SUBSCRIPTION AND STANDBY COMMITMENT AGREEMENT
Exhibit
10.1
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 Holding 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.
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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);
(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.
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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.
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(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.
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(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:
(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.
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(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.
(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.
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(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.”
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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.
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(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”).
(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-
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 modify,
or prohibit, in whole or in part, (x) the consummation of, the Transactions
or
the transactions contemplated hereby, (y) 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 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”);
(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.
-10-
(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 modify,
or prohibit, in whole or in part, (x) the consummation of, the Transactions
or
the transactions contemplated hereby, (y) 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 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.
(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.
-11-
(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.
-12-
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 (as used
here
and throughout this Agreement, 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:
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.
-13-
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.
-14-
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.
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:
|
||
-00-
|
Xxxxxxx
& Xxxxxxx & 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 | |
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.
-16-
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.
|
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| By: | /s/ | |||
|
Name: |
||||
|
Title:
|
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|
AMERICAN
REAL ESTATE HOLDING LIMITED PARTNERSHIP
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| By: | /s/ | |||
|
Name: |
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|
Title:
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