Document:

exv10w3

 

Exhibit 10.3

EXECUTION VERSION

PLEDGE AGREEMENT

dated as of February 9, 2007

between

COVANTA HOLDING CORPORATION

and

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGE
	 
	 	 	 	 	 	 
	SECTION 1. DEFINITIONS; GRANT OF SECURITY	 	 	1	 
	1.1

	 	General Definitions
	 	 	1	 
	1.2

	 	Definitions; Interpretation
	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 2. GRANT OF SECURITY	 	 	3	 
	2.1

	 	Grant of Security
	 	 	3	 
	 
	 	 	 	 	 	 
	SECTION 3. SECURITY FOR OBLIGATIONS; PLEDGOR REMAINS LIABLE	 	 	3	 
	3.1

	 	Security for Obligations
	 	 	3	 
	3.2

	 	Continuing Liability Under Collateral
	 	 	3	 
	 
	 	 	 	 	 	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS	 	 	3	 
	4.1

	 	Generally
	 	 	3	 
	4.2

	 	Pledged Equity Interests
	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 5. FURTHER ASSURANCES	 	 	8	 
	5.1

	 	Further Assurances
	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT	 	 	8	 
	6.1

	 	Power of Attorney
	 	 	8	 
	6.2

	 	No Duty on the Part of Collateral Agent or Secured Parties
	 	 	9	 
	SECTION 7. REMEDIES	 	 	9	 
	7.1

	 	Generally.
	 	 	9	 
	7.2

	 	Application of Proceeds
	 	 	11	 
	7.3

	 	Cash Proceeds
	 	 	11	 
	 
	 	 	 	 	 	 
	SECTION 8. COLLATERAL AGENT	 	 	12	 
	 
	 	 	 	 	 	 
	SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS	 	 	12	 
	 
	 	 	 	 	 	 
	SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 11. MISCELLANEOUS	 	 	13	 
	 
	 	 	 	 	 	 
	SCHEDULE 4.1 — GENERAL INFORMATION	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULE 4.2 — PLEDGED EQUITY INTERESTS	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A — PLEDGE SUPPLEMENT	 	 	 	 

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          This PLEDGE AGREEMENT, dated as of February 9, 2007 (this “Agreement”), between COVANTA
HOLDING CORPORATION (the “Pledgor”), and JPMORGAN CHASE BANK, N.A., as collateral agent for the
Secured Parties (as herein defined) (in such capacity as collateral agent, the “Collateral Agent”).

RECITALS:

     WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of the date
hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement”), by and among COVANTA ENERGY CORPORATION, a Delaware corporation (“Company”),
Pledgor, CERTAIN SUBSIDIARIES OF COMPANY, as guarantors, the Lenders party thereto from time to
time (the “Lenders”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, Revolving Issuing Bank
and a Funded LC Issuing Bank, UBS AG, STAMFORD BRANCH as a Funded LC Issuing Bank, LEHMAN
COMMERCIAL PAPER INC. and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Syndication
Agents, BANK OF AMERICA, N.A. and BARCLAYS BANK PLC, as Documentation Agents, and the COLLATERAL
AGENT;

     WHEREAS, subject to the terms and conditions of the Credit Agreement, certain Credit Parties
may enter into one or more Permitted Hedge Agreements (as defined in the Credit Agreement) with one
or more Lender Counterparties;

     WHEREAS, in consideration of the extensions of credit and other accommodations of Lenders and
Lender Counterparties as set forth in the Credit Agreement and the Permitted Hedge Agreements,
respectively, the Pledgor has agreed to secure the Credit Parties’ obligations under the Credit
Documents and the Permitted Hedge Agreements as set forth herein; and

     NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the Pledgor and the Collateral Agent agree as follows:

SECTION 1. DEFINITIONS; GRANT OF SECURITY.

     1.1 General Definitions. In this Agreement, the following terms shall have the following
meanings:

          “Agreement” shall have the meaning set forth in the preamble.

          “Cash Proceeds” shall have the meaning assigned in Section 7.3.

          “Collateral” shall have the meaning assigned in Section 2.1.

          “Collateral Agent” shall have the meaning set forth in the preamble.

          “Company” shall have the meaning set forth in the recitals.

          “Credit Agreement” shall have the meaning set forth in the recitals.

          “Lender” shall have the meaning set forth in the recitals.

          "Permitted Liens” shall have the meaning assigned in Section 4.1(a)(i).

 

 

          “Pledge Supplement” shall mean any supplement to this agreement in substantially the form of
Exhibit A.

          “Pledged Equity Interests” shall mean all shares of capital stock and all other equity
interests in the Company, including, without limitation, all interests listed on Schedule 4.2 (as
such schedule may be amended or modified from time to time) and the certificates, if any,
representing such equity interests and any interest of the Pledgor on the books and records of the
Company and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such equity interests.

          “Pledgor” shall have the meaning set forth in the preamble.

          “Proceeds” shall mean: (i) all “proceeds” as defined in Article 9 of the UCC, (ii) payments
or distributions made with respect to any Pledged Equity Interests and (iii) whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.

          “Record” shall have the meaning specified in Article 9 of the UCC.

          “Secured Obligations” shall have the meaning assigned in Section 3.1.

          “Secured Parties” shall mean the Agents, Issuing Banks, Lenders and the Lender Counterparties
and shall include, without limitation, all former Agents, Issuing Banks, Lenders and Lender
Counterparties to the extent that any Obligations owing to such Persons were incurred while such
Persons were Agents, Issuing Banks, Lenders or Lender Counterparties and such Obligations have not
been paid or satisfied in full.

          “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of
New York or, when the context relates to perfection or priority of security interests, the Uniform
Commercial Code as in effect from time to time in any other applicable jurisdiction.

     1.2 Definitions; Interpretation. All capitalized terms used herein (including the preamble
and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in
the Credit Agreement or, if not defined therein, in the UCC. References to “Sections,” “Exhibits”
and “Schedules” shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on the reference. The
use herein of the word “include” or “including”, when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or words of similar
import) is used with reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement, term or matter. If
any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement
shall govern. All references herein to provisions of the UCC shall include all successor
provisions under any subsequent version or amendment to any Article of the UCC.

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SECTION 2. GRANT OF SECURITY.

     2.1 Grant of Security. The Pledgor hereby grants to the Collateral Agent a security interest
in and continuing lien on all of Pledgor’s right, title and interest in, to and under all of the
following, in each case whether now owned or existing or hereafter acquired or arising and wherever
located (all of which being hereinafter collectively referred to as the “Collateral”):

          (a) Pledged Equity Interests; and

          (b) to the extent not otherwise included above, all Proceeds, products, accessions, rents and
profits of or in respect of any of the foregoing.

SECTION 3. SECURITY FOR OBLIGATIONS; PLEDGOR REMAINS LIABLE.

     3.1 Security for Obligations. This Agreement secures, and the Collateral is collateral security
for, the prompt and complete payment or performance in full when due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise (including the payment of
amounts that would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all Obligations
of the Pledgor and the Credit Parties (the “Secured Obligations”).

     3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary,
(i) the Pledgor shall remain liable for all obligations under the Collateral the same as if this
Agreement had not been executed and nothing contained herein is intended or shall be a delegation
of duties to the Collateral Agent or any Secured Party, (ii) the Pledgor shall remain liable under
any agreements relating to Pledged Equity Interests, to perform all of the obligations undertaken
by it thereunder all in accordance with and pursuant to the terms and provisions thereof and
neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any
of such agreements by reason of or arising out of this Agreement or any other document related
thereto nor shall the Collateral Agent nor any Secured Party have any obligation to make any
inquiry as to the nature or sufficiency of any payment received by it or have any obligation to
take any action to collect or enforce any rights under any agreements relating to Pledged Equity
Interests, and (iii) the exercise by the Collateral Agent of any of its rights hereunder shall not
release the Pledgor from any of its duties or obligations under any such contracts and agreements.

SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.

