Exhibit 5
D. E. Shaw Laminar Portfolios, L.L.C.
000 Xxxx Xxxxx-Xxxxx Xxxxxx
Xxxxx 00, Xxxxx 00
Xxx Xxxx, XX 00000
December 2, 2003
Xxxxxxxxx Holding Corporation
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is hereby made to that certain Note Purchase Agreement, dated the date
hereof (the "Note Purchase Agreement"), among Xxxxxxxxx Holding Corporation (the
"Company"), and SZ Investments, L.L.C., Third Avenue Trust, on behalf of the
Third Avenue Value Fund Series, and D. E. Shaw Laminar Portfolios, L.L.C.
("DES"). As a condition to entering into the Note Purchase Agreement, DES has
requested that the Company enter into this Letter Agreement (this "Letter
Agreement"). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Note Purchase Agreement.
In consideration of the foregoing and the representations, warranties, covenants
and agreements set forth herein and in the Note Purchase Agreement, the Company
and DES hereby agree as follows:
I. Transfer of Common Stock by DES and the Transferees. Subject to Paragraph III
below, DES and each Transferee may Transfer the shares of Common Stock acquired
by DES pursuant to the Note Purchase Agreement, including the Escrowed Stock and
the Common Stock to be received upon conversion of the Notes (collectively, the
"Subject Shares"), pursuant to the following terms and conditions:
A. DES shall be permitted to Transfer, in one or multiple transactions and
without obtaining any additional consent from the Company pursuant to
Article FIFTH of the Restated Certificate of Incorporation, an aggregate
number of Subject Shares under this Paragraph A up to but not exceeding an
amount equal to (i) 10% of the outstanding Common Stock of the Company
(calculated at the time of such Transfer) during the period beginning on
the date of the closing of the Acquisition (the "Closing Date") through
the first anniversary of the Closing Date; (ii) 15% of the outstanding
Common Stock of the Company (calculated at the time of such Transfer) less
the percentage of shares sold pursuant to clause I.A.(i) during the period
beginning on the first anniversary of the Closing Date and ending on the
second anniversary of the Closing Date; and (iii) 20% of the outstanding
Common Stock of the Company (calculated at the time of such Transfer) less
the percentage of shares sold pursuant to clauses I.A.(i) and (ii) during
the period beginning on the second anniversary of the Closing Date and
ending on the third anniversary of the Closing Date;
B. anytime after the third anniversary of the Closing Date, DES shall be
permitted to Transfer any such remaining Subject Shares then owned by it
free and clear of any limitations on Transfer and without obtaining any
additional consent from the Company;
C. anytime after the Closing Date, if DES becomes subject to any filings
or other requirements of any federal, state, municipal or foreign
governmental, regulatory or other public body, agency or authority
(including self-regulatory organizations), including without limitation
any insurance or banking authority (collectively, "Regulations"), (other
than the Disclaimer(s) filed by DES with the State Insurance Departments
and any filing required under any federal or state securities laws
(including without limitation Form 3, Form 4, Schedule 13d or 13g, and
registration statements)) that requires any disclosures of the identity
of, or other confidential information related to DES's direct or indirect
investors or any other identifying facts or features or would otherwise
limit DES's ability to make future investments as a result of being made
subject to new Regulations, DES shall be permitted to Transfer all Subject
Shares free and clear of any limitations on Transfer and without obtaining
any additional consent from the Company; and
D. each Transferee from a prior Authorized Transfer shall be permitted to
Transfer any Subject Shares free and clear of any limitations on Transfer
and without obtaining any additional consent from the Company;
provided, that, in each case, such Transfer constitutes an Authorized Transfer.
As used herein, "Transfer" shall mean any sale, assignment, transfer,
disposition, exchange, mortgage, pledge, grant, hypothecation or other transfer,
absolute or as a security or encumbrance, in any manner whatsoever, from any
transaction or transactions, including without limitation, via secondary market
or over-the-counter transactions; "Transferee" shall mean any Person that
receives Subject Shares in an Authorized Transfer; "Authorized Transfer" shall
mean a Transfer by (i) DES pursuant to Paragraphs A, B or C above or (ii) any
Transferee pursuant to Paragraph D above, in each case that satisfies the
procedures described in Paragraph III below; provided further, that any Transfer
must comply with applicable federal and state securities laws and xxxxxxx
xxxxxxx policies.
II. Representations and Warranties of Company. The Company hereby represents and
warrants to DES that:
A. The Special Committee of the Board of Directors of the Company, on
behalf of the Board of Directors, has authorized the agreements set forth
in this Letter Agreement in resolutions of the Special Committee of the
Board of Directors adopted at a Special Meeting held on November 24, 2003
and determined that: (i) it is in the best interest of the Company to
pre-approve the Authorized Transfers and (ii) subject to the requirements
in Paragraph III below, all obligations of the Board of Directors and the
Company pursuant to Article FIFTH of the Restated Certificate of
Incorporation have been satisfied
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in full with regard to the Authorized Transfers, subject to receipt of a
Bring-Down Opinion (defined below);
B. the Company has received the Xxxxx Peabody Letter substantially in the
form of Exhibit A hereto;
C. based on current law and circumstances, the Bring-Down Opinion (as
described below) would be available for the Transfers described in
Paragraph I, unless (i) the Transferee owns other Common Stock that the
Transferee acquired within the testing period that includes the date of
the Proposed Transfer, (ii) the Transferee becomes a "5-percent
shareholder" as a result of the Transfer and (iii) DES or the Transferee
receives a Blocking Opinion;
D. each of the Transfers described in Paragraph I shall be treated by the
Company as "previously approved subsequent transactions" for purposes of
Article FIFTH of the Restated Certificate of Incorporation.
