Document:

exv4w10

 

Exhibit 4.10

CUSIP 55375UAA2

73/8% Senior Secured Notes due 2010

			
	No. 1
	 	$220,675,000

MSW
ENERGY HOLDINGS II LLC

MSW ENERGY FINANCE CO. II, INC.

promises to pay to CEDE & CO.

or registered assigns,

the principal sum of TWO HUNDRED TWENTY MILLION SIX HUNDRED SEVENTY FIVE

THOUSAND Dollars on September 1, 2010.

Interest Payment Dates: March 1 and September 1

Record Dates: February 15 and August 15

Dated: November 24, 2003

	 	 	 	 	 
	 	MSW ENERGY HOLDINGS II LLC

 	 
	 	By:  	/s/ Daniel Clare
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	MSW ENERGY FINANCE CO. II, INC.

 	 
	 	By:  	/s/ Daniel Clare
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

This is
one of the Notes referred to in

the within-mentioned Indenture:

WELLS FARGO BANK MINNESOTA, 
NATIONAL
ASSOCIATION,
   
as Trustee

	 	 	 	 	 
	By:

	 	/s/ Frank McDonald
	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 

 

 

7 3/8% Senior Secured Notes due 2010

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM. THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND THIS NOTE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE
MAY BE RELYING ON THE EXEMPTION FROM THE PROVIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) THIS
NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

 

     Capitalized terms used herein have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

     (1)
Interest. MSW Energy Holdings II LLC, a Delaware limited liability company (“MSW
Energy II”), and MSW Energy Finance Co. II, Inc., a Delaware corporation (“MSW Energy Finance
II” and, together with MSW Energy II, the “Company”), promises to pay interest on the principal
amount of this Note at 7 3/8% per annum from November 24, 2003 until maturity and shall pay the
Additional Interest, if any, payable pursuant to Section 6 of the Registration Rights Agreement
referred to below. The Company will pay interest and Additional Interest, if any, semi-annually
in arrears on March 1 and September 1 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further that the first Interest Payment Date shall be
March 1, 2004. The Company will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in effect; it will pay
interest (including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Additional Interest, if any, (without regard to any
applicable grace periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.

     (2) Method of Payment. The Company will pay interest on the Notes (except defaulted
interest) and Additional Interest, if any, to the Persons who are registered Holders of Notes
at the close of business on the February 15 or August 15 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Additional Interest, if any,
and interest at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company, payment of interest
and Additional Interest, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire transfer of
immediately available funds ‘will be required with respect to principal of and interest,
premium and Additional Interest, if any, on, all Global Notes and all other Notes the Holders
of which will have provided wire transfer instructions to the Company or the Paying Agent.
Such payment will be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.

     (3)
Paying Agent and Registrar. Initially, Wells Fargo Bank Minnesota, National
Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.

     (4)
Indenture and Security Agreements. The Company issued the Notes under an Indenture dated
as of November 24, 2003 (the “Indenture”) between the
Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Identure by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code §§
77aaa-77ccbb). The Notes are subject
to all such terms, and Holders are referred to the Indenture and
such Act for a complete
statement of such terms. To the extent any provision of this Note

 

 

conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are secured obligations of the
Company. The Notes are secured by a first priority lien on substantially all of the assets
of the Company pursuant to the Pledge Agreement and the Deposit Agreement referred to in
the Indenture.

     (5) Optional Redemption.

     (a) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior
to September 1, 2006, the Company may redeem Notes with the net proceeds of a Qualified Equity
Offering at a redemption price equal to 107.375% of the aggregate principal amount thereof;
provided that at least 65% in aggregate principal amount of the Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption and that such redemption
occurs within 90 days of the date of the closing of such Qualified Equity Offering.

     (b) At
any time prior to September 1, 2007, the Company may redeem all or a part of the Notes upon
not less than 30 nor more than 60 days’ notice, at a redemption price equal to the following on the
date of redemption:

     (1) as determined by an Independent Investment Bank, the sum of the present values of
the Remaining Scheduled Payments discounted to the redemption date on a semiannual basis
(assuming a 360 day year consisting of twelve 30-day months) at the Adjusted Treasury Rate;
plus in each case,

     (2) accrued and unpaid interest and Additional Interest, if any, on the notes to the
applicable date of redemption.

     (c) At
any time on or after September 1, 2007, the Company will have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional Interest, if any, thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on September 1 of the years indicated below:

	 	 	 	 	 
	Year	 	Percentage
	2007
	 	 	103.688	%
	2008
	 	 	101.844	%
	2009 and thereafter
	 	 	100.000	%

     (6) Special Mandatory Redemption.

     In accordance with the terms and conditions of the Escrow Agreement, and using the Company
Deposit (as defined in the Escrow Agreement), the Company shall redeem all and not less than all
of the Notes on March 1, 2004, or such earlier date as the
Company shall elect (the “Special Mandatory Redemption Date”), if the Acquisition has not occurred or if the Transactions have been
terminated on or prior to March 1, 2004, at a redemption price equal to 100% of the aggregate
principal amount of the Notes, plus accrued and unpaid interest thereon to, but not including, the
Special Mandatory Redemption Date. Upon the closing of the Acquisition on or before the
Special Mandatory Redemption Date, the foregoing provisions of this paragraph (6) shall be null
and void.

     (7)
Repurchase at Option of Holder.

 

 

          (a) If there is a Change of Control, the Company will be required to make an offer (a
“Change of Control Offer”) to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of
purchase (the “Change of Control Payment”). Within 30 days following any Change of Control, the
Company will mail a notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.

          (b) MSW Energy II shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale.

          (c) Within 30 days of each date on which the aggregate amount of Excess Proceeds exceeds $20
million, the Company will commence an ARC Transaction Offer to all Holders of Notes and all holders
of other Indebtedness that is pari passu with the Notes containing provisions similar to those set
forth in the Indenture pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes (including any Additional Notes) and other pari passu Indebtedness that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any,
to the date fixed for the closing of such offer, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes (including any Additional Notes) and
other pari passu Indebtedness tendered pursuant to an ARC Transaction Offer is less than the Excess
Proceeds, the Company may use such deficiency for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and other
pari passu Indebtedness
surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and other pari passu Indebtedness to be purchased on a
pro rata basis. Holders of Notes that
are the subject of an offer to purchase will receive an ARC Transaction Offer from the Company
prior to any related purchase date and may elect to have such Notes purchased by completing the
form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes.

     (8) Notice
of Redemption. Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its
registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in
whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date, interest ceases to accrue on Notes or portions thereof called for
redemption.

     (9) Denominations,
Transfer, Exchange. The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require
a Holder, among other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being redeemed in part.
Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.

     (10) Persons
Deemed Owners. The registered Holder of a Note may be treated as its owner for
all purposes.

 

 

     (11) Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture,
the Note Guarantees, the Notes, the Pledge Agreement or the Deposit Agreement may be amended or
supplemented with the consent of the Holders of at least a majority in principal amount of the then
outstanding Notes and Additional Notes, if any, voting as a single class, and any existing default
or compliance with any provision of the Indenture, the Note Guarantees, the Notes, the Pledge
Agreement or the Deposit Agreement may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes and Additional Notes, if any, voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes
may be amended or supplemented to (i) cure any ambiguity, defect or inconsistency, (ii) provide for
uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of
Article 2 of the Indenture (including the related definitions) in a manner that does not materially
adversely affect any Holder, (iii) provide for the assumption of the Company’s or any Guarantor’s
obligations to Holders of the Notes in case of a merger or consolidation, (iv) make any change that
would provide any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legabrights under the Indenture of any such Holder, (v) comply with the
requirement of the SEC in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act, (vi) provide for the Issuance of Additional Notes in accordance with the
limitations set forth in the Indenture, (vii) allow any Guarantor to execute a supplemental
indenture and/or a Note Guarantee with respect to the Notes, (viii) implement the arrangements
contemplated by Section 4.19 of the Indenture or (ix) conform the text of this Indenture, the Note
Guarantees, the Pledge Agreement, the Deposit Agreement or the Notes to any provision of the
section entitled “Description of Notes” in the Offering Memorandum.

     (12) Defaults And Remedies. Events of Default include: (i) default for 30 days in the payment
when due of interest or Additional Interest on the Notes; (ii) default in payment when due of
principal of or premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase)
or otherwise, (iii) failure by
MSW Energy II or any of its Restricted Subsidiaries to comply with Section 4.07, 4.09, 4.10, 4.15
or 5.01 of the Indenture for 30 days after notice; (iv) failure by MSW Energy II or any of its
Restricted Subsidiaries for 60 days after notice to MSW Energy II by the Trustee or the Holders of
at least 25% in principal amount of the Notes then outstanding voting as a single class to comply
with certain other agreements in the Indenture, the Notes, the Pledge Agreement or the Deposit
Agreement; (v) default under certain other agreements relating to Indebtedness of MSW Energy II or
any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness
prior to its express maturity, and the principal amount of any such
Indebtedness aggregates $25.0
million or more; (vi) default under the ARC Indenture which default results in the acceleration of
such Indebtedness prior to its express maturity and the principal amount of any such Indebtedness
aggregates $25.0 million or more; (vii) certain final judgments aggregating in excess of $25.0
million for the payment of money that remain undischarged for a period of 60 days; (viii) the
breach of certain material covenants in the Pledge Agreement or Deposit Agreement for 30 days after
notice, the repudiation in writing by the Company of any of its obligations under the Pledge
Agreement or Deposit Agreement or a material provision of the Pledge Agreement or Deposit Agreement
shall be held in any judicial proceeding to be unenforceable against the Company for any reason;
(ix) failure of the Escrow Agreement, at any time, to be in full force and effect (unless the
Company Deposit is released by the Escrow Agent) or any contest by the Company or any of the
Guarantors of the validity or enforceability of the Escrow Agreement; (x) except as permitted by
the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person
acting on its behalf shall deny or disaffirm its obligations under such Guarantor’s Note Guarantee;
or (xi) certain events of bankruptcy or

 

 

insolvency with respect to MSW Energy II, or any of its Restricted Subsidiaries,
Ref-Fuel, any Subsidiary of Ref-Fuel that is a Significant Subsidiary of Ref-Fuel or any group of
Subsidiaries of Ref-Fuel that, taken as a whole, would constitute a Significant Subsidiary of
Ref-Fuel. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount of the then outstanding Notes may declare all the Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all outstanding Notes will become due and payable without
further action or notice. Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

     (13) 
Trustee Dealings with Company. The Trustee, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it
were not the Trustee.