     4.1 Generally.

          (a) Representations and Warranties. The Pledgor hereby represents and warrants that:

     (i) it owns the Collateral purported to be owned by it or otherwise has the rights it
purports to have in each item of Collateral and, as to all Collateral whether now existing
or hereafter acquired, will continue to own or have such rights in each item of the
Collateral, in each case free and clear of any and all Liens of all other Persons, other
than Liens of the type described in Section 6.2(b) of the Credit Agreement (“Permitted
Liens”) and including, without limitation, liens arising as a result of the Pledgor
becoming bound (as a result of merger or otherwise) as debtor under a security agreement
entered into by another Person;

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     (ii) it has indicated on Schedule 4.1(A) as of the Closing Date: (w) its type of
organization, (x) its jurisdiction of organization, (y) its organizational identification
number and (z) the jurisdiction where its chief executive office or its sole place of
business is, and for the one-year period preceding the Closing Date has been, located;

     (iii) as of the Closing Date, the full legal name of the Pledgor is as set forth on
Schedule 4.1(A) and it has not had any other legal names in the last five (5) years since
the Closing Date except for those names set forth on Schedule 4.1(B);

     (iv) except as provided on Schedule 4.1(C), as of the Closing Date, it has not changed
its name, jurisdiction of organization, chief executive office or sole place of business or
its corporate structure in any way (e.g., by merger, consolidation, change in corporate
form or otherwise) within the past five (5) years;

     (v) as of the Closing Date, it has not within the last five (5) years become bound
(whether as a result of merger or otherwise) as debtor under a security agreement entered
into by another Person, which has not heretofore been terminated other than the agreements
identified on Schedule 4.1(D) hereof;

     (vi) (A) upon the filing of all UCC financing statements naming the Pledgor as
“debtor” and the Collateral Agent as “secured party” and describing the Collateral in the
filing office(s) set forth on Schedule 4.1(E) hereof and (B) upon delivery of all
certificated Pledged Equity Interests, the security interests granted to the Collateral
Agent hereunder constitute valid and perfected first priority Liens on all of the
Collateral;

     (vii) all actions and consents (other than actions and consents required by the UCC or
any other applicable law), including all filings, notices, registrations and recordings
necessary for the exercise by the Collateral Agent of the voting or other rights provided
for in this Agreement or the exercise of remedies in respect of the Collateral have been
made or obtained or otherwise set forth on Schedule 4.1(F);

     (viii) other than the financing statements filed in favor of the Collateral Agent, no
effective UCC financing statement or other instrument similar in effect under any
applicable law covering all or any part of the Collateral for perfection purposes is on
file in any filing or recording office on the Closing Date or has been authorized by the
Pledgor at any time thereafter except for financing statements for which proper termination
statements have been delivered to the Collateral Agent for filing;

     (ix) no authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority or regulatory body is required for either (i) the pledge or
grant by the Pledgor of the security interest purported to be created in favor of the
Collateral Agent hereunder or (ii) the exercise by Collateral Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created hereunder or
created or provided for by applicable law), except (A) for the filings contemplated by
clause (vi) above and (B) as may be required, in connection with the disposition of any
Pledged Equity Interests, by laws generally affecting the offering and sale of securities;

     (x) all information supplied by the Pledgor with respect to any of the Collateral is
accurate and complete in all material respects as of the date supplied

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by the Pledgor, except as could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;

     (xi) as of the Closing Date, it has been duly organized as a corporation solely under
the laws of Delaware and remains duly existing as such. The Pledgor has not filed any
certificates of domestication, transfer or continuance in any other jurisdiction as of the
Closing Date.

          (b) Covenants and Agreements. The Pledgor hereby covenants and agrees that:

     (i) except for the security interest created by this Agreement, it shall not create or
suffer to exist any Lien upon or with respect to any of the Collateral other than Permitted
Liens, and it shall defend the Collateral against all Persons at any time claiming any
interest therein adverse to the Collateral Agent;

     (ii) it shall not change its legal name, identity, corporate structure (e.g., by
merger, consolidation, change in corporate form or otherwise), type of organization or
jurisdiction of organization unless it shall have (a) notified the Collateral Agent in
writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all Supplements to
applicable Schedules showing such change thereto, at least thirty (30) days prior to any
such change or establishment, identifying such new proposed name, identity, corporate
structure or jurisdiction of organization and providing such other information in
connection therewith as the Collateral Agent may reasonably request and (b) taken all
actions necessary or reasonably requested by the Collateral Agent to maintain the
continuous validity, perfection and the same or better priority of the Collateral Agent’s
security interest in the Collateral intended to be granted and agreed to hereby;

     (iii) unless it shall have provided Collateral Agent with 30 days prior written
notice, it shall not file any certificates of domestication, transfer or continuance in any
jurisdiction other than the jurisdiction set forth opposite its name on Schedule 4.1(A);

     (iv) it shall not take or permit any action which could materially impair the
Collateral Agent’s rights in the Collateral; and

     (v) it shall not sell, transfer or assign any Collateral.

     4.2 Pledged Equity Interests.

          (a) Representations and Warranties. The Pledgor hereby represents and warrants that:

     (i) Schedule 4.2(A) sets forth all of the Pledged Equity Interests owned by the
Pledgor and such Pledged Equity Interests constitutes all of the issued and outstanding
shares of stock of the Company;

     (ii) it is the record and beneficial owner of the Pledged Equity Interests free of all
Liens, rights or claims of other Persons (other than Permitted Liens)

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and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or
similar agreements outstanding with respect to, or property that is convertible into, or
that requires the issuance or sale of, any Pledged Equity Interests;

     (iii) no consent of any Person is necessary in connection with the creation,
perfection or first priority status of the security interest of the Collateral Agent in any
Pledged Equity Interests or the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the exercise of remedies in respect thereof.

          (b) Covenants and Agreements. The Pledgor hereby covenants and agrees that:

     (i) in the event it acquires rights in any Pledged Equity Interests after the date
hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, reflecting such new Pledged Equity Interests. Notwithstanding the
foregoing, it is understood and agreed that the security interest of the Collateral Agent
shall attach to all Pledged Equity Interests immediately upon the Pledgor’s acquisition of
rights therein and shall not be affected by the failure of the Pledgor to deliver a pledge
supplement required hereby;

     (ii) except as provided in the next sentence, in the event the Pledgor receives any
dividends, interest or distributions on any Pledged Equity Interests, or any securities or
other property upon the merger, consolidation, liquidation or dissolution of the Company,
then (a) such dividends, interest or distributions and securities or other property shall
be included in the definition of Collateral without further action and (b) the Pledgor
shall immediately take all steps, if any, necessary or advisable to ensure the validity,
perfection, priority and, if applicable, control of the Collateral Agent over such Pledged
Equity Interests (including, without limitation, delivery thereof to the Collateral Agent)
and pending any such action the Pledgor shall be deemed to hold such dividends, interest,
distributions, securities or other property in trust for the benefit of the Collateral
Agent and shall segregate such dividends, distributions, securities or other property from
all other property of the Pledgor. Notwithstanding the foregoing, so long as no Event of
Default shall have occurred and be continuing, the Collateral Agent authorizes the Pledgor
to retain all ordinary cash dividends and distributions paid in the normal course of the
business of the issuer and consistent with the past practice of the issuer and all
scheduled payments of interest; and

     (iii) except as expressly permitted by the Credit Agreement, without the prior written
consent of the Collateral Agent, it shall not permit the Company to merge or consolidate
unless (i) the surviving entity creates a security interest that is perfected by a filed
financing statement (that is not effective solely under section 9-508 of the UCC) in
collateral in which such new debtor has or acquires rights, and (ii) all the outstanding
capital stock or other equity interests of the surviving or resulting corporation, limited
liability company, partnership or other entity which is a Subsidiary of the Pledgor and
which is owned by the Pledgor is, upon such merger or consolidation, pledged hereunder.

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          (c) Delivery and Control.

     (i) The Pledgor agrees that with respect to any Pledged Equity Interests in which it
currently has rights it shall comply with the provisions of this Section 4.2(c)(i) on or
before the Credit Date and with respect to any Pledged Equity Interests hereafter acquired
by the Pledgor it shall comply with the provisions of this Section 4.2(c)(i) within fifteen
(15) days of acquiring rights therein, in each case in form and substance reasonably
satisfactory to the Collateral Agent. With respect to any Pledged Equity Interests that is
represented by a certificate or that is an “instrument,” it shall cause such certificate or
instrument to be delivered to the Collateral Agent, indorsed in blank by an “effective
indorsement” (as defined in Section 8-107 of the UCC), regardless of whether such
certificate constitutes a “certificated security” for purposes of the UCC.

          (d) Voting and Distributions.

     (i) So long as no Event of Default shall have occurred and be continuing and the
Collateral Agent has not given the Pledgor five (5) Business Days prior written notice to
the contrary:

	 	(1)	 	except as otherwise provided under the covenants and agreements in this
Agreement or elsewhere herein or in the Credit Agreement, the Pledgor shall be
entitled to exercise or refrain from exercising any and all voting and other
consensual rights pertaining to the Pledged Equity Interests or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit Agreement;
and
	 
	 	(2)	 	the Collateral Agent shall promptly execute and deliver (or cause to be
executed and delivered) to the Pledgor all proxies, and other instruments as the
Pledgor may from time to time reasonably request for the purpose of enabling the
Pledgor to exercise the voting and other consensual rights when and to the extent
which it is entitled to exercise pursuant to clause (1) above.

