EXHIBIT 7.16
GUARANTEE
OF
AIG FINANCIAL PRODUCTS CORP.
Guarantee, dated as of August 28, 2006 (this "Guarantee"), by AIG
Financial Products Corp., a Delaware corporation with its principal office
located at 00 Xxxxxxx Xxxx, Xxxxxx, XX 00000-0000 (the "Guarantor"), in favor of
Xxxxxx Xxxxxx, Inc., a Kansas corporation (the "Guaranteed Party").
1. GUARANTEE. To induce the Guaranteed Party to enter into that
certain Agreement and Plan of Merger, dated as of August 28, 2006 (as amended,
supplemented or otherwise modified from time to time, the "Merger Agreement"),
by and among the Guaranteed Party, Knight Holdco LLC, a Delaware limited
liability company ("Parent"), and Knight Acquisition Co., a Kansas corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which Merger
Sub will merge with and into the Guaranteed Party, the Guarantor absolutely,
unconditionally and irrevocably guarantees to the Guaranteed Party the prompt
payment when due, subject to applicable grace periods, of 26.02% of the Parent
Termination Fee (as such term is defined in the Merger Agreement) (the
"Obligations"); provided that notwithstanding anything to the contrary set forth
herein, the maximum amount payable by the Guarantor under this Guarantee shall
not exceed $55,949,027 (the "Cap"), it being understood that this Guarantee may
not be enforced without giving effect to the Cap. Notwithstanding anything to
the contrary contained in this Guarantee or any other document, the obligations
of Guarantor under this Agreement and of any other parties under any other
guarantees shall be several and not joint.
2. NATURE OF GUARANTEE. The Guarantor's obligations hereunder
shall not be affected by the existence, validity, enforceability, perfection or
extent of any collateral therefor or by any other circumstance relating to the
Obligations that might otherwise constitute a legal or equitable discharge of or
defense to the Guarantor not available to Parent or Merger Sub. The Guarantor
agrees that the Guaranteed Party may resort to the Guarantor for payment of any
of the Obligations whether or not the Guaranteed Party shall have resorted to
any collateral therefor or shall have proceeded against Parent or Merger Sub or
any other obligor principally or secondarily obligated with respect to any of
the Obligations. The Guaranteed Party shall not be obligated to file any claim
relating to the Obligations in the event that Parent or Merger Sub becomes
subject to a bankruptcy, reorganization or similar proceeding, and the failure
of the Guaranteed Party to so file shall not affect the Guarantor's obligations
hereunder. In the event that any payment to the Guaranteed Party in respect of
any Obligations is rescinded or must otherwise be returned for any reason
whatsoever, the Guarantor shall remain liable hereunder with respect to such
Obligations as if such payment had not been made. This is an unconditional
guarantee of payment and not of collectibility. The Guarantor reserves the right
to (a) set-off against any payment owing to the Guaranteed Party hereunder any
amounts owing by the Guaranteed Party to Parent, Merger Sub or the Guarantor and
(b) assert defenses which Parent or Merger Sub may have to payment of any
Obligations other than defenses arising from the bankruptcy or insolvency of
Parent or Merger Sub and other defenses expressly waived hereby.
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3. CHANGES IN OBLIGATIONS, COLLATERAL THEREFOR AND AGREEMENTS
RELATING THERETO; WAIVER OF CERTAIN NOTICES. The Guarantor agrees that the
Guaranteed Party may at any time and from time to time, without notice to or
further consent of the Guarantor, extend the time of payment of any of the
Obligations, and may also make any agreement with Parent or Merger Sub or with
any other party to, or person interested in the transactions contemplated by the
Merger Agreement, for the extension, renewal, payment, compromise, discharge or
release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between the Guaranteed Party and Parent or Merger
Sub or any such other person without in any way impairing or affecting this
Guarantee. The Guarantor waives notice of the acceptance of this Guarantee and
of the Obligations, presentment, demand for payment, notice of dishonor and
protest. The Guarantor agrees that the obligations of the Guarantor hereunder
shall not be released or discharged, in whole or in part, or otherwise affected
by (a) the failure of the Guaranteed Party to assert any claim or demand or to
enforce any right or remedy against Parent or Merger Sub or any other entity or
person interested in the transactions contemplated by the Merger Agreement; (b)
any change in the time, place or manner of payment of any of the Obligations or
any rescission, waiver, compromise, consolidation or other amendment or
modification of any of the terms or provisions of the Merger Agreement or any
other agreement evidencing, securing or otherwise executed in connection with
any of the Obligations, (c) the addition, substitution or release of any other
entity or person interested in the transactions contemplated by the Merger
Agreement; (d) any change in the corporate existence, structure or ownership of
Parent or Merger Sub or any other entity or person interested in the
transactions contemplated by the Merger Agreement; (e) any insolvency,
bankruptcy, reorganization or other similar proceeding affecting Parent or
Merger Sub or any other entity or person interested in the transactions
contemplated in the Merger Agreement; or (f) the adequacy of any other means the
Guaranteed Party may have of obtaining payment of the Obligations.
Notwithstanding anything to the contrary contained in this Guarantee, the
Guaranteed Party hereby agrees that to the extent Parent and Merger Sub are
relieved of their obligations under Section 7.2(b) of the Merger Agreement, the
Guarantor shall be similarly relieved of its Obligations under this Guarantee.
4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
Guaranteed Party to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Guaranteed Party of any right, remedy or power hereunder
preclude any other or future exercise of any right, remedy or power. Each and
every right, remedy and power hereby granted to the Guaranteed Party or allowed
it by law or other agreement shall be cumulative and not exclusive of any other,
and may be exercised by the Guaranteed Party at any time or from time to time.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
power to execute, deliver and perform this Guarantee;
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(b) the execution, delivery and performance of this
Guarantee have been duly authorized by all necessary corporate action and do not
contravene any provision of the Guarantor's certificate of incorporation or
by-laws, as amended to date, or any law, regulation, rule, decree, order,
judgment or contractual restriction binding on the Guarantor or its assets;
(c) all consents, licenses, clearances, authorizations
and approvals of, and registrations and declarations with, any governmental
authority or regulatory body necessary for the due execution, delivery and
performance of this Guarantee have been obtained and remain in full force and
effect and all conditions thereof have been duly complied with, and no other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required in connection with the execution, delivery or
performance of this Guarantee; and
(d) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights, and to general equity principles;
6. ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may
assign its rights, interests or obligations hereunder to any other person
(except by operation of law) without the prior written consent of the Guaranteed
Party or the Guarantor, as the case may be; provided, however, that the
Guarantor may assign all or a portion of its obligations hereunder to an
affiliate or to an entity managed or advised by an affiliate of the Guarantor,
provided that no such assignment shall relieve the Guarantor of any liability or
obligation hereunder except to the extent actually performed or satisfied by the
assignee.
7. NOTICES. All notices or demands on the Guarantor shall be
deemed effective when received, shall be in writing and shall be delivered by
hand or by registered mail, or by facsimile transmission promptly confirmed by
registered mail, addressed to the Guarantor at:
AIG Financial Products Corp.
00 Xxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Chief Financial Officer, General Counsel
Facsimile: 000-000-0000
or to such other address or facsimile number as the Guarantor shall have
notified the Guaranteed Party in a written notice delivered to the Guaranteed
Party in accordance with the Merger Agreement.
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8. CONTINUING GUARANTEE. This Guarantee shall remain in full
force and effect and shall be binding on the Guarantor, its successors and
assigns until all amounts payable under this Guarantee have been indefeasibly
paid or satisfied in full. Notwithstanding the foregoing, this Guarantee shall
terminate and the Guarantor shall have no further obligations under this
Guarantee as of the earlier of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) the first anniversary of any termination of the Merger
Agreement in accordance with its terms, except as to a claim for payment of any
Obligation presented by the Guaranteed Party to Parent, Merger Sub or the
Guarantor by such first anniversary.
9. NO RECOURSE. The Guaranteed Party acknowledges that the sole
assets of Parent and Merger Sub are cash in a de minimis amount and its rights
under the Merger Agreement, and that no additional funds are expected to be
contributed to Parent or Merger Sub unless and until the Closing occurs.