     (14) No
Recourse Against Others. A director, officer, employee, incorporator, partner,
member or stockholder, of the Company or any of the Guarantors, as such, will not have any
liability for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, the Indenture, the Pledge Agreement or the Deposit Agreement or for any claim based on,
in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.

     (15) Authentication.
This Note will not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.

     (16) Abbreviations.
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

     (17) Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Restricted
Global Notes and Restricted Definitive Notes will have all the rights
set forth in the
Registration Rights Agreement, dated as of November 24, 2003,
among the Company, UAE AE Ref-Fuel II
Corp. (upon its acquisition by MSW Energy II as provided for therein) and Credit Suisse First
Boston LLC or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted
Definitive Notes will have the rights set forth in one or more registration rights agreements, if
any, among the Company, the Guarantors and the other parties thereto,

 

 

relating to rights given by the Company and the Guarantors to the purchasers of any
Additional Notes (collectively, the “Registration Rights Agreement”).

     (18) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

       The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to:

If to the Company and/or any Guarantor:

MSW Energy Holdings II LLC

MSW Energy Finance Co. II, Inc.

c/o DLJ Merchant Banking Partners

Eleven Madison Avenue

New York, New York 10010-3629

Fax No.: (646) 935-7043

Attention: Daniel Clare

 

 

Assignment Form

     To assign this Note, fill in the form below:

	 	 	 
	(I) or (we) assign and transfer this Note to:
	 	 
	 	 	 
	 

	 	(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

and
irrevocably appoint                                                   
                                                                              
                                                           

to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:                                         

	 	 	 
	 

	 	Your Signature:  
                                                                               
	 

	 	    (Sign exactly as your name appears on the face of this Note)

Signature
Guarantee*:  
                                                           

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

 

Option of Holder to Elect Purchase

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.15 of the indenture, check the appropriate box below:

	 	 	 
	o Section 4.10

	 	o Section 4.15

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:

$                                        

Date:                                         

	 	 	 
	 

	 	Your Signature:  
                                                                               
	 

	 	     (Sign exactly as your name appears on the face of this Note)
	 
	 	 
	 

	 	Tax Identification No.:
                                                                                

Signature
Guarantee*:  
                                                           

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

 

SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

     The following exchanges of a part of this Regulation S Temporary Global Note for an
interest in another Global Note, or of other Restricted Global Notes for an interest in
this Regulation S Temporary Global Note, have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal Amount of	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	this Global Note	 	 	 	 
	 	 	Amount of decrease in	 	 	Amount of increase in	 	 	following such	 	 	Signature of authorized	 
	 	 	Principal Amount of	 	 	Principal Amount of	 	 	decrease	 	 	officer of Trustee or	 
	Date of Exchange	 	this Global Note	 	 	this Global Note	 	 	(or increase)	 	 	Custodian	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

CUSIP U60747AA7

73/8% Senior Secured Notes due 2010

			
	No. 1
	 	$4,325,000

MSW ENERGY HOLDINGS II LLC

MSW ENERGY FINANCE CO. II, INC.

promises
to pay to CEDE & CO.

or registered assigns,

the
principal sum of FOUR MILLION THREE HUNDRED TWENTY FIVE
THOUSAND

Dollars on September 1, 2010.

Interest Payment Dates: March 1 and September 1

Record Dates: February 15 and August 15

Dated: November 24, 2003

	 	 	 	 	 
	 	MSW ENERGY HOLDINGS II LLC

 	 
	 	By:  	/s/ Daniel Clare
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	MSW ENERGY FINANCE CO. II, INC.

 	 
	 	By:  	/s/ Daniel Clare
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

This is
one of the Notes referred to

in the within-mentioned Indenture:

WELLS EARCO BANK MINNESOTA,

NATIONAL ASSOCIATION,
   
as Trustee

	 	 	 	 	 
	By:

	 	/s/ Frank McDonald
	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 

 

 

7 3/8% Senior Secured Notes due 2010

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.

THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF
THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE
OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE SECURITIES ACT”) AND THIS NOTE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT
OF THE ISSUERS THAT (A) THIS
NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN

 

 

EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

          Capitalized terms used herein have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.

     (1)
Interest. MSW Energy Holdings II LLC, a Delaware limited liability company (“MSW
Energy II”) and MSW Energy Finance Co. II, Inc., a Delaware corporation (“MSW Energy
Finance II” and, together with MSW Energy II, the “Company”), promises to pay interest on
the principal amount of this Note at 7 3/8% per annum from November 24, 2003 until maturity
and shall pay the Additional Interest, if any, payable pursuant to Section 6 of the
Registration Rights Agreement referred to below. The Company will pay interest and
Additional Interest, if any, semi-annually in arrears on March 1 and September 1 of each
year, or if any such day is not a Business Day, on the next succeeding Business Day (each,
an “Interest Payment Date”). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if this Note
is authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be March 1,
2004. The Company will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it will pay
interest (including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Additional Interest, if any, (without regard to any
applicable grace periods) from lime to time on demand at the same rate to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

     Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S
Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of
interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall
in all other aspects be entitled to the same benefits as other Notes under the Indenture.

     (2)
Method of Payment. The
Company will pay interest on the Notes (except defaulted interest)
and Additional Interest, if any, to the Persons who are registered Holders of Notes at the
close of business on the February 15 or August 15 next preceding the Interest Payment Date,
even if such Notes are canceled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and
Additional Interest, if any,
and interest at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company, payment of
interest and Additional Interest, if any, may be made by check mailed to the Holders at their
addresses set forth the register of Holders; provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and interest, premium
and Additional Interest, if any, on, all Global Notes and all other Notes the Holders of which
will have provided wire transfer instructions to the Company or the Paying Agent. Such payment will
be in such coin or

 

 

currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts.

     (3)
Paying Agent and
Registrar. Initially, Wells Fargo Bank Minnesota, National
Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.

     (4)
Indenture and Security
Agreements. The Company issued the Notes under an Indenture
dated as of November 24, 2003 (the “Indenture”) between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a complete statement of such terms. To the extent any provision
of this Note conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are secured obligations of the Company.
The Notes are secured by a first priority lien on substantially all of the assets of the
Company pursuant to the Pledge Agreement and the Deposit Agreement referred to in the
Indenture.

     (5)
Optional Redemption.

     (a) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior
to September 1, 2006, the Company may redeem Notes with the net proceeds of a Qualified Equity
Offering at a redemption price equal to 107.375% of the aggregate principal amount thereof;
provided that at least 65% in aggregate principal amount of the Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption and that such redemption
occurs within 90 days of the date of the closing of such Qualified Equity Offering.

     (b) At any time prior to September 1, 2007, the Company may redeem all or a part of the Notes
upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to the following
on the date of redemption:

     (1) as determined by an Independent Investment Bank, the sum of the present values of
the Remaining Scheduled Payments discounted to the redemption date on a semiannual basis
(assuming a 360 day year consisting of twelve 30-day months) at the Adjusted Treasury Rate;
plus in each case,

     (2) accrued and unpaid interest and Additional Interest, if any, on the notes to the
applicable date of redemption.

     (c) At any time on or after September 1, 2007, the Company will have the option to redeem the
Notes, in  whole or in part, upon not less than 30 nor more than 60 days’ notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional Interest, if any, thereon to the applicable redemption date, if redeemed
during the twelve month period beginning on September 1 of the years indicated below:

	 	 	 	 	 
	Year	 	Percentage
	2007
	 	 	103.688	%
	2008
	 	 	101.844	%
	2009 and thereafter
	 	 	100.000	%

 

 

     (6) Special Mandatory Redemption.

     In accordance with the terms and conditions of the Escrow Agreement, and using the Company
Deposit (as defined in the Escrow Agreement), the Company shall redeem all and not less than all
of the Notes on March 1, 2004, or such earlier date as the
Company shall elect (the “Special
Mandatory Redemption Date”), if the Acquisition has not occurred or if the Transactions have been
terminated on or prior to March 1, 2004, at a redemption price equal to 100% of the aggregate
principal amount of the Notes, plus accrued and unpaid interest thereon to, but not including, the
Special Mandatory Redemption Date. Upon the closing of the Acquisition on or before the Special
Mandatory Redemption Date, the foregoing provisions of this paragraph (6) shall be null and void.

     (7)
Repurchase at Option of Holder.

               (a) If there is a Change of Control, the Company will be required to make an offer (a
“Change of Control Offer”) to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of each Holder’s Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if
any, to the date of purchase (the “Change of Control Payment”). Within 30 days following
any Change of Control, the Company will mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.

               (b) MSW Energy II shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale.

               (c) Within 30 days of each date on which the aggregate amount of Excess Proceeds exceeds
$20 million, the Company will commence an ARC Transaction Offer to all Holders of Notes and
all holders of other Indebtedness that is pari passu with the Notes containing provisions
similar to those set forth in the Indenture pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes (including any
Additional Notes) and other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Additional Interest thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes (including any Additional Notes) and other pari
passu Indebtedness tendered
pursuant to an ARC Transaction Offer is less than the Excess Proceeds, the Company may use
such deficiency for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and other pari passu Indebtedness surrendered by holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and other pari
passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an ARC Transaction Offer from the Company prior
to any related purchase date and may elect to have such Notes purchased by completing the
form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes.

     (8)
Notice of Redemption. Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at
its registered address. Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date, interest ceases to accrue on Notes or portions
thereof called for redemption.

 

 

     (9)
Denominations, Transfer,
Exchange. The Notes are in registered form without
coupons in denominations of $ 1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global
Notes only (i) on or after the termination of the 40-day restricted period (as defined in
Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary
Global Note.

     (10)
Persons
Deemed Owners. The registered Holder of a Note may be treated as its owner for
all purposes.

     (11)
Amendment,
Supplement and Waiver. Subject to certain exceptions, the Indenture, the
Note Guarantees, the Notes, the Pledge Agreement or the Deposit Agreement may be amended or
supplemented with the consent of the Holders of at least a majority in principal amount of the then
outstanding Notes and Additional Notes, if any, voting as a single class, and any existing default
or compliance with any provision of the Indenture, the Note Guarantees, the Notes, the Pledge
Agreement or the Deposit Agreement may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes and Additional Notes, if any, voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the
Notes may be amended or supplemented to (i) cure any ambiguity, defect or inconsistency, (ii)
provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the
provisions of Article 2 of the Indenture (including the related definitions) in a manner that does
not materially adversely affect any Holder, (iii) provide for the assumption of the Company’s or
any Guarantor’s obligations to Holders of the Notes in case of a merger or consolidation, (iv) make
any change that would provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such Holder, (v) comply with
the requirements of the SEC in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act, (vi) provide for the Issuance of Additional Notes in accordance with the
limitations set forth in the Indenture, (vii) allow any Guarantor to execute a supplemental
indenture and/or a Note Guarantee with respect to the Notes, (viii) implement the arrangements
contemplated by Section 4.19 of the Indenture or (ix) conform the text of this Indenture, the Note
Guarantees, the Pledge Agreement, the Deposit Agreement or the Notes to any provision of the
section entitled “Description of Notes” in the Offering Memorandum.

     (12)
Defaults and Remedies. Events of Default include: (i) default for 30 days in the payment
when due of interest or Additional Interest on the Notes; (ii) default in payment when due of
principal of or premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by
MSW Energy II or any of its Restricted Subsidiaries to comply with Section 4.07, 4.09, 4.10, 4.15
or 5.01 of the Indenture for 30 days after notice; (iv) failure by MSW Energy II or any

 

 

of its Restricted Subsidiaries for 60 days after notice to MSW Energy II by the Trustee or
the Holders of at least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with certain other agreements in the Indenture, the Notes, the Pledge Agreement or
the Deposit Agreement; (v) default under certain other agreements relating to Indebtedness of MSW
Energy II or any of its Restricted Subsidiaries which default results in the acceleration of such
Indebtedness prior to its express maturity, and the principal amount of any such Indebtedness
aggregates $25.0 million or more; (vi) default under the ARC Indenture which default results in the
acceleration of such Indebtedness prior to its express maturity and the principal amount of any
such Indebtedness aggregates $25.0 million or more; (vii) certain final judgments aggregating in
excess of S25.0 million for the payment of money that remain undischarged for a period of 60 days;
(viii) the breach of certain material covenants in the Pledge Agreement or Deposit Agreement for 30
days after notice, the repudiation in writing by the Company of any of its obligations under the Pledge
Agreement or Deposit Agreement or a material-provision of the Pledge Agreement or Deposit Agreement
shall be held in any judicial proceeding to be unenforceable or invalid against the Company for any
reason; (ix) failure of the Escrow Agreement, at any time, to be in full force and effect (unless
the Company Deposit is released by the Escrow Agent) or any contest by the Company or any of the
Guarantors of the validity or enforceability of the Escrow Agreement; (x) except as permitted by
the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person
acting on its behalf shall deny or disaffirm its obligations under such Guarantor’s Note Guarantee;
or (xi) certain events of bankruptcy or insolvency with respect to MSW Energy II, or any of its
Restricted Subsidiaries, Ref-Fuel, any Subsidiary of Ref-Fuel that is a Significant Subsidiary of
Ref-Fuel or any group of Subsidiaries of Ref-Fuel that, taken as a whole, would constitute a
Significant Subsidiary of Ref-Fuel. If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and
payable without further action or notice. Holders may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

     (13)
Trustee Dealings with
Company. The Trustee, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

     (14)
No Recourse Against Others. A director, officer, employee, incorporator, partner,
member or stockholder, of the Company or any of the Guarantors, as such, will not have any
liability for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, the Indenture, the Pledge Agreement or the Deposit Agreement or for any claim

 

 

based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.

     (15)
Authentication. This Note will not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent.

     (16)
Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with right of survivorship and not as tenants in common) CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

     (17)
Additional Rights of Holders of Restricted Global Notes and Restricted Definitive
Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders
of Restricted Global Notes and Restricted Definitive Notes will have all the rights set
forth in the Registration Rights Agreement, dated as of November 24, 2003, among the
Company, UAE Ref-Fuel II Corp. (upon its acquisition by MSW Energy II as provided for
therein) and Credit Suisse First Boston LLC or, in the case of Additional Notes, Holders of
Restricted Global Notes and Restricted Definitive Notes will have the rights set forth in
one or more registration rights agreements, if any, among the Company, the Guarantors and
the other parties thereto, relating to rights given by the Company and the Guarantors to the
purchasers of any Additional Notes (collectively, the “Registration Rights Agreement”).

     (18)
cusip Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

       The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to:

If to the Company and/or any Guarantor:

MSW Energy Holdings II LLC 
MSW
Energy Finance Co. II, Inc. 
c/o DLJ
Merchant Banking Partners 
Eleven
Madison Avenue 
New York, New York
10010-3629 
Fax No.: (646) 935-7043

Attention: Daniel Clare

 

 

Assignment Form

     To assign this Note, fill in the form below:

	 	 	 
	(I) or (we) assign and transfer this Note to:
	 	 
	 	 	 
	 

	 	(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

and
irrevocably appoint                                                                                                             
                                                                            

to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:                                         

	 	 	 
	 

	 	Your Signature:  
                                                                              
 
	 

	 	     (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:                                                             

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

 

Option of Holder to Elect Purchase

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.15 of the indenture, check the appropriate box below:

	 	 	 
	o Section 4.10

	 	o Section 4.15

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:

$                                        

Date:                                         

	 	 	 
	 

	 	Your Signature:  
                                                                               
	 

	 	     (Sign exactly as your name appears on the face of this Note)
	 
	 	 
	 

	 	
Tax Identification No.:                                                                          
         

Signature Guarantee*:                                                             

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

     The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global Note or
Definitive Note for an interest in this Global Note, have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal Amount of	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	this Global Note	 	 	 	 
	 	 	Amount of decrease in	 	 	Amount of increase in	 	 	following such	 	 	Signature of authorized	 
	 	 	Principal Amount of	 	 	Principal Amount of	 	 	decrease	 	 	officer of Trustee or	 
	Date of Exchange	 	this Global Note	 	 	this Global Note	 	 	(or increase)	 	 	Custodianexv4w11

 

EXHIBIT 4.11

WARRANT OFFERING AGREEMENT

(Replaces in its entirety that certain Rights Offer Agreement dated October 4, 2004 between Wells

Fargo Bank National Association and Danielson Holding Corporation attached hereto as Exhibit E.)

     This Agreement, effective as of ___, 2005 (the “Agreement”), is entered into between
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, (“Wells Fargo”) and COVANTA
HOLDING CORPORATION (formerly known as Danielson Holding Corporation), a Delaware corporation (the
“Company”).