     (ii) Upon the occurrence and during the continuation of an Event of Default and upon
five (5) Business Days prior written notice from the Collateral Agent to the Pledgor of the
Collateral Agent’s intention to exercise such rights:

	 	(1)	 	all rights of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant hereto shall cease and all
such rights shall thereupon become vested in the Collateral Agent who shall thereupon
have the sole right to exercise such voting and other consensual rights; and
	 
	 	(2)	 	in order to permit the Collateral Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to receive
all dividends and other distributions which it may be entitled to receive hereunder:
(1) the Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to the Collateral Agent all proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to time reasonably request and (2)
the Pledgor acknowledges that the Collateral Agent may utilize the power of attorney
set forth in Section 6.1.

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SECTION 5. FURTHER ASSURANCES.

     5.1 Further Assurances.

          (a) The Pledgor agrees that from time to time, at its expense, that it shall promptly execute
and deliver all further instruments and documents, and take all further action, that may be
necessary, or that the Collateral Agent may reasonably request, in order to create and/or maintain
the validity, perfection or priority of and protect any security interest granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the foregoing, the Pledgor shall:

     (i) file such financing or continuation statements, or amendments thereto, and execute
and deliver such other agreements, instruments, endorsements, powers of attorney or
notices, as may be necessary or as the Collateral Agent may reasonably request, in order to
perfect and preserve the security interests granted hereby; and

     (ii) at the Collateral Agent’s request, appear in and defend any action or proceeding
that may affect the Pledgor’s title to or the Collateral Agent’s security interest in all
or any part of the Collateral.

          The Pledgor hereby authorizes the Collateral Agent to file a Record or Records, including,
without limitation, financing or continuation statements, and amendments thereto, in any
jurisdictions and with any filing offices as the Collateral Agent may determine, in its sole
discretion, are necessary or advisable to perfect the security interest granted to the Collateral
Agent herein. Such financing statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral that describes such
property in any other manner as the Collateral Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral
granted to the Collateral Agent herein. The Pledgor shall furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Collateral Agent may reasonably request, all
in reasonable detail.

SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

     6.1 Power of Attorney. Until payment in full of all Secured Obligations (other than unmatured indemnification
obligations), the cancellation or termination of the Commitments and the cancellation, cash
collateralization or expiration of all outstanding Letters of Credit, the Pledgor hereby
irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as its
attorney-in-fact, with full authority in its place and stead and in its name, in the name of the
Collateral Agent or otherwise, from time to time in the Collateral Agent’s discretion to take any
action and to execute any instrument that the Collateral Agent may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without limitation, the
following:

          (a) upon the occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral;

8

 

          (b) upon the occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel paper in connection with
clause (a) above;

          (c) upon the occurrence and during the continuance of any Event of Default, to file any claims
or take any action or institute any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Collateral;

          (d) to prepare and file any UCC financing statements against the Pledgor as debtor;

          (e) upon the occurrence and during the continuance of any Event of Default, to take or cause
to be taken all actions necessary to perform or comply or cause performance or compliance with the
terms of this Agreement, including, without limitation, access to pay or discharge taxes or Liens
other than Permitted Liens levied or placed upon or threatened against the Collateral, the legality
or validity thereof and the amounts necessary to discharge the same to be determined by the
Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become
obligations of the Pledgor to the Collateral Agent, due and payable immediately without demand; and

          (f) upon the occurrence and during the continuance of any Event of Default, generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Collateral Agent were the absolute owner thereof for all
purposes, and to do, at the Collateral Agent’s option and the Pledgor’s expense, at any time or
from time to time, all acts and things that the Collateral Agent deems reasonably necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s security interest
therein in order to effect the intent of this Agreement, all as fully and effectively as the
Pledgor might do.

     6.2 No Duty on the Part of Collateral Agent or Secured Parties. The powers conferred on the
Collateral Agent hereunder are solely to protect the interests of the Collateral Agent in the
Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise
any such powers. The Collateral Agent and the Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers, and neither they nor
any of their officers, directors, employees or agents shall be responsible to the Pledgor for any act or failure to act hereunder, except for their
own gross negligence or willful misconduct.

SECTION 7. REMEDIES.

     7.1 Generally.

     (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may
exercise in respect of the Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it at law or in equity, all the rights and remedies of the
Collateral Agent on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately, successively or
simultaneously:

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     (i) require the Pledgor, and the Pledgor hereby agrees that it shall at its expense
and promptly upon request of the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to the Collateral
Agent at a place to be designated by the Collateral Agent that is reasonably convenient to
both parties; and

     (ii) without notice except as specified below or under the UCC, sell, assign or
otherwise dispose of the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable.

          (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the Collateral being privately
sold is of a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as
collateral agent for and representative of the Secured Parties, shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Pledgor hereby waives any claims
against the Collateral Agent arising by reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than the price which might have been obtained at
a public sale, even if the Collateral Agent accepts the first offer received and does not offer
such Collateral to more than one offeree. Nothing in this Section shall in any way alter the
rights of the Collateral Agent hereunder.

          (c) The Pledgor recognizes that, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to
any sale of all or any part of the Pledged Equity Interests conducted without prior registration or
qualification of such Pledged Equity Interests under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other things, to acquire the
Pledged Equity Interests for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances, the Pledgor agrees that the fact that any
such sale is conducted as a private sale shall not, in and of itself, issue such sale to not be
deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale of any Pledged
Equity Interests for the period of time necessary to permit the issuer thereof to register it for a
form of

10

 

public sale requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it. If the Collateral
Agent determines to exercise its right to sell any or all of the Pledged Equity Interests, upon
written request, the Pledgor shall and shall cause the Company to furnish to the Collateral Agent
all such information as the Collateral Agent may request in order to determine the number and
nature of interest, shares or other instruments included in the Pledged Equity Interests which may
be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same are from time to time
in effect.

          (d) The Collateral Agent may sell the Collateral without giving any warranties as to the
Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or
the like. This procedure will not be considered to adversely affect the commercial reasonableness
of any sale of the Collateral.

          (e) The Collateral Agent shall have no obligation to marshal any of the Collateral.

     7.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement or the
Credit Agreement, all proceeds received by the Collateral Agent in respect of any sale, any
collection from, or other realization upon all or any part of the Collateral shall be applied in
full or in part by the Collateral Agent in payment of the Secured Obligations in the following
order:

     First, to pay incurred and unpaid fees and expenses of the Agents under the
Credit Documents;

     Second, to the Administrative Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Secured Obligations, pro
rata among the Secured Parties according to the amounts of the Secured Obligations then due
and owing and remaining unpaid to the Secured Parties; and

     Third, any balance remaining after the Secured Obligations shall have been
paid in full, the Commitments shall have terminated or been cancelled and the Letters of
Credit shall have been cancelled, cash collateralized or have expired shall be paid over to
the Company or to whomsoever may be lawfully entitled to receive the same.

     7.3 Cash Proceeds. All proceeds of any Collateral received by the Pledgor consisting of cash,
checks and other non-cash items (collectively, “Cash Proceeds”) shall, if an Event of Default shall
have occurred and is continuing be held by the Pledgor in trust for the Collateral Agent,
segregated from its other funds, and shall, forthwith upon its receipt, unless otherwise provided
pursuant to Section 4.2(b)(ii), be turned over to the Collateral Agent in the exact form received
by the Pledgor (duly indorsed by the Pledgor to the Collateral Agent, if required) and held by the
Collateral Agent in the Collateral Account. Any Cash Proceeds received by the Collateral Agent
(whether from the Pledgor or otherwise): (i) if no Event of Default shall have occurred and be
continuing, shall be handled as required by this Agreement or the Credit Agreement, or otherwise be
turned over to the Pledgor and (ii) if an Event of Default shall have occurred and be continuing,
may, in the sole discretion of the Collateral Agent, (A) be held by the Collateral Agent for the
ratable benefit of the Secured Parties, as collateral security for the Secured Obligations (whether
matured or unmatured) and/or (B) then or at any time

11

 

thereafter may be applied by the Collateral Agent against the Secured Obligations then due and owing in accordance with the Credit Agreement.

SECTION 8. COLLATERAL AGENT.

