EXHIBIT 7.10
August 28, 2006
To: Knight Holdco LLC
The Investor Members Listed on Schedule A
Re: Acquisition of Xxxxxx Xxxxxx, Inc.
Ladies and Gentlemen:
Reference is made to (1) the Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), by and among Xxxxxx Xxxxxx, Inc., a
Kansas corporation (the "Company"), Knight Holdco LLC, a Delaware limited
liability company ("Parent"), and Knight Acquisition Co., a Kansas corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and pursuant to which
Merger Sub will be merged with and into the Company (the "Merger") and (2) the
Limited Liability Company Agreement of Parent, dated as of the date hereof (the
"Interim LLC Agreement"), by and among GS Capital Partners V Fund, L.P., GS
Capital Partners V Offshore Fund, L.P., GS Capital Partners V GmbH & CO. KG, GS
Capital Partners V Institutional, L.P., GS Global Infrastructure Partners I,
L.P. and The Xxxxxxx Xxxxx Group, Inc. (collectively, "GS"), Carlyle Partners
IV, L.P. ("Carlyle"), Carlyle/Riverstone Global Energy and Power Fund III, L.P.
("Riverstone") and AIG Knight LLC ("AIG" and, together with GS, Carlyle and
Riverstone, the "Investor Members" and each an "Investor Member") and Xxxxxxx X.
Xxxxxx (the "Management Group Member" and, together with the Investor Members,
the "Members"). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Merger Agreement and the Interim LLC Agreement,
as appropriate. This letter is being delivered to the addressees in connection
with the execution of the Merger Agreement by the Company, Parent and Merger
Sub.
This letter confirms the commitment of the undersigned, subject to the
conditions set forth herein, to subscribe for Class A units of Parent
("Subscribed Shares") for aggregate consideration consisting of the number of
shares of Company Common Stock (the "Committed Shares") and the cash amounts
(the "Committed Cash") set forth on Schedule B, provided that the undersigned
shall not, under any circumstances, be obligated to contribute to, purchase
equity or debt of or otherwise provide funds to Parent in connection with its
formation other than the contribution of the Committed Shares and the Committed
Cash. The Subscribed Shares shall have a value for purposes of determining the
relative equity contributions of the undersigned and the Investor Members as set
forth next to the heading "Total Value" in Schedule B. The obligation of the
undersigned to fund the Committed Shares and the Committed Cash (the
"Commitment") is subject to the consummation of the Merger and the terms of this
letter, and the funding will occur immediately prior to the Effective Time of
the Merger and the simultaneous issuance to the undersigned of the Subscribed
Shares.
This letter, and the undersigned's obligation to fund the Commitment,
will terminate automatically and immediately upon the earliest to occur of (a)
the Effective Time (at which time the obligation shall be discharged), (b) the
termination of the Merger Agreement, (c) the Members representing a majority of
the Equity Commitments of the Members agreeing to terminate the corresponding
letters delivered by each of the Investor Members and (d) the assertion by the
Company or any of its affiliates in any litigation or other proceeding any claim
under any guarantee of any Investor Member or its Affiliate in connection
herewith (the "Guarantees"). Notwithstanding the foregoing, in the event that
the Merger Agreement is amended to effect a Change in the Merger Consideration
without the consent of the undersigned, such non-consenting signatory may
terminate his, her or its Commitment and shall be released from any liability
under this letter.
The undersigned represents and warrants to Parent that: (i) the
undersigned has the requisite capacity and authority to execute and deliver this
letter and to fulfill and perform the undersigned's obligations hereunder; (ii)
this letter has been duly and validly executed and delivered by the undersigned
and constitutes a legal, valid and binding agreement of the undersigned
enforceable by the addressees against the undersigned in accordance with its
terms; (iii) the undersigned is the record and beneficial owner of the Committed
Shares, free and clear of any lien or encumbrance (other than those arising
under this letter) and has full and unrestricted power to dispose of all of such
Committed Shares as contemplated by this letter without the consent or approval
of, or any other action on the part of, any other Person; (iv) other than the
filing by the undersigned of any reports with the SEC required by Sections 13(d)
or 16(a) of the Exchange Act, none of the execution and delivery of this letter
by the undersigned, the consummation by the undersigned of the transactions
contemplated hereby or compliance by the undersigned with any of the provisions
hereof (1) requires any consent or other permit of, or filing with or
notification to, any Governmental Entity or any other Person by the undersigned,
(2) results in a violation or breach of, or constitutes (with or without notice
or lapse of time or both) a default (or gives rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any organizational document or contract
to which the undersigned is a party or by which the undersigned or any of the
Committed Shares may be bound or affected, (3) violates any law or order or
judgment of any governmental authority applicable to the undersigned or the
Committed Shares, or (4) results in a lien or encumbrance upon any of the
Committed Shares; and (v) the undersigned has not entered into any share
disposition, commitment or other agreement that is inconsistent with this letter
(including the Commitment). The undersigned covenants and agrees that from and
after the date hereof and for so long as this letter remains in effect, the
undersigned shall not take or omit to take any action that would or would cause
or result in any of the foregoing representations and warranties to become
untrue.
The rights and obligations under this letter may not be assigned by any
party hereto without the prior written consent of Parent and each Member, and
any attempted assignment shall be null and void and of no force or effect. This
letter may not be amended, and no provision hereof waived or modified, except by
an instrument in writing signed by Xxxxxx and the undersigned and approved in
writing by each Member.
This letter shall be binding on the undersigned solely for the benefit
of the addressees, and nothing set forth in this letter shall be construed to
confer upon or give to any person other than the addressees any benefits, rights
or remedies under or by reason of, or any rights to enforce or cause such
addressee to enforce, the Commitment or any provisions of this letter.
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Nothing in this letter, express or implied, is intended to or shall
confer upon any person, other than Parent and the Members, any right, benefit or
remedy of any nature whatsoever under or by reason of this letter.
This letter may only be enforced by the addressees in accordance with
Section 4.7 of the Interim LLC Agreement. Parent's creditors shall have no right
to enforce this letter or to cause Parent to enforce this letter.
The Company's remedies against the Investor Members (or their
Affiliates) under the Guarantees shall, and are intended to be, the sole and
exclusive direct or indirect remedies available to the Company against the
Members (or their Affiliates), including the undersigned, in respect of any
liabilities or obligations arising under, or in connection with, the Merger
Agreement and the transactions contemplated thereby, including in the event
Parent or Merger Sub breaches its respective obligations under the Merger
Agreement, whether or not Parent or Merger Sub's breach is caused by the
undersigned's breach of his obligations under this letter. Nothing in this
letter, express or implied, is intended to or shall confer upon any person,
other than Parent and the Members, any right, benefit or remedy of any nature
whatsoever under or by reason of this letter.
This letter shall be treated as confidential and is being provided to
the addressees solely in connection with the Merger. This letter may not be
used, circulated, quoted or otherwise referred to in any document, except with
the written consent of the Majority Members. The foregoing notwithstanding, and
without prejudice to the sixth paragraph of this letter, this letter may be
provided to the Company if the Company agrees to treat this letter as
confidential, except that the Company and the undersigned may disclose the
existence of this letter to the extent required by law, the applicable rules of
any national securities exchange or in connection with any SEC filings relating
to the Merger.
Except to the extent otherwise required pursuant to a determination
(within the meaning of Section 1313(a) of the Code), the parties hereto shall
treat the issuance of Subscribed Shares in exchange for the contribution of the
Commitment as a tax-free exchange for United States federal income tax purposes
to the Company and its Members and shall not take any position, on a tax return,
in any tax proceeding or otherwise, that is inconsistent with such treatment.
This letter may be executed in counterparts and by facsimile. This
letter shall be governed by, and construed and interpreted in accordance with,
the laws of the State of Delaware, without giving effect to any applicable
principles of conflict of laws that would cause the laws of another State to
otherwise govern this Agreement. The parties hereto hereby (a) submit to the
personal jurisdiction of Delaware Court of Chancery, or in the event (but only
in the event) that such court does not have subject matter jurisdiction over an
action or proceeding, in the United States District Court for the District of
Delaware, and (b) waive any claim of improper venue or any claim that those
courts are an inconvenient forum. The parties hereto agree that mailing of
process or other papers in connection with any action or proceeding in the
manner provided in Section 8.7 of the Merger Agreement or in such other manner
as may be permitted by applicable laws, will be valid and sufficient service
thereof.
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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 LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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Very truly yours,
/s/Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
Accepted and Acknowledged:
KNIGHT HOLDCO LLC
By: /s/Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Person
KNIGHT ACQUISITION CO.
By: /s/Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Person
GS CAPITAL PARTNERS V FUND, L.P.
By: GSCP V Advisors, L.L.C., its General Partner
By: /s/Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title:
CARLYLE PARTNERS IV, L.P.
By: TC Group IV, L.P. its General Partner
By: TC Group IV, L.L.C., its General Partner
By: GC Group, L.L.C., its Sole Member
By: TCG Holdings, L.L.C.
By: /s/Xxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
CARLYLE/RIVERSTONE GLOBAL ENERGY AND POWER FUND III, L.P.
By: Carlyle/Riverstone Energy Partners III, L.P., its General Partner
By: C/R Energy GP III, LLC, its General Partner
By:/s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Authorized Person
NY12528:255157.2
AIG KNIGHT LLC
By:/s/ Xxxxx XxXxxxxx
--------------------------------------
Name: Xxxxx XxXxxxxx
Title: Managing Director
Schedule A
INVESTOR MEMBERS
GS Capital Partners V Fund, L.P.
GS Capital Partners V Offshore Fund, L.P.
GS Capital Partners V GmbH & CO. KG
GS Capital Partners V Institutional, L.P.
GS Global Infrastructure Partners I, L.P.
The Xxxxxxx Xxxxx Group, Inc.
Carlyle Partners IV, X.X.
Xxxxxxx/Riverstone Global Energy and Power Fund III, L.P.
AIG Knight LLC
Schedule B
STOCKHOLDER SHARES CASH VALUE
--------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxx 23,994,827(1) --- $2,423,477,527
Total Shares: 23,994,827
Total Cash: ---
Total Value: $2,423,477,527
--------
(1) Includes 250 shares held by Xx. Xxxxxx for the account of his nephew.
Additionally, Xx. Xxxxxx'x wife is expected to contribute an additional
5,173 shares of Company Common Stock to Parent.