RECITALS

     WHEREAS, the Bankruptcy Court in the jointly administered Chapter 11 cases captioned In re
Ogden Services New York, Inc. et al., Case Nos. 02-40826 (CB), et al., entered an order confirming
the Second Joint Plan of Reorganization of Covanta Energy Corporation (“Covanta”) and certain
affiliates, dated January 14, 2004, as modified (the “Plan”) pursuant to which the Company
purchased 100% of the equity interests in Covanta;

     WHEREAS, Covanta consummated the Plan and emerged from reorganization proceedings under
Chapter 11 on March 10, 2004;

     WHEREAS, as part of the Plan, the Company agreed to offer the right to purchase up to
3,000,000 shares of its common stock, par value $0.10 per share (“Common Stock”), at a price of
$1.53 per share (the “Base Offering”) to those holders of Allowed Subclass 3B Claims that held the
Allowed Subclass 3B Claims on January 12, 2004 (the “Record Date”), and that voted their Allowed
Subclass B Claims in favor of the Plan (the “Eligible Offerees”), with the exact amount of shares
to be offered in the Base Offering to be determined by the Company following the completion of a
pro rata rights offering to be made by the Company to its existing common stockholders;

     WHEREAS, under the Plan each Eligible Offeree would be offered the right to purchase its pro
rata portion of the Base Offering based upon the principal amount of the 9.25% Debentures held by
each such Eligible Offeree on the Record Date, relative to the aggregate principal amount of 9.25%
Debentures held by all Eligible Holders;

     WHEREAS, pursuant to the Order Approving Stipulation Between Covanta Energy Corporation and
Sunbeam Opportunities (Cayman) Master Fund L.P., dated September 30, 2005, issued by the Bankruptcy
Court (the “Sunbeam Order”), in connection with an adversary proceeding initiated by Sunbeam
Opportunities (Cayman) Master Fund L.P. (“Sunbeam”),
Sunbeam is deemed to have been the beneficial owner of
an Allowed Subclass 3B Claim in the amount of $3,000,000 on the
Record Date and is deemed to have
voted such Allowed Subclass 3B Claim in favor of the Plan;

     WHEREAS, pursuant to the Order Approving Stipulation Between Covanta Energy Corporation,
Covanta Holding Corporation and Goldman, Sachs & Co., dated October 17, 2005 (the “Goldman Order”
and, together with the Sunbeam Order, the “Orders”) issued by the

1

 

Bankruptcy Court in connection with an adversary proceeding initiated by Goldman, Sachs and
Co. (“Goldman”), Goldman is deemed to have been the record holder of an Allowed Subclass 3B Claim in the
amount of $6,079,000 on the Record Date and is deemed to have voted such Allowed Subclass 3B Claim in
favor of the Plan;

     WHEREAS, on June 11, 2004, the Company completed a pro rata rights offering to each of its
common stockholders in which each stockholder was issued a warrant to purchase 0.75 shares of
Common Stock at a price of $1.53 per share for each share of Common Stock held by such stockholder,
and the Company issued a total of 27,438,118 additional shares of its Common Stock, constituting
all of the shares offered for sale in such rights offering;

     WHEREAS, following the completion of such rights offering, the Company determined that the
full 3,000,000 shares could be sold to Eligible Offerees in the Base Offering;

     WHEREAS, in order to finance the Company’s acquisition of Covanta ARC Holdings, Inc., formerly
known as American Ref-Fuel Holdings, Corp. (“Ref-Fuel”), the Company, on June 21, 2005, completed a
pro rata rights offering to each of its common stockholders in which each stockholder was issued a
warrant to purchase 0.9 shares of Common Stock at a price of $6.00 per share for each share of
Common Stock held by such stockholder (the “Ref-Fuel Rights Offering”);

     WHEREAS, on January 31, 2005, the Company agreed with D.E. Shaw Laminar Portfolios L.L.C., one
of the Eligible Offerees, that if the Base Offering was not completed prior to the Ref-Fuel Rights
Offering, the terms of the Base Offering would be revised so that Eligible Offerees who
participated in the Base Offering would be offered the opportunity to purchase additional shares of
Common Stock as if the Ref-Fuel Rights Offering had occurred after the Base Offering;

     WHEREAS, under the revised terms of the Base Offering Eligible Offerees who participate in the
Base Offering will also be offered contingently issuable warrants to purchase 0.9 shares of Common
Stock at $6.00 per share for each share of Common Stock purchased in the Base Offering (the
“Contingent Offering”, collectively the Base Offering and the Contingent Offering are sometimes
referred to herein as the “Warrant Offering”);

     WHEREAS, the Warrant Offering will be made by the Company pursuant to a prospectus (the
“Prospectus”) filed with the Securities and Exchange Commission as part of a Registration Statement
on Form S-1;

     WHEREAS, Wells Fargo is serving as the Disbursing Agent for distributions to holders of
Allowed Subclass 3B Claims pursuant to a Disbursing Agreement, effective March 9, 2004, between
Wells Fargo and Covanta; and

     WHEREAS, the Company desires to appoint Wells Fargo as Warrant Agent for the Warrant Offering
in accordance with this Agreement, and Wells Fargo desires to act as the Warrant Agent, subject to
the terms and conditions set forth in this Agreement.

2

 

     NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable
consideration, the Company and Wells Fargo agree as follows:

     1. Definitions. Except as otherwise defined in this Agreement, all capitalized terms
shall have the meanings ascribed to them in the Plan.

     2. Appointment of Warrant Agent for Eligible Offerees. The Company hereby appoints
Wells Fargo to act in accordance with the terms set forth in this Agreement. Wells Fargo hereby
accepts such appointment and agrees to be bound by and comply with the terms of the Warrant
Offering and this Agreement. In acting as Warrant Agent, Wells Fargo shall perform such duties as
are specifically set forth in the Prospectus, the warrant exercise documents and this Agreement
(including the procedures for conducting the Warrant Stock Offering attached hereto as Exhibit
A).

     3. Establishment of Custody Accounts. Wells Fargo shall establish the following
segregated bank custody accounts:

     (a) Warrant Offering; and

     (b) Such additional accounts as may be necessary to effect distributions to Eligible
Offerees in connection with the Warrant Offering (collectively, the “Accounts”).

     4. Investment of Cash. Wells Fargo is hereby authorized and directed to invest funds
in the Accounts, and any interest earned thereon, pursuant to an Agency and Custody Account
Direction for Cash Balances attached hereto as Exhibit B.

     5. Records
Pertaining to Eligible Offerees.

         
 (a) In performing its duties hereunder, Wells
Fargo shall use the records pertaining to Eligible Offerees provided to it pursuant to Section 5 of
the Disbursing Agreement, including, without limitation, the listing of the Depository Trust
Company (“DTC”) participants ( the “DTC Participants”) holding the 9.25% Debentures due 2002 in
book-entry form as of the Record Date and shall verify and update such records as required for the
Warrant Offering including, without limitation, the use of the
information described in Exhibit C attached hereto.

         
 (b) In addition, pursuant to the Orders, (i) Sunbeam
is deemed to be an Eligible Offeree in the amount of $3,000,000,
which amount is held of record on the books and records of DTC by
Goldman, in its capacity as a DTC Participant, for the account of
Sunbeam, and (ii) excluding Sunbeam, Goldman is deemed to have
been the record holder of an Allowed Subclass 3B Claim in the amount
of $6,079,000 on the Record Date and is deemed to have voted such
Allowed Subclass 3B Claim in favor of the Plan.

3

 

     (c) The provisions
of this Section 5 are based solely on a review of the
information set forth in the materials described on Exhibit C attached hereto. While the
Company believes such information is true and correct, the Company has not verified the accuracy of
any such information.

     6. Warrant Offering to Eligible Offerees.

     (a) The Warrant Offering shall commence on the date shown in the Prospectus. Wells Fargo
shall communicate with DTC, the DTC Participants and any beneficial owners of the 9.25% Debentures
on behalf of the Company on matters relating to the Warrant Offering, including the number of
shares of Common Stock that each Eligible Offeree is entitled to purchase pursuant to the Base
Offering. Wells Fargo and the Company shall agree on the written instructions to be provided to
DTC and the DTC Participants with respect to the Warrant Offering. Wells Fargo agrees not to make
any representations in connection with the Warrant Offering not included in the Prospectus and
related documents. Wells Fargo agrees to preserve the confidentiality of all non-public
information provided by the Company or its agents for its use in providing services under this
Agreement, or information developed by Wells Fargo based upon such non-public information.

     (b) Upon completion of the Warrant Offering, Wells Fargo shall certify in writing to the
Company that (i) the Warrant Offering was made to all Eligible Offerees who participated in the
Warrant Offering pursuant to the delivery of a Prospectus and (ii) each Eligible Offeree was
notified of its proper allocation of shares of Common Stock as described in the Prospectus.

     7. Expiration of Warrant Offering. The Warrant Offering shall be conducted and expire
in accordance with the terms and conditions set forth in the Prospectus.

4

 

     8. Tax Reporting. Wells Fargo shall not be responsible for determining any tax
reporting to any Class 3B Claimant receiving distributions under the Warrant Offering. To the
extent that Wells Fargo is requested to print and mail IRS Form 1099s, the Company shall instruct
Wells Fargo with respect to 1099 reporting by (a) specifying in writing the version(s) of IRS Form
1099 to be distributed, (b) furnishing any information required in such IRS Form 1099 and (c)
providing any additional information as may be reasonably requested by Wells Fargo in connection
with this section. Wells Fargo shall print and mail IRS Form 1099s to Eligible Offerees in
accordance with the Company’s instructions. Wells Fargo may rely wholly upon the Company’s
representations regarding tax reporting.

     9. Fees and Expenses. For its services, Wells Fargo shall be entitled to
compensation from the Company in accordance with Exhibit D attached hereto and incorporated
herein by reference.

     10. Notices. All notices, directions, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the
date of service if served personally on the party to whom notice is to be given; (b) on the day of
transmission if sent by facsimile transmission to the facsimile number given below, and telephonic
confirmation, if receipt is obtained promptly after completion of transmission; (c) on the day
after delivery to an overnight courier or the express mail service maintained by the United States
Postal Service; or (d) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid, and properly addressed,
return receipt requested, to the party as follows:

IF TO THE COMPANY:

Craig Abolt

Chief Financial Officer

Covanta Holding Corporation

40 Lane Road

Fairfield, NJ 07004

Fax: (973) 882-7776

Tel: (973) 882-7070

WITH A COPY TO:

David S. Stone, Esq.

Neal, Gerber & Eisenberg LLP

Two North LaSalle Street

Chicago, Illinois 60602

Fax: (312) 269-1747

Tel: (312) 269-8411

5

 

IF TO WELLS FARGO:

Wells Fargo Bank, National Association

Ms. Patty Adams

Corporate Trust Services

Sixth Street and Marquette Avenue

MAC N9303-120

Minneapolis, MN 55479

Fax: (612) 667-9825

Tel: (612) 316-1102

If either the Company or Wells Fargo receives any notice of any third party claim against any cash
or securities to be distributed to an Eligible Offeree pursuant this Agreement, a copy of the
notice shall be promptly forwarded to the other party.

     11. Scope of Wells Fargo’s Duties. Wells Fargo:

     (a) shall have no duties or obligations other than those specifically set forth in this
Agreement or as may be subsequently agreed to by the Company and Wells Fargo in writing;

     (b) may reasonably rely on and shall be indemnified by the Company in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram or other
document or security delivered to Wells Fargo by the Company and reasonably believed by
Wells Fargo to be genuine and to have been signed by the proper party or parties except to
the extent arising out of Wells Fargo’s bad faith, gross negligence or willful misconduct;

     (c) shall not be obligated to take legal action hereunder which might in the Wells
Fargo’s reasonable judgment involve any expense or liability, unless Wells Fargo shall have
been furnished with reasonable indemnity;

     (d) may reasonably act upon any tender, statement, request, comment, agreement or other
instrument whatsoever not only as to its due execution and validity and effectiveness of its
provisions, but also as to the truth and accuracy of any information contained therein,
which Wells Fargo believes in good faith to be genuine and to have been signed or
represented by a proper person or persons acting in a fiduciary or representative capacity
(so long as proper evidence of such fiduciary’s or representative’s authority so to act is
submitted to Wells Fargo) and Wells Fargo examines and reasonably concludes that such
evidence properly establishes such authority except to the extent arising out of Wells
Fargo’s bad faith, gross negligence or willful misconduct;

     (e) may rely on and shall be protected in acting upon written or oral instructions from
the designated officers of the Company specified in Exhibit A; and

6

 

     (f) may consult with the Company’s counsel with respect to any questions relating to
Wells Fargo’s duties and responsibilities, and the written opinion of such counsel shall be
full and complete authorization and protection in respect of certain action taken, suffered
or omitted to be taken by Wells Fargo hereunder in good faith and in accordance with the
written opinion of such counsel.

     12. Further Indemnification.

     (a) The Company hereby agrees to protect, defend, indemnify and hold harmless Wells Fargo
against and from any and all costs, losses, liabilities, expenses (including counsel fees and
disbursements) and claims imposed upon or asserted against Wells Fargo on account of any action
taken or omitted to be taken by Wells Fargo in connection with its acceptance of or performance of
its duties under this Agreement and the documents related thereto as well as the costs and expenses
of defending itself against any claim or liability arising out of or relating to this Agreement and
the documents related thereto. This indemnification shall survive the release, discharge,
termination, or satisfaction of this Agreement. Anything in this Agreement to the contrary
notwithstanding, the Company shall not be liable for indemnification or otherwise for loss,
liability, cost or expense to the extent arising out of Wells Fargo’s bad faith, gross negligence
or willful misconduct. The Company shall not be liable under this indemnification agreement with
respect to any claim against Wells Fargo unless the Company shall be notified by Wells Fargo, by
letter, of the written assertion of a claim against Wells Fargo or of any other action commenced
against Wells Fargo, promptly after Wells Fargo shall have received any such written assertion or
shall have been served with a summons in connection therewith. Wells Fargo agrees that, without
the prior written consent of the Company (which consent will not be unreasonably withheld), it will
not settle, compromise or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding in respect of which indemnification could be sought in accordance with the
indemnification provision of this Agreement (whether or not Wells Fargo or the Company or any of
its directors, officers and controlling persons is an actual or potential party to such claim,
action or proceeding).

     (b) In the event that Wells Fargo becomes involved in any litigation (“Litigation”) in which
an adverse result may give rise to the Company’s obligation to indemnify hereunder, Wells Fargo
will give prompt written notice to the Company of the pendency of such Litigation, and the Company
shall have the right at any time to participate in and control the contest and defense of such
Litigation at its own cost and expense, including the cost and expense of attorneys’ fees in
connection therewith.

     (c) Wells Fargo hereby agrees to protect, defend, indemnify and hold harmless the Company
against and from any and all costs, losses, liabilities, expenses (including counsel fees and
disbursements) and claims imposed upon or asserted against the Company on account of any action
taken or omitted to be taken by Wells Fargo in connection with matters certified to the Company
hereunder and its determinations and allocations to Eligible Offerees of the number of shares to
which such Eligible Offerees are entitled to purchase in the Base Offering, as well as the costs
and expenses of defending the Company against any claim or liability arising out of a misallocation
or a failure to properly allocate shares to an Eligible Offeree. This indemnification shall
survive the release, discharge, termination, or satisfaction of this Agreement. Anything in this
Agreement to the contrary notwithstanding, Wells Fargo shall not

7

 

be liable for indemnification or otherwise for loss, liability, cost or expense to the extent
arising out of the Company’s bad faith, gross negligence or willful misconduct relating hereto.
Wells Fargo shall not be liable under this indemnification agreement with respect to any claim
against the Company unless Wells Fargo shall be notified by the Company, by letter, of the written
assertion of a claim against the Company or of any other action commenced against the Company,
promptly after the Company shall have received any such written assertion or shall have been served
with a summons in connection therewith. The Company agrees that, without the prior written consent
of Wells Fargo (which consent will not be unreasonably withheld), it will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought in accordance with the indemnification provision
of this Agreement (whether or not Wells Fargo or the Company or any of its directors, officers and
controlling persons is an actual or potential party to such claim, action or proceeding).

     13. Termination. Either party may give thirty (30) days prior written notice to the
other of the termination of this Agreement. Upon notice of termination, the Company shall use its
reasonable best efforts to obtain a successor Warrant Agent on the terms and conditions set forth
herein. If a successor Warrant Agent is not appointed within thirty (30) days after the date of
the notice of termination, the Company shall act as its own Warrant Agent on the terms and
conditions set forth herein. Upon receipt of written notice from the Company of the appointment of
the successor Warrant Agent and upon receipt of written instructions, Wells Fargo shall, upon
request of the Company and upon payment of any accrued and unpaid amounts owed Wells Fargo pursuant
to the terms of this Agreement, promptly transfer to the successor Warrant Agent the original or
copies of all books and records maintained by Wells Fargo hereunder and cooperate with, and provide
reasonable assistance to, the successor Warrant Agent in the establishment of the books and records
necessary to carry out its responsibilities hereunder.

     14. Successors and Assigns. Except as otherwise provided in this Agreement, no party
hereto shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of the parties hereto.

     15. Successor by Merger. Any corporation or association into which Wells Fargo may be
merged, or with which it may be consolidated, or to which it may sell, lease or transfer its
corporate trust business and assets as a whole or substantially as a whole, shall be and become
successor Wells Fargo hereunder and shall be vested with all the trusts, powers, rights,
obligations, duties, remedies, immunities and privileges hereunder as was its predecessor, without
the execution or filing of any instrument on the part of any of the parties hereto;
provided, however, that Wells Fargo shall notify the Company of any impending
merger, consolidation or disposition of its corporate trust business reasonably in advance of its
consummation.

     16. Governing Law; Jurisdiction. This Agreement shall be construed, performed, and
enforced in accordance with, and governed by, the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.

8

 

     17. Severability. If any part of this Agreement is declared by any court or other
judicial or administrative body to be null, void, or unenforceable, said provision shall survive to
the extent it is not so declared, and all of the other provisions of this Agreement shall remain in
full force and effect.

     18. Amendments; Waivers. This Agreement may be amended or modified, and any of the
provisions, covenants, representations, warranties, or conditions hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, in any one or more instances,
shall not be deemed to be nor construed as further or continuing waiver of any such condition, or
of the breach of any other provision, term, covenant, representation, or warranty of this
Agreement.

     19. Entire Agreement. This Agreement contains the entire understanding between the
Company and Wells Fargo and supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, including, without limitation, the Rights Offer Agreement dated
October 4, 2004 between Wells Fargo and the Company.

     20. Section Headings. The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this Agreement.

     21. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute one instrument.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.

COVANTA HOLDING CORPORATION:

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 
	Its:	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

WELLS FARGO BANK, NATIONAL ASSOCIATION:

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 
	Its:	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

9

 

EXHIBIT A

PROCEDURES FOR WARRANT OFFERING

     1. Summary of Warrant Offering. The Warrant Offering consists of the Base Offering
and the Contingent Offering. In the Base Offering, the Company is offering at no charge warrants
(the “Base Warrants”) to purchase up to 3,000,000 shares of Common Stock at a purchase price of
$1.53 per share (the “Base Exercise Price”). The Base
Offering is being made solely to those holders as of
January 12, 2004 (the “Record Date”) of the 9.25%
Debentures issued by Covanta who voted in favor of Covanta’s
second reorganization plan (the “Covanta Plan of
Reorganization”) or who have been authorized to participate by
the Bankruptcy Court having jurisdiction over the Covanta Plan of
Reorganization (collectively, the “Eligible Offerees”).