III. Procedures for Authorized Transfers. DES and each Transferee intending to
effect a Transfer of Subject Shares that, but for this Paragraph III, would
otherwise qualify as an Authorized Transfer, shall provide the Company written
notice in the form of Exhibit B hereto (the "Notice of Transfer") of such
Transfer (a "Proposed Transfer") no less than seven Business Days before the
date of such Proposed Transfer. The Notice of Transfer shall include the number
of Subject Shares to be Transferred pursuant to such Proposed Transfer and the
anticipated date of such Proposed Transfer. In the case of a Transferee or
intended recipient, as the case may be, that either is or would become a
"5-percent shareholder" (within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended and the applicable Treasury regulations
thereunder (the "Code")) immediately after the Proposed Transfer, the Notice of
Transfer shall also include the name of the Transferee, in the case of a
Proposed Transfer by DES, or the intended recipient of the Subject Shares, in
the case of a Proposed Transfer by a Transferee , the number of shares of Common
Stock owned, directly or constructively, by such Transferee or intended
recipient within the past three years and the number of shares of Common Stock
acquired within such three year period. The Company shall promptly use all
commercially reasonable efforts to obtain an opinion substantially in the form
of Exhibit C hereto (a "Bring-Down Opinion"), and in no event later than five
Business Days after receipt of the Notice of Transfer, give appropriate
instructions to the transfer agent for the Common Stock (the "Transfer Agent"),
in full satisfaction of the provisions of Article FIFTH of the Restated
Certificate of Incorporation, and shall direct the Transfer Agent to effectuate
the Proposed Transfer; provided, however, that if such Bring-Down Opinion cannot
be delivered, the Company shall deliver to DES or the Transferee, as applicable,
within five Business Days after the receipt of the Notice of Transfer, an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxxx Xxxxxxx LLP or other
nationally recognized tax counsel reasonably acceptable to DES or the
Transferee, as applicable, that the Proposed Transfer would result in, or create
an unreasonable risk of, (i) an aggregate increase in the percentage ownership
of the stock of the Company by its "5-percent shareholders" and (ii) that such
aggregate increase in ownership of the stock of the Company would constitute an
"ownership change" under Section 382(g) of the Code, determined by substituting
"48.75 percentage points" for "50 percentage points" where such phrase appears
in Section 382(g)(1)(A) of the Code (the "Blocking Opinion"), and such Proposed
Transfer shall
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not qualify as an Authorized Transfer. For the avoidance of doubt, any Blocking
Opinion issued upon receipt of a Notice of Transfer shall apply solely to the
Proposed Transfer and not to any subsequent Transfer of Subject Shares pursuant
to this Letter Agreement.
IV. Cooperation Under FPA.
A. DES agrees to use commercially reasonable efforts, to the extent
required by law, to cooperate in providing information required to be
furnished as part of any required filing under Section 203 of the Federal
Power Act, as amended, by Covanta, the Company or DES.
B. The Company agrees to use commercially reasonable efforts, to cooperate
with DES in minimizing the information to be furnished by DES and to
provide to DES information required in any such filing required to be made
by DES.
V. Miscellaneous.
A. The Company and DES agree that the provisions of this Letter Agreement
will be amended to equitably reflect the effect of any issuance or
redemption of stock of the Company, stock split or reverse stock split
with respect to stock of the Company, recapitalization of the Company or
any other adjustment to the capital structure of the Company.
B. All notices or other communications required or authorized to be given
hereunder shall be made pursuant to Section 12.4 of the Note Purchase
Agreement.
C. This Letter Agreement may not be amended, supplemented, modified or
revoked unless agreed to in writing by the parties hereto.
D. This Letter Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to its
conflicts-of-law provisions.
E. The Company and DES hereby acknowledge that damages may not be an
adequate remedy in the event that any of the provisions of this Letter
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that DES shall be
entitled to an injunction or injunctions to prevent breaches of this
Letter Agreement and to enforce specifically the terms and provisions
hereof in any court in the United States or any state having
jurisdiction, this being in addition to any other remedy to which DES
is entitled at law or in equity.
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If you are in agreement with the foregoing, please sign in the space provided
below and return a copy of this Letter Agreement to DES.
D. E. SHAW LAMINAR PORTFOLIOS, L.L.C.
By: /s/ Xxx Xxxxxx
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Name: Xxx Xxxxxx
Title:
Agreed:
XXXXXXXXX HOLDING CORPORATION
By: /s/ Xxxxxx Xxxxxxx
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Name:
Title:
Date: