 5,000 shares and if the Purchaser
delivered $10,000 in cash, and the Accrued Preference Amount per share of Series
A-2 Preferred Stock was $100, then the number of shares of Series A Preferred
Stock to be delivered hereunder would be 338.6 shares, determined as
follows:
-
10-
5,000
shares minus ($10,000 ¸ 8.772) =
1,140
= 3,860
common shares remaining to be bought at $8.772 per share (an aggregate $33,860
purchase price) which requires delivery of 338.6 shares of Series A-2 Preferred
Shares having an Accrued Preference Amount of $100 per share.
12. Amendments. This
Agreement may not be modified, amended or supplemented except in a writing
signed by the parties hereto.
13. Governing
Law. THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL
RESPECTS BE GOVERNED BY AND INTERPRETED, CONSTRUED AND DETERMINED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO ANY
CONFLICTS OF LAW PROVISION THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY
OTHER JURISDICTION).
14. Jurisdiction: BY
ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO AND ACCEPTS THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE OR
THE COURTS OF THE STATE OF DELAWARE FOR ANY ACTION, SUIT, OR PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR ANY MATTER RELATING TO IT, AND WAIVE ANY
OBJECTION THAT SUCH PARTY MAY HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM OR DOES NOT HAVE PERSONAL JURISDICTION
OVER SUCH PARTY.
15. Specific
Performance. It is understood and agreed by the Company and
the Purchaser that money damages would not be a sufficient remedy for any breach
of this Agreement by any party hereto and each non-breaching party shall be
entitled, prior to termination of this Agreement in accordance with its terms,
to specific performance and injunctive or other equitable relief as a remedy of
any such breach, including, without limitation, an order of a court requiring
any party to comply promptly with any of its obligations hereunder.
16. Headings. The
headings of the Sections, paragraphs and subsections of this Agreement are
inserted for convenience only and shall not affect the interpretation
hereof.
17. Successors and
Assigns. This Agreement is intended to bind and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
executors, administrators and representatives. The Company shall not
assign its rights, duties or obligations under this Agreement without the prior
written consent of the Purchaser. The Purchaser shall have the right
to assign its Commitment in the manner contemplated by Section 2(d) hereof,
provided that no such assignment to Purchaser Designees shall effect the
Purchaser’s obligations under this Agreement.
18. No Third-Party
Beneficiaries. This Agreement shall be solely for the benefit
of the parties hereto and no other person or entity shall be a third party
beneficiary hereof.
19. Prior Negotiations; Entire
Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes all prior negotiations with respect to the subject
matter hereof, except that the parties hereto acknowledge that any
confidentiality agreements heretofore executed among the parties shall continue
in full force and effect.
20. Expenses. All
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense; provided, that in the
event of a termination by the Company pursuant to Section 10(b)(i), the
Purchaser will reimburse the Company for all fees and expenses paid by the
Company to Gordian Group LLC, and pay all fees and expenses owed to Gordian
Group LLC by the Company, in each case pursuant to the terms and conditions of
the Gordian Engagement Letter.
-
11-
21. Counterparts. This
Agreement may be executed in any number of counterparts by the parties on
different counterparts signature pages, all of which taken together shall
constitute one and the same agreement. Any of the parties may execute
this Agreement by signing any such counterparts, and each such counterpart,
including a facsimile counterpart, shall for all purposes be deemed to be an
original.
22. Severability. The
illegality, invalidity, or unenforceability of any provision of this Agreement
under the law of any jurisdiction shall not affect its legality, validity or
enforceability under the law of any other jurisdiction nor the legality,
validity or enforceability of any other provision.
23. Notices. All
notices and other communications under this Agreement shall be in writing, sent
contemporaneously to all of the parties hereto, and deemed given when delivered
by hand or by facsimile during standard business hours (from 8:00 a.m. to 6:00
p.m. Eastern time) at the place of receipt at the addresses and facsimile
numbers set forth below, with a copy to each person identified
thereon.
If to the Company,
to:
|
WestPoint
International, Inc.
|
00
Xxxx 00xx Xxxxxx, 0xx Xxxxx
|
Xxx
Xxxx, XX 00000
|
Fax:
(000) 000-0000
|
Attention:
Xxxxx Xxxxxx,
Vice
President and General Counsel
|
with
copy to :
|
Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx LLP
|
000
Xxxx Xxx.
|
Xxx
Xxxx, XX 00000
|
Attention: Xxxxxx
X. Xxxxxxx (Fax: (000) 000-0000)
Xxxxxx
Xxxxxxxx (Fax: (000) 000-0000)
|
and
to:
|
Stroock
& Stroock & Xxxxx LLP
|
000
Xxxxxx Xxxx
|
Xxx
Xxxx, Xxx Xxxx 00000
|
Fax:
(000) 000-0000
|
Attention: Xxxxxx
Xxxxxxx
Xxxxxxxx
Xxxxx
|
If to the Purchaser,
to:
|
American
Real Estate Partners
|
000
Xxxxxxxx Xxxxxx
|
Xxxxx
0000
|
Xxxxx
Xxxxxx, Xxx Xxxx 00000
|
Fax: (000)
000-0000
|
Attention: Xxxxxxx
Xxxxxx
|
-
12-
24. Survival. All
representations, warranties and covenants and other provisions made by the
parties hereto shall be considered to have been relied upon by the parties and
shall survive the execution, delivery and performance of this
Agreement.
* * * *
-
13-
IN
WITNESS WHEREOF, the parties have caused this Subscription and Standby
Commitment Agreement to be executed as of the date first written
above.
WESTPOINT
INTERNATIONAL, INC.
|
|
By:
|
/s/ Xxxxxx Xxxxxxxxxx
|
Name:
Xxxxxx Xxxxxxxxxx
|
|
Title: Chief
Executive Officer
|
AMERICAN
REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
|
|
By: American
Property Investors, Inc., its general partner
|
|
By:
|
/s/ Xxxxx
Xxxxxxx
|
Name:
Xxxxx Xxxxxxx
|
|
Title: Principal
Executive Officer
|