     The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and,
by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent shall
be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement; provided, the Collateral Agent shall, after payment in full of
all Obligations under the Credit Agreement and the other Credit Documents, exercise, or refrain
from exercising, any remedies provided for herein in accordance with the instructions of the
holders of a majority of the aggregate notional amount (or, with respect to any Permitted Hedge
Agreement that has been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination payments then due)
under such Permitted Hedge Agreement) under all Permitted Hedge Agreements. In furtherance of the
foregoing provisions of this Section, each Secured Party, by its acceptance of the benefits hereof,
agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Secured Party that all rights and remedies hereunder may be
exercised solely by the Collateral Agent for the benefit of Secured Parties in accordance with the
terms of this Section. Collateral Agent may resign at any time by giving thirty (30) days’ prior
written notice thereof to Lenders and the Pledgor. Upon any such notice of resignation or any such
removal, Requisite Lenders shall have the right, upon five (5) Business Days’ notice to the
Administrative Agent, to appoint a successor Collateral Agent. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, that successor
Collateral Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral
Agent all sums, securities and other items of Collateral held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance of the duties of
the successor Collateral Agent under this Agreement, and (ii) execute and deliver to such successor
Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder, whereupon such
retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Collateral Agent’s resignation
hereunder as the Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it was the Collateral
Agent hereunder.

SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.

     This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the payment in full of all Secured Obligations, the cancellation,
cash collateralization or termination of the Commitments and the cancellation, cash
collateralization or expiration of all outstanding Letters of Credit, be binding upon The Pledgor,
its successors and assigns, and inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and
assigns. Without limiting the generality of the foregoing, but subject to the terms of the Credit
Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person,
and such

12

 

other Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation, cash collateralization or
expiration of all outstanding Letters of Credit, the security interest granted hereby shall
automatically terminate hereunder and of record and all rights to the Collateral shall
automatically revert to the Pledgor. Upon any such termination the Collateral Agent shall, at
Pledgor’s expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence such termination.

SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.

     The powers conferred on the Collateral Agent hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its
own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise. If the Pledgor fails to perform any
agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Pledgor.

SECTION 11. MISCELLANEOUS.

     Any notice required or permitted to be given under this Agreement shall be given in accordance
with Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agent
in the exercise of any power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Credit Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any
provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby. All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such action is taken or
condition exists. This Agreement shall be binding upon and inure to the benefit of the Collateral
Agent and Pledgor and its respective successors and assigns. The Pledgor shall not, without the
prior written consent of the Collateral Agent given in accordance with the Credit Agreement, assign
any right, duty or obligation hereunder. This Agreement and the other Credit Documents embody the
entire agreement and understanding between the Pledgor and the Collateral Agent and supersede all
prior agreements and understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Credit Documents may not be contradicted

13

 

by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to the same document.

     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

14

 

     IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first
written above.

	 	 	 	 	 
	 	 	COVANTA HOLDING CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Anthony J. Orlando
	 

	 	 	 	 
	 

	 	 	 	Name: Anthony J. Orlando
	 

	 	 	 	Title: Chief Executive Officer
and President
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as
	 	 	Collateral Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory

15

 

 

SCHEDULE 4.1

TO PLEDGE AGREEMENT

GENERAL INFORMATION

	(A)	 	Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive
Office/Sole Place of Business and Organizational Identification Number of the Pledgor:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Chief Executive	 	 
	 	 	 	 	Jurisdiction of	 	Office/Sole Place	 	 
	Full Legal Name	 	Type of Organization	 	Organization	 	of Business	 	Organization I.D.#
	Covanta Holding 

Corporation

	 	Corporation
	 	Delaware
	 	40 Lane Rd.
Fairfield, NJ 07004
	 	 	2294829	 

	(B)	 	Other Legal Names of the Pledgor in the past five (5) years:

On September 20, 2005 the company changed its name from Danielson Holding Corporation to Covanta
Holding Corporation.

Trade Name or Fictitious Business Name

None.

	(C)	 	Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of
Business and Corporate Structure within past five (5) years:

	 	 	 
	Date of Change	 	Description of Change
	March 10, 2004

	 	The Chief Executive Office moved from its prior location at
2 North Riverside Plaza, Suite 600, Chicago, IL 60606 to
its new location at 40 Lane Road, Fairfield, NJ 07004

	(D)	 	Agreements that have not yet terminated pursuant to which Pledgor is bound as debtor within
past five (5) years:

None.

	 	 	 
	 	 	Description of Agreement

SCHEDULE 4.1-1

 

	(E)	 	Financing Statements:

Filing Jurisdiction(s): Delaware

	(F)	 	Actions and Consents: None.

SCHEDULE 4.1-2

 

SCHEDULE 4.2

TO PLEDGE AGREEMENT

Pledged Equity Interests

(A)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Certificate No.	 	No. of Pledged	 	 
	Corporation 	 	Certificated (Y/N)	 	(if any)	 	Units/Stock	 	% of Outstanding Stock
	Covanta Energy
Corporation
	 	Y	 	2	 	200	 	100%

SCHEDULE 4.2-1

 

EXHIBIT A

TO PLEDGE AGREEMENT

PLEDGE SUPPLEMENT

     This PLEDGE SUPPLEMENT, dated [mm/dd/yy], is delivered by COVANTA HOLDING CORPORATION, a
Delaware corporation (the “Pledgor") pursuant to the Pledge Agreement, dated as of February 9, 2007
(as it may be from time to time amended, restated, modified or supplemented, the “Pledge
Agreement”), between Pledgor and JPMORGAN CHASE BANK, N.A., as Collateral Agent (the “Collateral
Agent”). Capitalized terms used herein not otherwise defined herein shall have the meanings
ascribed thereto in the Pledge Agreement.

     Pledgor hereby confirms the grant to the Collateral Agent set forth in the Pledge Agreement
of, and does hereby grant to the Collateral Agent, a security interest in all of Pledgor’s right,
title and interest in and to all Collateral to secure the Secured Obligations, in each case whether
now or hereafter existing or in which Pledgor now has or hereafter acquires an interest and
wherever the same may be located. Pledgor represents and warrants that the attached Supplements to
Schedules accurately and completely set forth all additional information required pursuant to the
Pledge Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the
Schedules to the Pledge Agreement.

     IN WITNESS WHEREOF, Pledgor has caused this Pledge Supplement to be duly executed and
delivered by its duly authorized officer as of [mm/dd/yy].

	 	 	 
	 

	 	COVANTA HOLDING CORPORATION
	 
	 	 
	 

	 	By:
	 

	 	 
	 

	 	Name:
	 

	 	Title:

Exhibit A-1exv10w4

 

Exhibit 10.4

EXECUTION VERSION

INTERCOMPANY SUBORDINATION AGREEMENT

          This INTERCOMPANY SUBORDINATION AGREEMENT, dated as of February 9, 2007 (as may be amended,
restated, supplemented, replaced or otherwise modified from time to time, the “Agreement”, is
entered into by and among COVANTA ENERGY CORPORATION, a Delaware corporation (the “Company”),
COVANTA HOLDING CORPORATION, a Delaware corporation (“Holding”), CERTAIN SUBSIDIARIES OF COMPANY,
as Guarantor Subsidiaries under and as defined in the Credit Agreement (defined below)
(collectively, the “Guarantor Subsidiaries,” and together with the Company and Holding, the
“Covanta Parties”), CERTAIN OTHER SUBSIDIARIES OF COMPANY as Excluded Subsidiaries or Unrestricted
Subsidiaries under and as defined in the Credit Agreement (defined below) (collectively, the
“Non-Guarantor Subsidiaries”) and JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”) for the benefit of the Secured Parties (as such term is
defined in the Credit Agreement defined below).

RECITALS:

          WHEREAS, each capitalized term used but not otherwise defined herein shall have the meaning
assigned to such term in the Credit and Guaranty Agreement dated as of the date hereof (as the same
may hereafter be amended, restated, supplemented, replaced or otherwise modified from time to time,
the “Credit Agreement”) by and among the Company, Holding and certain of the other Covanta Parties,
the Lenders from time to time party thereto, the Administrative Agent and certain other parties
thereto;

          WHEREAS, pursuant to the Credit Agreement and the Permitted Hedge Agreements, the Company and
certain other Covanta Parties shall owe the Obligations to the Secured Parties;

          WHEREAS, certain of the Covanta Parties are or may become indebted to each other and
Non-Guarantor Subsidiaries pursuant to the Intercompany Master Note identified on Exhibit A hereto
(the Indebtedness of each of the Covanta Parties to any other Covanta Party or any Non-Guarantor
Subsidiary, now existing or hereafter incurred (whether created directly or acquired by assignment
or otherwise), and interest and premiums, if any, thereon and other amounts payable in respect
thereof are hereinafter collectively referred to as the “Intercompany Indebtedness”); and

          WHEREAS, the obligations of the Secured Parties under the Credit Agreement and the Permitted
Hedge Agreements are subject to the condition, among others, that the Intercompany Indebtedness be
subordinated to the Senior Indebtedness (as defined below) in the manner set forth herein.

          NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and agree as
follows:

          1. Subordination of Liabilities. Each Covanta Party, for itself, its successors and assigns,
covenants and agrees, and each holder of Intercompany Indebtedness by its acceptance thereof
likewise covenants and agrees, that the payment of the principal of, and

 

 

interest on, and all other amounts owing in respect of, Intercompany Indebtedness is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth, to the indefeasible
payment in full in cash or discharge in full of Senior Indebtedness in cash and cash
collateralization of any outstanding letters of credit thereunder. The subordination provisions set
forth herein shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are hereby made
obligees hereunder to the same extent as if their names were written herein as such, and they
and/or each of them may proceed to enforce such provisions.

          “Senior Indebtedness” means, at any time, the Obligations as such term is defined in the
Credit Agreement, but excluding indemnification and other contingent obligations (other than
contingent reimbursement obligations in respect of amounts that may be drawn under outstanding
letters of credit) in respect of which no assertion of liability and no claim or demand for payment
has been made (and, in the case of indemnification obligations, no notice for indemnification has
been issued by the indemnitee) at such time.

          2. Covanta Parties Not to Make Payments with Respect to Intercompany Indebtedness in Certain
Circumstances. (a) Upon the maturity of any Senior Indebtedness (including interest thereon or
fees or any other amounts owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all principal thereof and premium, if any, and interest thereon or fees or any other
amounts owing in respect thereof, in each case to the extent due and owing at such time, shall
first be paid in full in cash or discharged in full, or such payment duly provided for in cash or
in a manner satisfactory to the holder or holders of such Senior Indebtedness, including cash
collateralization of any outstanding letters of credit thereunder, before any payment is made on
account of the principal of (including installments thereof), or interest on, or any amount
otherwise owing in respect of, Intercompany Indebtedness. Each holder of Intercompany Indebtedness
hereby agrees that, so long as an Event of Default has occurred and is continuing, no amounts owing
in respect of Intercompany Indebtedness shall be made, asked, demanded, sued for, or otherwise
taken, accepted or received (it being understood that such actions may be taken prior to the
maturity of any Senior Indebtedness (whether at stated maturity, by acceleration or otherwise) so
long as no Event of Default has occurred and is continuing).

          (b) In the event that notwithstanding the provisions of the preceding subsection (a) of this
Section 2, any Covanta Party shall make any payment on account of the principal of, or interest on,
or amounts otherwise owing in respect of, Intercompany Indebtedness at a time when payment is not
permitted by said subsection (a), such payment shall be held by the holder of such Intercompany
Indebtedness, in trust for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness or their representative or representatives under the agreements
pursuant to which Senior Indebtedness may have been issued, as their respective interests may
appear, for application pro rata to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in cash and cash collateralize any
outstanding letters of credit thereunder in accordance with the terms of such Senior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness. Without in any way modifying the subordination provisions set forth herein or
affecting the subordination effected hereby, the relevant Covanta

 

 

Party shall give holders of Intercompany Indebtedness prompt written notice of any maturity of
Senior Indebtedness after which such Senior Indebtedness remains unsatisfied.

          3. Intercompany Indebtedness Subordinated to Prior Payment of all Senior Indebtedness on
Dissolution, Liquidation or Reorganization of any Covanta Party. Upon any distribution of assets
of any Covanta Party that constitute Collateral upon any dissolution, winding up, liquidation or
reorganization of such Covanta Party (whether in bankruptcy, insolvency or receivership proceedings
or upon an assignment for the benefit of creditors or otherwise):

     (a) the holders of all Senior Indebtedness shall first be entitled to receive payment
in full in cash or in a manner satisfactory to the holder or holders of such Senior
Indebtedness of the principal thereof, premium, if any, and interest (including, without
limitation, all interest accruing after the commencement of any bankruptcy, insolvency,
receivership or similar proceeding at the rate provided in the governing documentation
whether or not such interest is an allowed claim in such proceeding) and all other amounts
due thereon before the holders of Intercompany Indebtedness is entitled to receive any
payment on account of the principal of or interest on or any other amount owing in respect
of Intercompany Indebtedness,

     (b) any payment or distribution of assets of such Covanta Party of any kind or
character that constitute Collateral, whether in cash, property or securities, to which
holders of Intercompany Indebtedness would be entitled except for the subordination
provisions set forth herein, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee or agent, directly to the
holders of Senior Indebtedness or their representative or representatives under the
agreements pursuant to which Senior Indebtedness may have been issued, to the extent
necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior Indebtedness;
and

     (c) in the event that, notwithstanding the foregoing provisions of this Section 3, any
payment or distribution of assets of such Covanta Party of any kind or character that
constitute Collateral, whether in cash, property or securities, shall be received by holders
of Intercompany Indebtedness on account of principal of, or interest or other amounts due
on, Intercompany Indebtedness before all Senior Indebtedness is paid in full in cash or in a
manner satisfactory to the holder or holders of such Senior Indebtedness or otherwise
discharged in full, or effective provisions made for its payment, such payment or
distribution shall be received and held in trust for and shall be paid over to the holders
of Senior Indebtedness remaining unpaid or unprovided for or their representative or
representatives under the agreements pursuant to which Senior Indebtedness may have been
issued, for application to the payment of such Senior Indebtedness until all such Senior
Indebtedness shall have been paid in full in cash or in a manner satisfactory to the holder
or holders of such Senior Indebtedness or otherwise discharged in full, after giving effect
to any concurrent payment or distribution to the holders of such Senior Indebtedness.

 

 

          Without in any way modifying the subordination provisions set forth herein or affecting the
subordination effected hereby, such Covanta Party shall give prompt written notice to holders of
Intercompany Indebtedness of any dissolution, winding up, liquidation or reorganization of such
Covanta Party (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment
for the benefit of creditors or otherwise).

          4. Furtherance of Subordination. If any proceeding referred to in Section 3 above is
commenced by or against any Covanta Party:

     (a) the Administrative Agent, acting on behalf of each holder of Senior Indebtedness,
is hereby irrevocably authorized and empowered (in its own name or in the name of the
holders of Intercompany Indebtedness or otherwise), but shall have no obligation, to demand,
sue for, collect and receive every payment or distribution referred to in Section 3(b) and
give acquittance therefor and to file claims and proofs of claim and take such other action
(including, without limitation, voting the claims arising under Intercompany Indebtedness or
enforcing any security interest or other lien securing payment of Intercompany Indebtedness)
as it may deem necessary or advisable for the exercise or enforcement of or causing
enforcement of any of the rights or interests of the holders of Senior Indebtedness
hereunder;

     (b) each holder of Intercompany Indebtedness shall duly and promptly take such action
as the Administrative Agent may request (i) to collect Intercompany Indebtedness for the
account of the holders of Senior Indebtedness and to file appropriate claims or proofs of
claim in respect of Intercompany Indebtedness, (ii) to execute and deliver to the
Administrative Agent such powers of attorney, assignments or other instruments as the
Administrative Agent may request in order to enable the Administrative Agent to enforce any
and all claims with respect to, and any security interests and other liens securing payment
of, Intercompany Indebtedness, and (iii) to collect and receive any and all payments or
distributions that may be payable or deliverable upon or with respect to Intercompany
Indebtedness; and

     (c) The holders of Senior Indebtedness are hereby authorized to demand specific
performance of this Agreement, whether or not such Covanta Party shall have complied with
any of the provisions hereof applicable to it, at any time when the holders of Intercompany
Indebtedness shall have failed to comply with any of the provisions of this Agreement
applicable to it. Each holder of Intercompany Indebtedness hereby irrevocably waives any
defense based on the adequacy of a remedy at law that might be asserted as a bar to such
remedy of specific performance.

          5. Subrogation. Subject to the prior payment or discharge in cash in full of all Senior
Indebtedness, holders of Intercompany Indebtedness shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of any Covanta Party
applicable to Senior Indebtedness until all amounts owing in respect of Intercompany Indebtedness
shall be paid or discharged in full, and for the purpose of such subrogation no payments or
distributions to the holders of Senior Indebtedness by or on behalf of such Covanta Party or by or
on behalf of holders of Intercompany Indebtedness by virtue of the subordination provisions set
forth herein that otherwise would have been made to the holders of Intercompany

 

 

Indebtedness, shall be deemed to be payment by such Covanta Party to or on account of
Intercompany Indebtedness, it being understood that the subordination provisions set forth herein
are and are intended solely for the purpose of defining the relative rights of the holders of
Intercompany Indebtedness, on the one hand, and the holders of Senior Indebtedness, on the other
hand.