     In the Base Offering, each Eligible Offeree may purchase the number of shares of Common Stock
equal to the dollar value of the 9.25% Debentures held by the Eligible Offeree on the Record Date,
divided by 93,593,000 (the total dollar value of all 9.25% Debentures held by all Eligible
Offerees), multiplied by 3,000,000. Cash will be paid by the Company in lieu of fractional shares,
calculated as the product of the fraction of a share of Common Stock multiplied by the difference
between the current market price of a share of Common Stock and the Base Exercise Price.

     The Contingent Offering is being made solely to Eligible Offerees who purchase shares in the
Base Offering in the form of contingently issuable, non-transferable warrants (the
“Contingent Warrants”). In the Contingent Offering the
Company will issue at no charge to an Eligible Offeree a Contingent Warrant to purchase 0.9 shares of the
Common Stock at a purchase price of $6.00 per share (the “Contingent Exercise Price”) for each
share of Common Stock purchased by the Eligible Offeree through the
exercise of Base Warrants in the Base Offering. In the Contingent
Offering up to 2,700,000 shares of Common Stock will be offered by
the Company for purchase pursuant to the Contingent Warrants. Cash
will be paid by the Company in lieu of fractional shares, calculated as the product of the fraction
of a share of Common Stock multiplied by the difference between the current market price of a share
of Common Stock and the Contingent Exercise Price.

     Warrants
to purchase shares of the Common Stock under the Warrant Offering will be effective
upon the date of the Prospectus and will expire if they are not exercised by 5:00 p.m., Eastern
Time, on ___, 200__ and have no further value. There are no oversubscription
privileges being offered under the Warrant Offering and Warrants not exercised will not be reallocated to
other Eligible Offerees nor may any such Warrants be transferred in any way or to any person.

     The Warrant Offering will be made solely through ASOP and you will receive the agent’s
messages from DTC setting forth the number of Base Warrants and Contingent Warrants being exercised
by each Eligible Offeree.

     2. Delivery of Documents. You have received drafts of, and will receive final copies
of, the following documents:

     (a) the Prospectus;

     (b) Nominee Letter;

 

 

     (c) Form Client Letter; and

     (d) Beneficial Owner Election Form

     You will notify the Company of the number of copies of each of the documents required for
mailing and as soon as is reasonably practical on and after the date of the Prospectus you shall
mail or cause to be mailed the above documents. The Company will provide you with sufficient
copies of each of the documents.

     3. Escrow Protection Mechanics. As described in the Prospectus, in order to avoid an
“ownership change” for federal income tax purposes, the Company has implemented certain escrow
protection mechanics which operate as follows: (1) by exercising its Warrants, each holder will
represent to us that such holder will not be, after giving effect to the exercise of the Warrants,
an owner, directly or indirectly (as described in the Prospectus) of
more than 6,600,000 shares,
which is approximately 4.5% of the outstanding Common Stock; (2) if such exercise would result in
such holder owning, directly or indirectly (as described in the
Prospectus), more than 6,600,000
shares, which is approximately 4.5% of the outstanding Common Stock, such holder must notify you at
your telephone number included in the Prospectus; (3) if requested, each holder will be required to
provide us with additional information regarding the amount of Common Stock that the holder owns;
and (4) the Company has the right to instruct you to refuse to honor such holder’s exercise to the
extent such exercise might, in the Company’s sole and absolute discretion, result in such holder
owning at least 7,393,806 shares, constituting 5% or more of the outstanding shares of Common
Stock. The Company also has the right, in its sole and absolute discretion, to limit the exercise
of Warrants, including you, to refuse to honor any exercise of Warrants, by holders of 5% or more of the Common
Stock or persons who would become a 5% holder through the exercise of Warrants.

     You will notify the Company promptly after receipt of any telephone call as described in
clause (2) in the above paragraph.

     4. Reports. You shall notify the Company by email to the persons listed in Section 5
below immediately after the close of business on each business day during the period commencing two
business days after the mailing of the Prospectus and ending at the Expiration Date of the number
of Base Warrants and Contingent Warrants exercised on the day covered by such daily notice and the
cumulative total of the Base Warrants and Contingent Warrants exercised during the Warrant
Offering. At or before 5:00 p.m., Eastern time, on the first trading day following the
Expiration Date (1) you shall make the certification required by Section 7(b) of this Agreement and
also certify in writing to the Company the cumulative total through the Expiration Date of the
number of Base Warrants and Contingent Warrants exercised, and (2) provide to American Stock
Transfer & Trust Company, the Company’s registrar and transfer agent (the “Transfer Agent”), the
information required for the Transfer Agent to issue the shares of Common Stock and pay cash for
the fractional shares.

	5.	 	Instructions. With respect to notices or instructions to be provided by the Company
hereunder, you may rely and act on any written instruction signed by any one or more of the
following authorized officers, agents or employees of the Company:

2

 

	 	 	 	 	 
	David S. Stone

	 	(312) 269-8411
	 	dstone@ngelaw.com
	Elaine M. Taussig

	 	(312) 269-5341
	 	etaussig@ngelaw.com
	Beth J. Rosner

	 	(312) 269-8478
	 	brosner@ngelaw.com
	Michele L. Davis

	 	(312) 269-5209
	 	mdavis@ngelaw.com
	Anthony Orlando

	 	(973) 882-7277
	 	AnthonyOrlando@covantaholding.com
	Timothy Simpson

	 	(973) 882-7308
	 	tsimpson@covantaholding.com
	Craig Abolt

	 	(973) 882-7070
	 	cabolt@covantaholding.com

3

 

EXHIBIT B

AGENCY AND CUSTODY ACCOUNT

DIRECTION FOR CASH BALANCES

1

 

Exhibit B

Agency and Custody Account Direction For Cash Balances

 

	 
	Direction to use Wells Fargo Advantage Funds for Cash Balances in the following account(s):

	 	 	 
	Account Names:	 	Covanta Class 3B Stock Offering

	 	 	 

	Account Number(s):
	 	16513200

You are hereby directed to invest, as indicated below or as I shall direct further from time
to time, all cash in the Account in the following money market portfolio of Wells Fargo
Advantage Funds (the “Fund”) or another permitted investment of my choice (Check One):

	o	 	Wells Fargo Advantage Funds, Cash Investment Money Market Fund
	 
	o	 	Wells Fargo Advantage Funds, Treasury Plus Money Market Fund
	 
	þ	 	Wells Fargo Advantage Funds, 100% Treasury Money Market Fund
	 
	o	 	Wells Fargo Advantage Funds, Government Money Market Fund
	 
	o	 	Wells Fargo Advantage Funds, National Tax-Free Money Market Fund

I acknowledge that I have received, at my request, and reviewed the Fund’s prospectus and have
determined that the Fund is an appropriate investment for the Account.

I understand from reading the Fund’s prospectus that Wells Fargo Funds Management, LLC,
(“Wells Fargo Bank”) a wholly-owned subsidiary of Wells Fargo & Company provides investment
advisory and other administrative services for the Wells Fargo Advantage Funds. Other
affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds.
Boston Financial Data Services serves as transfer agent for the Funds. The Funds are
distributed by Stephens Inc., Member NYSE/SIPC. Wells Fargo & Company and its affiliates are
not affiliated with Stephens Inc. I also understand that Wells Fargo & Company will be paid,
and its bank affiliates may be paid, fees for services to the Funds and that those fees may
include Processing Organization fees as described in the Fund’s prospectus.

I understand that you will not exclude amounts invested in the Fund from Account assets
subject to fees under the Account agreement between us.

I understand that investments in the Fund are not obligations of, or endorsed or guaranteed
by, Wells Fargo Bank or its affiliates and are not insured by the Federal Deposit Insurance
Corporation.

I acknowledge that I have full power to direct investments of the Account.

I understand that I may change this direction at any time and that it shall continue in effect
until revoked or modified by me by written notice to you.

I understand that if I choose to communicate this investment direction solely via facsimile,
then the investment direction will be understood to be enforceable and binding.

	 	 	 
	 	 	Timothy J. Simpson, Senior Vice President

	 	 	 

	Signature
	 	General Counsel and Secretary

	 	 	 

	12/14/05
	 	 

	 	 	 

	Date
	 	 

 

EXHIBIT C

CERTAIN RELIANCE MATERIALS

     (1) The Affidavit of Bridget Gallerie of Bankruptcy Services LLC Regarding the Methodology
for the Tabulation of and Results of Voting with Respect to the Debtors’ Second Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, dated February 27, 2004, in the form filed
with the Bankruptcy Court;

     (2) the Order Approving Stipulation Between Covanta Energy Corporation and Sunbeam
Opportunities (Cayman) Master Fund L.P., dated September 30, 2005, issued by the Bankruptcy Court,
in connection with an adversary proceeding initiated by Sunbeam Opportunities (Cayman) Master Fund
L.P.;

     (3) the Order Approving Stipulation Between Covanta Energy Corporation, Covanta Holding
Corporation and Goldman, Sachs & Co., dated October 17, 2005, issued by the Bankruptcy Court in
connection with an adversary proceeding initiated by Goldman, Sachs and Co.; and

     (4) the DTC One Time Special Security Report for Covanta’s 9 1/4% Debentures (the “DTC
Report”) as of January 12, 2004, the record date for voting with respect to the Plan.

1

 

EXHIBIT D

SCHEDULE OF FEES

Covanta Holding Corporation

For Services as Warrant Agent

     Wells Fargo Bank is a leading provider of quality, cost-efficient Corporate Trust Services.
Our staff is qualified and proficient, drawing on years of experience in the field. Because we
value your business, we are committed to bringing you personal, professional service.