Notwithstanding anything that may be expressed or implied in this Guarantee or
any document of instrument delivered contemporaneously herewith, by its
acceptance of the benefits of this Guarantee, the Guaranteed Party acknowledges
and agrees that it has no right of recovery against, and no liability shall
attach to, the former, current or future stockholders, directors, officers,
employees, agents, affiliates, members, managers, general or limited partners or
assignees of the Guarantor, Parent or Merger Sub or any former, current or
future stockholder, director, officer, employee, general or limited partner,
member, manager, affiliate, agent or assignee of any of the foregoing
(collectively, but not including the Guarantor, Parent or Merger Sub, each an
"Affiliate"), or, other than its right to recover from Guarantor for up to the
amount of the Obligations (subject to the Cap and the other limitations
described herein), Guarantor, Parent or Merger Sub, through Parent, Merger Sub
or otherwise, whether by or through attempted piercing of the corporate veil, by
or through a claim by or on behalf of Parent or Merger Sub against an Affiliate,
Guarantor, Parent or Merger Sub (including a claim to enforce the commitment
letters dated as of the date hereof from the AIG Knight LLC and certain other
parties to Parent), arising under, or in connection with, the Merger Agreement
or the transactions contemplated thereby or otherwise relating thereto, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute, regulation or applicable law, or otherwise. The Guaranteed Party
hereby covenants and agrees that it shall not institute, directly or indirectly,
and shall cause its respective affiliates not to institute, any proceeding or
bring any other claim arising under, or in connection with, the Merger Agreement
or the transactions contemplated thereby or otherwise relating thereto, against
an Affiliate or, other than its right to recover from Guarantor for up to the
amount of the Obligations (subject to the cap and the other limitations
described herein), Guarantor, Parent or Merger Sub. Recourse against the
Guarantor under this Guarantee shall be the sole and exclusive remedy of the
Guaranteed Party against the Guarantor or Affiliates in respect of any
liabilities or obligations arising under, or in connection with, the Merger
Agreement or the transactions contemplated thereby. Nothing set forth in this
Guarantee shall affect or be construed to affect any liability of Parent or
Merger Sub to the Guaranteed Party or shall confer or give or shall be construed
to confer or give to any Person other than the Guaranteed Party (including any
Person acting in a representative capacity) any rights or remedies against any
Person other than the Guarantor as expressly set forth herein. For all purposes
of this Guarantee, pursuit of a claim against a person by the Guaranteed Party
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shall be deemed to be pursuit of a claim by the Guaranteed Party arising under
or in connection with the Merger Agreement or the transactions contemplated
thereby or otherwise relating thereto. A person shall be deemed to have pursued
a claim against another person if such first person brings a legal action
against such person, adds such other person to an existing legal proceeding, or
otherwise asserts a legal claim of any nature against such person. The
Guaranteed Party acknowledges that the Guarantor is agreeing to enter into this
Guarantee in reliance on the provisions set forth in this Section 9. This
Section 9 shall survive termination of this Guarantee.
10. GOVERNING LAW. This Guarantee shall be governed and construed
in accordance, with the laws of the State of New York applicable to contracts
executed in and to be performed in that State.
11. JURISDICTION. All actions arising out of or relating to this
Guarantee shall be heard and determined exclusively in the state or federal
courts of the United States of America located in the State of New York. The
parties hereto hereby (a) submit to the exclusive jurisdiction of the state or
federal courts of the United States of America located in the State of New York
for the purpose of any action arising out of or relating to this Guarantee
brought by any party hereto, and (b) irrevocably waive, and agree not to assert
by way of motion, defense, or otherwise, in any such action, any claim that it
is not subject personally to the jurisdiction of the above-named court, that its
property is exempt or immune from attachment or execution, that the action is
brought in an inconvenient forum, that the venue of the action is improper, or
that this Guarantee or the transactions contemplated hereby may not be enforced
in or by the above-named court.
12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS GUARANTEE OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
13. COUNTERPARTS. This Guarantee may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, this Guarantee has been duly executed and delivered
by the Guarantor to the Guaranteed Party as of the date first written above by
its officer thereunto duly authorized.
AIG FINANCIAL PRODUCTS CORP.
By: /s/Xxxxx XxXxxxxx
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Name: Xxxxx XxXxxxxx
Title: Managing Director
Accepted and Agreed to:
XXXXXX XXXXXX, INC.
By: /s/Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Vice President
[Signature Page to the AIG Guarantee Letter]
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