          6. Obligation of the Covanta Parties Unconditional. Nothing contained in the subordination
provisions set forth herein or in the documents evidencing Intercompany Indebtedness is intended to
or shall impair, as between any Covanta Party and the holders of Intercompany Indebtedness, the
obligation of such Covanta Party, which is absolute and unconditional, to pay to the holders of
Intercompany Indebtedness the principal of and interest on Intercompany Indebtedness as and when
the same shall become due and payable in accordance with its terms, or is intended to or shall
affect the relative rights of the holders of Intercompany Indebtedness and creditors of such
Covanta Party other than the holders of Senior Indebtedness, nor shall anything herein or therein
prevent the holders of Intercompany Indebtedness from exercising all remedies otherwise permitted
by applicable law, subject to the rights, if any, under the subordination provisions set forth
herein of the holders of Senior Indebtedness in respect of cash, property, or securities of such
Covanta Party received upon the exercise of any such remedy. Upon any distribution of assets of
such Covanta Party referred to herein, the holders of Intercompany Indebtedness shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of
the liquidating trustee or agent or other person making any distribution to the holders of
Intercompany Indebtedness, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other indebtedness of such Covanta Party,
the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or hereto.

          7. Subordination Rights Not Impaired by Acts or Omissions of any Covanta Party or Holders of
Senior Indebtedness. No rights of any present or future holders of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by
an act or failure to act on the part of any Covanta Party or by any act or failure to act in good
faith by any such holder, or by any noncompliance by such Covanta Party with the terms and
provisions of Intercompany Indebtedness, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with. The holders of Senior Indebtedness may, without in any way
affecting the obligations of the holders of Intercompany Indebtedness with respect thereto, at any
time or from time to time and in their absolute discretion, change the manner, place or terms of
payment of, change or extend the time of payment of, or renew or alter, any Senior Indebtedness, or
amend, modify or supplement any agreement or instrument governing or evidencing such Senior
Indebtedness or any other document referred to therein, or exercise or refrain from exercising any
other of their rights under Senior Indebtedness including, without limitation, the waiver of a
default thereunder and the release of any collateral securing such Senior Indebtedness, all without
notice to or consent from the holders of Intercompany Indebtedness.

          8. Additional Subsidiaries. Upon execution and delivery after the date hereof by any (x)
Guarantor Subsidiary of a counterpart signature page hereto, such Guarantor

 

 

Subsidiary shall become a “Covanta Party” hereunder or (y) Non-Guarantor Subsidiary of a
counterpart signature page hereto, such Non-Guarantor Subsidiary shall become a “Non-Guarantor
Subsidiary” hereunder, in each case with the same force and effect as if originally named as a
Covanta Party or Non-Guarantor Subsidiary (as applicable) hereunder. The rights and obligations of
each Covanta Party hereunder shall remain in full force and effect notwithstanding the addition of
any new Covanta Party as a party to this Agreement.

          9. Continuing Force and Effect. This Agreement shall continue in force for so long as any
portion of Senior Indebtedness remains unpaid and any Commitments under the Credit Agreement remain
outstanding, it being contemplated that this Agreement be of a continuing nature.

          10. Modification. Amendments or Waivers. Any and all agreements amending or changing any
provision of this Agreement or the rights of the holders of Senior Indebtedness hereunder, and any
and all waivers or consents hereunder, shall be made only by written agreement, waiver or consent
signed by the Covanta Parties and the Administrative Agent, acting on behalf of the holders of
Senior Indebtedness.

          11. Severability. The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

          12. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

          13. Successors and Assigns. This Agreement shall inure to the benefit of the Secured Parties
and their respective successors and assigns, as permitted in the Credit Agreement, and the
obligations of the Covanta Parties and the Non-Guarantor Subsidiaries shall be binding upon their
respective successors and assigns. The duties and obligations of the Covanta Parties and the
Non-Guarantor Subsidiaries may not be delegated or transferred without the written consent of the
Requisite Lenders under the Credit Agreement and any such delegation or transfer without such
consent shall be null and void.

          14. Counterparts. This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which, when executed and delivered,
shall be deemed an original, but all such counterparts shall constitute but one and the same
instrument.

          15. Remedies. In the event of a breach by any of the Covanta Parties or any of the
Non-Guarantor Subsidiaries in the performance of any of the terms of this Agreement, the
Administrative Agent, on behalf of the Secured Parties, may demand specific performance of this
Agreement and seek injunctive relief and may exercise any other remedy available at law or

 

 

in equity, it being recognized that the remedies of the Administrative Agent, on behalf of the
Secured Parties, at law may not fully compensate the Administrative Agent, on behalf of the Secured
Parties, for the damages they may suffer in the event of a breach hereof.

          16. Notices. All notices, statements, requests and demands and other communications given
to or made among the Covanta Parties, the Non-Guarantor Subsidiaries, the Administrative Agent or
the holders of Senior Indebtedness in accordance with the provisions of this Agreement shall be
given or made as provided in Section 10.1 of the Credit Agreement.

          17. Termination. Upon indefeasible payment in full of the principal amount of, all interest
on, and all other amounts then due in respect of Senior Indebtedness, the expiration or termination
of all Commitments under the Credit Agreement and the expiration, cash collateralization or
termination of Letters of Credit under the Credit Agreement, this Agreement shall terminate and be
of no further force and effect.

[Remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.

	 	 	 	 	 
	 	

COVANTA ENERGY CORPORATION, A DELAWARE CORPORATION, AND EACH OF
ITS SUBSIDIARIES LISTED ON ANNEX A HERETO

 	 
	 	By:  	/s/
Anthony J. Orlando	 
	 	 	Name:  	Anthony J. Orlando 	 
	 	 	Title:  	Authorized Officer	 
	 

	 	 	 	 	 
	 	COVANTA HOLDING CORPORATION, A DELAWARE CORPORATION

 	 
	 	By:  	/s/
Anthony J. Orlando	 
	 	 	Name:  	Anthony J. Orlando 	 
	 	 	Title:  	Chief Executive Officer and President	 
	 

	 	 	 	 	 
	 	EACH OF ITS SUBSIDIARIES OF COVANTA ENERGY CORPORATION LISTED ON ANNEX B HERETO

 	 
	 	By:  	/s/
Anthony J. Orlando	 
	 	 	Name:  	Anthony J. Orlando 	 
	 	 	Title:  	Authorized Officer	 
	 

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 	 
	 	By:  	/s/ Robert
Anastasio	 
	 	 	Name:  	Robert
Anastasio 	 
	 	 	Title:  	Vice President	 
	 

 

 

ANNEX A TO SIGNATURE PAGE

Guarantor Subsidiaries

	 	 	 	 	 	 	 
	1.	 	8309 Tujunga Avenue Corp., a California corporation
	2.	 	Amor 14 Corporation, a Delaware corporation
	3.	 	Burney Mountain Power, a California corporation
	4.	 	Covanta Acquisition, Inc., a Delaware corporation
	5.	 	Covanta ARC Holdings, Inc., a Delaware corporation
	6.	 	Covanta Bessemer, Inc., a Delaware corporation
	7.	 	Covanta Cunningham Environmental Support, Inc., a New York corporation
	8.	 	Covanta Energy Americas, Inc., a Delaware corporation
	9.	 	Covanta Energy Construction, Inc., a Delaware corporation
	10.	 	Covanta Energy Group, Inc., a Delaware corporation
	11.	 	Covanta Energy International, Inc., a Delaware corporation
	12.	 	Covanta Energy Resource Corp., a Delaware corporation
	13.	 	Covanta Energy Services, Inc., a Delaware corporation
	14.	 	Covanta Energy West, Inc., a Delaware corporation
	15.	 	Covanta Engineering Services, Inc., a New Jersey corporation
	16.	 	Covanta Geothermal Operations Holdings, Inc., a Delaware corporation
	17.	 	Covanta Geothermal Operations, Inc., a Delaware corporation
	18.	 	Covanta Haverhill Properties, Inc., a Massachusetts corporation
	19.	 	Covanta Heber Field Energy, Inc., a Delaware corporation
	20.	 	Covanta Hennepin Energy Resource Co., Limited Partnership,
	 	 	a Delaware limited partnership
	 

	 	By:
	 	Covanta Energy Resource Corp., its General
Partner	 	 
	21.	 	Covanta Hillsborough, Inc., a Florida corporation
	22.	 	Covanta Honolulu Resource Recovery Venture, a Hawaii General Partnership
	 	 	By: Covanta Oahu Waste Energy Recovery, Inc.,
its General Partner
	 	 	By: Covanta Projects of Hawaii, Inc., its General Partner
	23.	 	Covanta Huntsville, Inc., an Alabama corporation
	24.	 	Covanta Hydro Energy, Inc., a Delaware corporation
	25.	 	Covanta Hydro Operations West, Inc., Delaware corporation
	26.	 	Covanta Hydro Operations, Inc., a Tennessee corporation
	27.	 	Covanta Imperial Power Services, Inc., a California corporation
	28.	 	Covanta Kent, Inc., a Michigan corporation
	29.	 	Covanta Lancaster, Inc., a Pennsylvania corporation
	30.	 	Covanta Lee, Inc., a Florida corporation
	31.	 	Covanta Long Island, Inc., a Delaware corporation
	32.	 	Covanta Marion Land Corp., an Oregon corporation
	33.	 	Covanta Marion, Inc., an Oregon corporation
	34.	 	Covanta Mid-Conn., Inc., a Connecticut corporation
	35.	 	Covanta Montgomery, Inc., Maryland corporation
	36.	 	Covanta New Martinsville Hydroelectric Corporation, a Delaware corporation

 

 

	 	 	 
	37.