	I.	 	Warrant Offer Administration Fee:

	 	This includes the following:
	 
	 	•	 	Negotiating and drafting of the Warrant Offering Agreement.
	 
	 	•	 	Coordinating set up of Warrant offer with DTC.
	 
	 	•	 	Development of administration processes, procedures, compliance review and set-up of
custodial accounts at Wells Fargo.
	 
	 	•	 	Answering bondholder questions.
	 
	 	•	 	Routing calculations and due diligence associated with warrant offer.

	II.	 	Out-of-Pocket Expenses:
	 
	 	 	     All out-of-pocket expenses will be billed in addition to the above at cost. These
include the fees and expenses of any agents, representatives or independent contractors
(including, without limitation, attorneys, investment brokers, accountants, transfer agents,
managers, appraisers, brokers or otherwise). Other out-of-pocket expenses include, but are
not limited to, travel expenses, telephone charges, postage expenses, costs of providing
rights offer materials to DTC participants and/or their beneficial holders, special delivery
expenses, printing, filing fees, and other expenses incurred in connection with the
administration of the claims.

 

 

	III.	 	Extraordinary and Hourly Administration Fees:
	 
	 	 	Extraordinary administration fees may be charged for services beyond those contemplated by the
Agreement. You will be informed in advance of Wells Fargo’s performance of services that are
considered extraordinary.

$___ / Relationship Manager

$___ / Relationship Specialist

	IV.	 	Conditions:
	 
	 	 	This fee schedule is based upon a two-tier Warrant Offering. It consists of both the “Base
Offering” and the “Contingent Offering.”
	 
	 	 	It is noted that Covanta Holding Corporation has already made a payment of $_____ for these
services.

Schedule is subject to periodic review and adjustment.

	 	(i)	 	November 1, 2005

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EXHIBIT E

RIGHTS OFFER AGREEMENT

     This Agreement, effective October 4, 2004 is entered into between WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, (“Wells Fargo”) and DANIELSON HOLDING CORPORATION, a
Delaware corporation, (the “Company”).

RECITALS

     WHEREAS, the Bankruptcy Court in the jointly administered Chapter 11 cases captioned In re
Ogden Services New York, Inc. et al., Case Nos. 02-40826 (CB), et al., entered an order confirming
the Second Joint Plan of Reorganization of Covanta Energy Corporation (“Covanta”) and those of its
affiliates set forth on Exhibit 1 attached thereto, dated January 14, 2004, as modified (the
“Plan”) pursuant to which the Company purchased 100% of the equity interests in Covanta;

     WHEREAS, Covanta consummated the Plan and emerged from reorganization proceedings under
Chapter 11 on March 10, 2004;

     WHEREAS, as part of the Plan, the Company agreed to offer to sell up to 3,000,000 shares of
its common stock, par value $0.10 per share (“Common Stock”) at a price of $1.53 per share (the
“Class 3B Stock Offering”) to those holders of Allowed Subclass 3B Claims that voted in favor of
the Plan (the “Eligible Offerees”), with the exact amount of shares to be offered in the Class 3B
Stock Offering to be determined by the Company following the completion a pro rata rights offering
to be made by the Company to its existing common stockholders;

     WHEREAS, under the Plan each Eligible Offeree would be offered the right to purchase its pro
rata portion of the Class 3B Stock Offering based upon the principal amount of the 9.25% Debentures
held by each such Eligible Offeree as of January 12, 2004 relative to the aggregate principal
amount of 9.25% Debentures held by all Eligible Holders;

     WHEREAS, on June 11, 2004, the Company completed a pro rata rights offering to each of its
common stockholders in which each stockholder was issued a warrant to purchase 0.75 shares of
Common Stock at a price of $1.53 per share for each share of Common Stock held by such stockholder,
and the Company issued a total of 27,438,118 additional shares of its Common Stock, constituting
all of the shares offered for sale in such rights offering;

     WHEREAS, following the completion of such rights offering, the Company determined that the
full 3,000,000 shares could be sold to Eligible Offerees;

     WHEREAS, the Class 3B Stock Offering will be made by the Company pursuant to a prospectus (the
“Prospectus”) filed with the Securities and Exchange Commission as part of a Registration Statement
on Form S-3;

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     WHEREAS, Wells Fargo is serving as the Disbursing Agent for distributions to holders of
Allowed Subclass 3B Claims pursuant to a Disbursing Agreement, effective March 9, 2004, between
Wells Fargo and Covanta; and

     WHEREAS, the Company desires to appoint Wells Fargo as Rights Agent for the Class 3B Stock
Offering in accordance with this Agreement, and Wells Fargo desires to act as the Rights Agent,
subject to the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable
consideration, the Company and Wells Fargo agree as follows:

     1. Definitions. Except as otherwise defined in this Agreement, all capitalized terms
shall have the meanings ascribed to them in the Plan.

     2. Appointment of Rights Agent for Eligible Offerees. The Company hereby appoints
Wells Fargo to act in accordance with the terms set forth in this Agreement. Wells Fargo hereby
accepts such appointment and agrees to be bound by and comply with the terms of the Class 3B Stock
Offering and this Agreement. In acting as Right Agent, Wells Fargo shall perform such duties as
are specifically set forth in the Prospectus, the rights subscription documents and this Agreement
(including the procedures for conducting the Class 3B Stock Offering attached hereto as Exhibit
A).

     3. Establishment of Custody Accounts. Wells Fargo shall establish the following
segregated bank custody accounts:

     (a) Class 3B Stock Offering; and

     (b) Such additional accounts as may be necessary to effect distributions to Eligible
Offerees of the Class 3B Stock Offering (collectively, the “Accounts”).

     4. Investment of Cash. Wells Fargo is hereby authorized and directed to invest funds
in the Accounts, and any interest earned thereon, pursuant to an Agency and Custody Account
Direction for Cash Balances attached hereto as Exhibit B.

     5. Records Pertaining to Eligible Offerees. In performing its duties hereunder,
Wells Fargo shall use the records pertaining to Eligible Offerees provided to it pursuant to
Section 5 of the Disbursing Agreement, including, without limitation, the listing of the Depository
Trust Company (“DTC”) participants ( the “DTC Participants”) holding the 9.25% Debentures due 2002
in book-entry form as of January 12, 2004 and shall verify and update such records as required for
the Class 3B Stock Offering.

     6. Determination of Eligible Offerees.

     (a) The Company hereby certifies to Wells Fargo that (i) only one record holder of an Allowed
Subclass 3B Claim (in the principal amount of $400,000.00 which at the time of voting was held
through DTC in the name of the Northern Trust Company, customer account No. 17-74814) is a
Rejecting Bondholder (as defined in the Plan) under the Plan for purposes of distributions under
the Plan and is not entitled to participate in the Class 3B Stock Offering, and

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(ii) all other Allowed Subclass 3B Claims are Accepting Bondholders (as defined in the Plan) under
the Plan for purposes of distributions under the Plan and are entitled to participate in the Class
3B Stock Offering as an Eligible Offeree.

     (b) Based upon information (i) previously developed by Wells Fargo in its capacity as
Disbursing Agent for distributions to Allowed Subclass 3B Claims and (ii) as provided by DTC, Wells
Fargo shall determine the beneficial owners of 9.25% Debentures entitled to participate in the
Class 3B Stock Offering as Eligible Offerees and the number of shares of Common Stock that each
Eligible Offeree is entitled to purchase pursuant to the Class 3B Stock Offering.

     7. Class 3B Stock Offering to Eligible Offerees.

     (a) The Class 3B Stock Offering shall commence on the date shown in the Prospectus. Wells
Fargo shall communicate with DTC, the DTC Participants and any beneficial owners of the 9.25%
Debentures on behalf of the Company on matters relating to the Class 3B Stock Offering, including
the number of shares of Common Stock that each Eligible Offeree is entitled to purchase pursuant to
the Class 3B Stock Offering. Wells Fargo and the Company shall agree on the written instructions
to be provided to DTC and DTC Participants with respect to the Class 3B Stock Offering. Wells
Fargo agrees not to make any representations in connection with the Class 3B Stock Offering not
included in the Prospectus and related documents. Wells Fargo agrees to preserve the
confidentiality of all non-public information provided by the Company or its agents for its use in
providing services under this Agreement, or information developed by Wells Fargo based upon such
non-public information.

     (b) Upon completion of the Class 3B Stock Offering Wells Fargo shall certify in writing to the
Company that (i) the Class 3B Stock Offering was made to all Eligible Offerees who participated in
the Class 3B Stock Offering pursuant to the delivery of a Prospectus and (ii) each Eligible Offeree
was notified of its proper allocation of Shares as described in the Prospectus.

     8. Expiration of Class 3B Stock Offering. The Class 3B Stock Offering shall be
conducted and expire in accordance with the terms and conditions set forth in the Prospectus.

     9. Tax Reporting. Wells Fargo shall not be responsible for determining any tax
reporting to any Class 3B Claimant receiving distributions under the Class 3B Stock Offering. To
the extent that Wells Fargo is requested to print and mail IRS Form 1099s, the Company shall
instruct Wells Fargo with respect to 1099 reporting by (a) specifying in writing the version(s) of
IRS Form 1099 to be distributed, (b) furnish any information required in such IRS Form 1099 and (c)
any additional information as may be reasonably requested by Wells Fargo in connection with this
section. Wells Fargo shall print and mail IRS Form 1099s to Eligible Offerees in accordance with
the Company’s instructions. Wells Fargo may rely wholly upon the Company’s representations
regarding tax reporting.