	 	Covanta New Martinsville Hydro-Operations Corporation, a West Virginia corporation
	38.

	 	Covanta Oahu Waste Energy Recovery, Inc., a California corporation
	39.

	 	Covanta Onondaga Operations, Inc., a Delaware corporation
	40.

	 	Covanta Operations of Union LLC, a New Jersey limited liability company
	41.

	 	Covanta OPW Associates, Inc., a Connecticut corporation
	42.

	 	Covanta OPWH, Inc., a Delaware corporation
	43.

	 	Covanta Otay 3 Company, a California corporation
	44.

	 	Covanta Pasco, Inc., a Florida corporation
	45.

	 	Covanta Pinellas, Inc., a Florida corporation
	46.

	 	Covanta Plant Services of New Jersey, Inc., a New Jersey corporation
	47.

	 	Covanta Power Development of Mauritius, Inc., a Delaware corporation
	48.

	 	Covanta Power Development, Inc., a Delaware corporation
	49.

	 	Covanta Power Equity Corporation, a Delaware corporation
	50.

	 	Covanta Power International Holdings, Inc., a Delaware corporation
	51.

	 	Covanta Power Pacific, Inc., a California corporation
	52.

	 	Covanta Power Plant Operations, a California corporation
	53.

	 	Covanta Projects of Hawaii, Inc., a Hawaii corporation
	54.

	 	Covanta Projects, Inc., a Delaware corporation
	55.

	 	Covanta Ref-Fuel Finance LLC (f/k/a Ref-Fuel Corp.), a Delaware limited liability company
	56.

	 	Covanta Ref-Fuel LLC (f/k/a Ref-Fuel LLC), a Delaware limited liability company
	57.

	 	Covanta RRS Holdings, Inc., a Delaware corporation
	58.

	 	Covanta Secure Services, LLC, a Delaware limited liability company
	59.

	 	Covanta SIGC Energy II, Inc., a California corporation
	60.

	 	Covanta SIGC Energy, Inc., a Delaware corporation
	61.

	 	Covanta SIGC Geothermal Operations, Inc., a California corporation
	62.

	 	Covanta Systems, LLC, a Delaware limited liability company
	63.

	 	Covanta Tampa Bay, Inc., a Florida corporation
	64.

	 	Covanta Tampa Construction, Inc., a Delaware corporation
	65.

	 	Covanta Wallingford Associates, Inc., a Connecticut corporation
	66.

	 	Covanta Warren Energy Resources Co., Limited Partnership, a Delaware limited partnership
	67.

	 	Covanta Warren Holdings I, Inc., a Virginia corporation
	68.

	 	Covanta Warren Holdings II, Inc., a California corporation
	69.

	 	Covanta Waste to Energy, LLC, a Delaware limited liability company
	70.

	 	Covanta Water Holdings, Inc., a Delaware corporation
	71.

	 	Covanta Water Systems, Inc., a Delaware corporation
	72.

	 	Covanta Water Treatment Services, Inc., a Delaware corporation
	73.

	 	DSS Environmental, Inc., a New York corporation
	74.

	 	ERC Energy II, Inc., a Delaware corporation
	75.

	 	ERC Energy, Inc., a Delaware corporation
	76.

	 	Generating Resource Recovery Partners L.P., a California limited partnership
	77.

	 	Heber Field Energy II, Inc., a Delaware corporation
	78.

	 	Heber Loan Partners, a California general partnership
	 

	 	By:    ERC Energy, Inc., its General Partner

	 

	 	By:    ERC Energy II, Inc., its General Partner

 

 

	 	 	 
	79.

	 	LMI, Inc., a Massachusetts corporation
	80.

	 	Mammoth Geothermal Company, a California corporation
	81.

	 	Mammoth Power Company, a California corporation
	82.

	 	Michigan Waste Energy, Inc., a Delaware corporation
	83.

	 	MSW I Sub, LLC, a Delaware limited liability company
	84.

	 	Mt. Lassen Power, a California corporation
	85.

	 	Pacific Energy Operating Group, L.P., a California limited partnership
	86.

	 	Pacific Geothermal Company, a California corporation
	87.

	 	Pacific Oroville Power, Inc., a California corporation
	88.

	 	Pacific Recovery Corporation, a California corporation
	89.

	 	Pacific Wood Fuels Company, a California corporation
	90.

	 	Three Mountain Operations, Inc., a Delaware corporation
	91.

	 	Three Mountain Power, LLC, a Delaware corporation
	92.

	 	UAH Management Corp., a New York corporation

 

 

ANNEX B TO SIGNATURE PAGE

Non-Guarantor Subsidiaries

	 	 	 
	1.

	 	Covanta Alexandria /Arlington, Inc., a Virginia corporation
	2.

	 	Covanta Babylon, Inc., a New York corporation
	3.

	 	Covanta Bristol, Inc., a Connecticut corporation
	4.

	 	Covanta Energy Corporation, a Delaware corporation
	5.

	 	Covanta Fairfax, Inc., a Virginia corporation
	6.

	 	Covanta Haverhill Associates, a Massachusetts corporation
	7.

	 	Covanta Haverhill, Inc., a Massachusetts corporation
	8.

	 	Covanta Holding Corporation, a Delaware corporation
	9.

	 	Covanta Huntington Limited Partnership, a Delaware corporation
	10.

	 	Covanta Huntington Resource Recovery One Corp., a Delaware corporation
	11.

	 	Covanta Huntington Resource Recovery Seven Corp., a Delaware corporation
	12.

	 	Covanta Indianapolis, Inc., a Indiana corporation
	13.

	 	Covanta Lake II, Inc., a Florida corporation
	14.

	 	Covanta Omega Lease, Inc., a Delaware corporation
	15.

	 	Covanta Onondaga Five Corp., a Delaware corporation
	16.

	 	Covanta Onondaga Four Corp., a Delaware corporation
	17.

	 	Covanta Onondaga Limited Partnership, a Delaware corporation
	18.

	 	Covanta Onondaga Three Corp., a Delaware corporation
	19.

	 	Covanta Onondaga Two Corp., a Delaware corporation
	20.

	 	Covanta Onondaga, Inc., a New York corporation
	21.

	 	Covanta Projects of Wallingford, L.P., a Delaware corporation
	22.

	 	Covanta SBR Associates, a Massachusetts corporation
	23.

	 	Covanta Stanislaus, Inc., a California corporation
	24.

	 	Covanta Union, Inc., a New Jersey corporation
	25.

	 	Covanta Waste to Energy Asia Investments, Mauritius
	26.

	 	Haverhill Power, LLC, a Massachusetts corporation
	27.

	 	Olmec Insurance Ltd., Bermuda
	28.

	 	OPI Quezon, LLC, a Delaware corporation
	29.

	 	Pacific Energy Resources Incorporated, a California corporation
	30.

	 	Pacific Hydropower Company, a California corporation
	31.

	 	Penstock Power Company, a California corporation
	32.

	 	Covanta ARC LLC (formerly known as American Ref-Fuel Company LLC), a Delaware corporation
	33.

	 	Covanta Ref-Fuel Management LLC (formerly known as ARC Ref-Fuel Management LLC), a Delaware
corporation
	34.

	 	Covanta Ref-Fuel Management II, LLC (formerly known as Covanta Ref-Fuel Management II, Inc.
formerly known as ARC Ref-Fuel Management II, Inc.), a Delaware corporation
	35.

	 	Covanta ARC Company (formerly known as American Ref-Fuel Company (a general partnership)), a
Delaware corporation
	36.

	 	Covanta Hempstead LLC (formerly known as ARC Hempstead LLC), a Delaware corporation

 

 

	 	 	 
	37.

	 	Covanta Hempstead II, LLC (formerly known as Covanta Hempstead, Inc. formerly known as ARC
Hempstead II, Inc.), a Delaware corporation
	38.