     10. Fees and Expenses. For its services, Wells Fargo shall be entitled to
compensation from the Company in accordance with Exhibit C attached hereto and incorporated
herein by reference.

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     11. Notices. All notices, directions, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the
date of service if served personally on the party to whom notice is to be given; (b) on the day of
transmission if sent by facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission; (c) on the day after
delivery to an overnight courier or the express mail service maintained by the United States Postal
Service; or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and properly addressed,
return receipt requested, to the party as follows:

IF TO THE COMPANY:

Philip G. Tinkler

Chief Financial Officer

Danielson Holding Corporation

2 North Riverside Plaza, Suite 600

Chicago, Illinois 60606

Fax: (312) 454-9678

Tel.: (312) 466-3842

WITH A COPY TO:

David S. Stone, Esq.

Neal, Gerber & Eisenberg LLP

Two North LaSalle Street

Chicago, Illinois 60602

Fax: (312) 269-1747

Tel: (312) 269-8411

IF TO WELLS FARGO:

Wells Fargo Bank, National Association

Mr. Cory Branden

Corporate Trust Services; N9303-120

Sixth Street and Marquette Avenue

Minneapolis, MN 55479

Fax: (612) 667-9825

Tel: (612) 316-2335

If either the Company or Wells Fargo receives any notice of any third party claim against any cash
or securities to be distributed to an Eligible Offeree pursuant this Agreement, a copy of the
notice shall be promptly forwarded to the other party.

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     12. Scope of Wells Fargo’s Duties. Wells Fargo:

     (a) shall have no duties or obligations other than those specifically set forth in this
Agreement or as may be subsequently agreed to by the Company and Wells Fargo in writing;

     (b) may reasonably rely on and shall be indemnified by the Company in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram or other
document or security delivered to Wells Fargo by the Company and reasonably believed by
Wells Fargo to be genuine and to have been signed by the proper party or parties except to
the extent arising out of Wells Fargo’s bad faith, gross negligence or willful misconduct;

     (c) shall not be obligated to take legal action hereunder which might in the Wells
Fargo’s reasonable judgment involve any expense or liability, unless Wells Fargo shall have
been furnished with reasonable indemnity;

     (d) may reasonably act upon any tender, statement, request, comment, agreement or other
instrument whatsoever not only as to its due execution and validity and effectiveness of its
provisions, but also as to the truth and accuracy of any information contained therein,
which Wells Fargo believes in good faith to be genuine and to have been signed or
represented by a proper person or persons acting in a fiduciary or representative capacity
(so long as proper evidence of such fiduciary’s or representative’s authority so to act is
submitted to Wells Fargo) and Wells Fargo examines and reasonably concludes that such
evidence properly establishes such authority except to the extent arising out of Wells
Fargo’s bad faith, gross negligence or willful misconduct;

     (e) may rely on and shall be protected in acting upon written or oral instructions from
the designated officers of the Company specified in Exhibit A; and

     (f) may consult with the Company’s counsel with respect to any questions relating to
Wells Fargo’s duties and responsibilities, and the written opinion of such counsel shall be
full and complete authorization and protection in respect of certain action taken, suffered
or omitted to be taken by Wells Fargo hereunder in good faith and in accordance with the
written opinion of such counsel.

     13. Further Indemnification.

     (a) The Company hereby agrees to protect, defend, indemnify and hold harmless Wells Fargo
against and from any and all costs, losses, liabilities, expenses (including counsel fees and
disbursements) and claims imposed upon or asserted against Wells Fargo on account of any action
taken or omitted to be taken by Wells Fargo in connection with its acceptance of or performance of
its duties under this Agreement and the documents related thereto as well as the costs and expenses
of defending itself against any claim or liability arising out of or relating to this Agreement and
the documents related thereto. This indemnification shall survive the release, discharge,
termination, or satisfaction of this Agreement. Anything in this Agreement to the contrary
notwithstanding, the Company shall not be liable for indemnification or otherwise

7

 

for loss, liability, cost or expense to the extent arising out of Wells Fargo’s bad faith,
gross negligence or willful misconduct. The Company shall not be liable under this indemnification
agreement with respect to any claim against Wells Fargo unless the Company shall be notified by
Wells Fargo, by letter, of the written assertion of a claim against Wells Fargo or of any other
action commenced against Wells Fargo, promptly after Wells Fargo shall have received any such
written assertion or shall have been served with a summons in connection therewith. Wells Fargo
agrees that, without the prior written consent of the Company (which consent will not be
unreasonably withheld), it will not settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding in respect of which indemnification could be
sought in accordance with the indemnification provision of this Agreement (whether or not Wells
Fargo or the Company or any of its directors, officers and controlling persons is an actual or
potential party to such claim, action or proceeding).

     (b) In the event that Wells Fargo becomes involved in any litigation (“Litigation”) in which
an adverse result may give rise to the Company’s obligation to indemnify hereunder, Wells Fargo
will give prompt written notice to the Company of the pendency of such Litigation, and the Company
shall have the right at any time to participate in and control the contest and defense of such
Litigation at its own cost and expense, including the cost and expense of attorneys’ fees in
connection therewith.

     (c) Wells Fargo hereby agrees to protect, defend, indemnify and hold harmless the Company
against and from any and all costs, losses, liabilities, expenses (including counsel fees and
disbursements) and claims imposed upon or asserted against the Company on account of any action
taken or omitted to be taken by Wells Fargo in connection with matters certified to the Company
hereunder and its determinations and allocations to Eligible Offerees of the number of shares to
which such Eligible Offerees are entitled to purchase in the Class 3B Stock Offering, as well as
the costs and expenses of defending the Company against any claim or liability arising out of a
misallocation or a failure to properly allocate shares to an Eligible Offeree. This
indemnification shall survive the release, discharge, termination, or satisfaction of this
Agreement. Anything in this Agreement to the contrary notwithstanding, Wells Fargo shall not be
liable for indemnification or otherwise for loss, liability, cost or expense to the extent arising
out of the Company’s bad faith, gross negligence or willful misconduct relating hereto. Wells
Fargo shall not be liable under this indemnification agreement with respect to any claim against
the Company unless Wells Fargo shall be notified by the Company, by letter, of the written
assertion of a claim against the Company or of any other action commenced against the Company,
promptly after the Company shall have received any such written assertion or shall have been served
with a summons in connection therewith. The Company agrees that, without the prior written consent
of Wells Fargo (which consent will not be unreasonably withheld), it will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought in accordance with the indemnification provision
of this Agreement (whether or not Wells Fargo or the Company or any of its directors, officers and
controlling persons is an actual or potential party to such claim, action or proceeding).

     14. Termination. Either party may give thirty (30) days prior written notice to the
other of the termination of this Agreement. Upon notice of termination, the Company shall use its
reasonable best efforts to obtain a successor Rights Agent on the terms and conditions set

8

 

forth herein. If a successor Rights Agent is not appointed within thirty (30) days after the
date of the notice of termination, the Company shall act as its own Rights Agent on the terms and
conditions set forth herein. Upon receipt of written notice from the Company of the appointment of
the successor Rights Agent and upon receipt of written instructions, Wells Fargo shall, upon
request of the Company and upon payment of any accrued and unpaid amounts owed Wells Fargo pursuant
to the terms of this Agreement, promptly transfer to the successor Rights Agent the original or
copies of all books and records maintained by Wells Fargo hereunder and cooperate with, and provide
reasonable assistance to, the successor Rights Agent in the establishment of the books and records
necessary to carry out its responsibilities hereunder.

     15. Successors and Assigns. Except as otherwise provided in this Agreement, no party
hereto shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of the parties hereto.

     16. Successor by Merger. Any corporation or association into which Wells Fargo may be
merged, or with which it may be consolidated, or to which it may sell, lease or transfer its
corporate trust business and assets as a whole or substantially as a whole, shall be and become
successor Wells Fargo hereunder and shall be vested with all the trusts, powers, rights,
obligations, duties, remedies, immunities and privileges hereunder as was its predecessor, without
the execution or filing of any instrument on the part of any of the parties hereto;
provided, however, that Wells Fargo shall notify the Company of any impending
merger, consolidation or disposition of its corporate trust business reasonably in advance of its
consummation.

     17. Governing Law; Jurisdiction. This Agreement shall be construed, performed, and
enforced in accordance with, and governed by, the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.

     18. Severability. If any part of this Agreement is declared by any court or other
judicial or administrative body to be null, void, or unenforceable, said provision shall survive to
the extent it is not so declared, and all of the other provisions of this Agreement shall remain in
full force and effect.

     19. Amendments; Waivers. This Agreement may be amended or modified, and any of the
provisions, covenants, representations, warranties, or conditions hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, in any one or more instances,
shall not be deemed to be nor construed as further or continuing waiver of any such condition, or
of the breach of any other provision, term, covenant, representation, or warranty of this
Agreement.

     20. Entire Agreement. This Agreement contains the entire understanding between the
Company and Wells Fargo and supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written.

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     21. Section Headings. The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this Agreement.

     22. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute one instrument.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.

DANIELSON HOLDING CORPORATION:

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	 	 
	 	Its:  	 	 
	 

WELLS FARGO BANK, NATIONAL ASSOCIATION:

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	 	 
	 	Its:  	 	 
	 

10

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