	 	Covanta Hempstead Company (formerly known as American Ref-Fuel Company of Hempstead), a New
York corporation
	39.

	 	Covanta Essex LLC (formerly known as ARC Essex LLC), a Delaware corporation
	40.

	 	Covanta Essex II, LLC (formerly known as Covanta Essex II, Inc. formerly known as ARC Essex II,
Inc.), a Delaware corporation
	41.

	 	Covanta Essex Company (formerly known as American Ref-Fuel Company of Essex County), a New
Jersey corporation
	42.

	 	Covanta SECONN LLC (formerly knwn as ARC SECONN LLC), a Delaware corporation
	43.

	 	Covanta Connecticut (S.E.), LLC (formerly known as Covanta Connecticut (S.E.), Inc. formerly
known as ARC of Connecticut (S.E.), Inc.), a Delaware corporation
	44.

	 	Covanta Southeastern Connecticut, L.P. (formerly known as ARC of Southeastern Connecticut,
L.P.), a Delaware corporation
	45.

	 	Covanta Southeastern Connecticut Company (formerly known as American Ref-Fuel Company of
Southeastern Connecticut), Connecticut corporation
	46.

	 	Covanta Niagara, LLC (formerly known as ARC Niagara LLC), a Delaware corporation
	47.

	 	Covanta Niagara II, LLC (formerly known as Covanta Niagara II, Inc. formerly known as ARC
Niagara II, Inc.), a Delaware corporation
	48.

	 	Covanta Niagara, L.P. (formerly known as American Ref-Fuel Company of Niagara, L.P.), a
Delaware corporation
	49.

	 	Covanta Operations of SEMASS LLC (formerly known as ARC Operations of SEMASS LLC), a Delaware
corporation
	50.

	 	Covanta Operations of SEMASS II, LLC (formerly known as ARC Operations of 50. SEMASS II, Inc.),
a Delaware corporation
	51.

	 	Covanta SEMASS, L.P. (formerly known as American Ref-Fuel Operations of SEMASS, L.P.), a
Delaware corporation
	52.

	 	Covanta Company of SEMASS, L.P. (formerly known as American Ref-Fuel Company of SEMASS, L.P.),
a Delaware corporation
	53.

	 	Covanta SEMASS LLC (formerly ARC SEMASS LLC), a Delaware corporation
	54.

	 	Covanta SEMASS II, LLC (formerly known as ARC SEMASS II, Inc.), a Delaware corporation
	55.

	 	SEMASS Partnership, a Massachusetts corporation
	56.

	 	Covanta Delaware Valley LLC (formerly known as ARC Delaware Valley LLC), a Delaware corporation
	57.

	 	Covanta Delaware Valley II, LLC (formerly known as ARC Delaware Valley II, Inc.), a Delaware
corporation
	58.

	 	Covanta Delaware Valley, L.P. (formerly known as American Ref-Fuel Company of Delaware Valley,
L.P.), a Delaware corporation
	59.

	 	TransRiver LLC (formerly known as ARC TransRiver LLC), a Delaware corporation
	60.

	 	TransRiver II, LLC formerly known as TransRiver II, Inc. f/k/a ARC TransRiver II, Inc.), a
Delaware corporation
	61.

	 	TransRiver Marketing Company, L.P., a Delaware corporation
	62.

	 	TransRiver Portsmouth LLC, a Virginia corporation

 

 

	 	 	 
	63.

	 	TransRiver Transfer Systems, LLC (formerly known as ARC Transfer Systems LLC), a Delaware

corporation
	64.

	 	TransRiver Waste LLC (formerly known as ARC Waste LLC), a Delaware corporation
	65.

	 	Covanta Capital District LLC (formerly known as ARC Capital District LLC), a Delaware

corporation
	66.

	 	Covanta Capital District II LLC (formerly known as ARC Capital District II LLC), a Delaware

corporation
	67.

	 	Covanta Capital District, L.P. (formerly known as American Ref-Fuel Company of the Capital
District, L.P.), a Delaware corporation
	68.

	 	UAH-Groveville Hydro Associates, a New York corporation
	69.

	 	Covanta Ref-Fuel II LLC (f/k/a Covanta Ref-Fuel II Corp.), a Delaware corporation
	70.

	 	Covanta Ref-Fuel Holdings LLC (formerly known as Ref-Fuel Holdings LLC), a Delaware corporation
	71.

	 	MSW Energy Erie LLC, a Delaware corporation
	72.

	 	MSW Energy Holdings LLC, a Delaware corporation
	73.

	 	MSW Energy Holdings II LLC, a Delaware corporation
	74.

	 	MSW Energy Finance Co., Inc., a Delaware corporation
	75.

	 	MSW Energy Finance Co. II, Inc, a Delaware corporation
	76.

	 	MSW Energy Hudson LLC, a Delaware corporation
	77.

	 	Covanta Development Company LLC (formerly known as American Ref-Fuel Company of Camden LLC), a
Delaware corporation
	78.

	 	Edison (Bataan) Cogeneration Corporation, Philippines
	79.

	 	Hidro Operaciones Don Pedro S.A., Costa Rica
	80.

	 	Covanta Energy India (Balaji) Limited, Mauritius
	81.

	 	Covanta Energy International Investments Limited (f/k/a Covanta Energy India Investments,
Ltd.), Mauritius
	82.

	 	Covanta Energy India (Samalpatti) Ltd., Mauritius
	83.

	 	Covanta Energy Philippine Holdings, Inc., Philippines
	84.

	 	Ogden Power Development-Cayman, Inc., Cayman Islands
	85.

	 	Covanta Philippines Operating, Inc., Cayman Islands
	86.

	 	Madurai Power Corporation Pvt. Ltd., India
	87.

	 	Covanta Bangladesh Operating Ltd., Bangladesh
	88.

	 	Covanta Energy Asia Holdings Ltd. (f/k/a Covanta Chinese Investments Ltd.), Mauritius
	89.

	 	Covanta Energy China (Alpha) Ltd., Mauritius
	90.

	 	Linan Ogden-Jinjiang Cogeneration Co. Ltd., China
	91.

	 	Covanta Waste to Energy Asia Ltd. (f/k/a Covanta Energy China (Beta) Ltd.), Mauritius
	92.

	 	Covanta Energy China (Delta) Ltd., Mauritius
	93.

	 	Taixing Ogden-Yanjiang Cogeneration Co. Ltd., China
	94.

	 	Covanta Energy China (Gamma) Ltd., Mauritius
	95.

	 	Covanta One Ltd., Mauritius
	96.

	 	Covanta Five Ltd., Mauritius
	97.

	 	Covanta Samalpatti Operating Pvt. Ltd., India
	98.

	 	Covanta Madurai Operating Pvt. Ltd., India
	99.

	 	Covanta Waste to Energy, a Delaware corporation

 

 

	 	 	 
	100.

	 	Goa Holdings Ltd., Mauritius
	101.

	 	Magellan Cogeneration, Inc., Philippines
	102.

	 	Enereurope Holdings III, B.V., Netherlands
	103.

	 	Ogden Energy (Gulf) Limited , Mauritius
	104.

	 	Ogden Energy India (Bakreshwar) Ltd., Mauritius
	105.

	 	Bal-Sam India Holdings, Ltd., Mauritius
	106.

	 	Covanta Energy India (CBM) Ltd., Mauritius
	107.

	 	Covanta Two Ltd., Mauritius
	108.

	 	Covanta Cayman (Sahacogen) Ltd., Cayman Islands
	109.

	 	Covanta Three Ltd., Mauritius
	110.

	 	Covanta Cayman (Rojana) Ltd., Cayman Islands
	111.

	 	Covanta Four Ltd., Mauritius
	112.

	 	Power Operations and Maintenance Ltd., Bermuda
	113.

	 	Covanta India Operating Pvt. Ltd., India
	114.

	 	Ogden Taiwan Investments Ltd., Mauritius
	115.

	 	Covanta Mauritius O&M Ltd. (formally known as OPDB, Ltd., Cayman Islands
	116.

	 	Covanta Energy India Pvt. Ltd., India
	117.

	 	Covanta Energy (Thailand) Ltd., Thailand
	118.

	 	Covanta Energy Asia Pacific Ltd., Hong Kong
	119.

	 	Covanta Energy Limited, United Kingdom
	120.

	 	Covanta Italy Holding, S.r.l., Italy
	121.

	 	Covanta Italy I S.r.l., Italy
	122.

	 	Covanta Italy II S.r.l., Italy

 

 

EXHIBIT A

Intercompany Indebtedness

Master Intercompany Promissory Note dated February 9, 2007 made by each of the Covanta Parties

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