Document:

exv10w1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”), is made and entered into as of
this 27th day of April, 2004 by and between Danielson Holding Corporation, a
Delaware corporation (“Corporation”) and Jeffrey R. Horowitz, an individual
residing at 11 Laurel Lane, Bernardsville, New Jersey    (the “Executive”).

RECITALS

     WHEREAS, the Corporation desires to employ Executive as the interim
President and Chief Executive Officer of the Corporation;

     WHEREAS, the Executive desires to be employed by the Corporation as the
interim President and Chief Executive Officer at the salary and for the
benefits provided herein;

     WHEREAS, the Executive acknowledges and understands that during the course
of his employment, the Executive has and will become familiar with certain
confidential information of the Corporation which is exceptionally valuable to
the Corporation and vital to the success of the Corporation’s business; and

     WHEREAS, the Corporation and the Executive each desire to protect such
confidential information from disclosure to third parties or use of such
information to the detriment of the Corporation.

AGREEMENT

     NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     1. Employment. The Corporation hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, as the interim President and
Chief Executive Officer the Corporation.

     2. Term. The term of this Agreement shall commence on April 27, 2004 and
shall continue until March 2, 2005 (the “Term”), unless earlier terminated
pursuant to Section 12 of this Agreement.

     3. Duties. The Executive shall have the duties and responsibilities as
determined by the Board of Directors of the Corporation in accordance with the
Articles of Incorporation and the By-Laws of the Corporation in effect from
time to time, provided that such duties shall at all times be consistent with
the duties normally performed by Presidents and Chief Executive

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Officers of companies engaged in businesses similar to the business of the
Corporation. The Executive agrees to devote substantially all of his business
time, attention and energies to the diligent performance of his duties
hereunder and will not, during the Term hereof, engage in, accept employment
from, or provide services to any other person, firm, corporation, governmental
agency or other entity that engages in any activities which, in the opinion of
the Board of Directors, would conflict with or detract from the Executive’s
capable performance of such duties. The Corporation recognizes that during the
Term of this Agreement, the Executive may make passive investments which will
not interfere with or detract from the Executive’s performance of his duties
and obligations hereunder, subject to the policies applicable to senior
executive of the Corporation.

     4. Compensation.

     (a) Base Salary. During the Term of this Agreement, the Executive shall
receive compensation equal to the annual rate of $300,000 payable in equal
bi-weekly installments or as otherwise agreed to by the parties. The annual
amount of salary payments to the Executive during the Term of this Agreement
shall be referred to herein as the “Base Salary.”

     (b) Bonus. During the Term of this Agreement and commencing as of the
date hereof, the Executive shall participate in a bonus program to be adopted
by the Corporation providing the Executive with the opportunity to earn a cash
bonus equal to up to 80% of the Executive’s Base Salary (the “Bonus”). The
Bonus shall payable as follows: 75% of the Bonus shall be payable upon
termination of employment other than pursuant to Sections 12(a) or 12(e) and
25% of the Bonus shall be payable at the discretion of the Corporation’s
Compensation Committee of the Board of Directors of the Corporation.

     5. Benefits. During the Term of this Agreement, the Executive shall be
entitled to receive benefits as are provided generally to other senior
executives of the Corporation from time to time. As soon as practicable, the
Corporation shall use its reasonable best efforts to cause its subsidiary,
Covanta Energy Corporation, to amend its retirement, supplemental retirement
and 401(k) plans to permit employees of the Corporation, including the
Executive, to participate therein. Executive shall be entitled to four (4)
weeks of vacation during each twelve (12) month period hereunder.

     6. Expenses. During the Term of this Agreement, the Executive shall be
reimbursed by the Corporation for all reasonable, ordinary and necessary
out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or
any other similar expenses incurred by the Executive in performing services for
the Corporation to the extent that such expenditures are substantiated and
documented by the Executive as reasonably requested or required by the
Corporation.

     7. Non-Disclosure of Confidential Information.

     a. The Executive, except in furtherance of the business of the
Corporation, or otherwise with the prior authorization of the Corporation, will
not during, or for a period of three (3) years after termination of, this
Agreement, in any form or manner, directly or indirectly, divulge, disclose or
communicate to any person, entity, firm, corporation or any other third party
(other than in the course of the Executive’s employment hereunder), or utilize
for the

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Executive’s personal benefit or for the benefit of any competitor of the
Corporation, any Confidential Information (as hereinafter defined).

     b. For the purposes of this Agreement, the term “Confidential Information”
shall mean, but shall not be limited to, any technical or non-technical data,
formulae, patterns, compilations, programs, devices, methods, techniques,
drawings, designs, processes, procedures, improvements, models or manuals of
the Corporation or which are licensed by the Corporation, any financial data or
lists of actual or potential customers or suppliers (including contacts
thereat) of the Corporation, and any information regarding the Corporation’s
contracts, marketing and sales plans, which is not generally known to the
public through legitimate origins. The Corporation and the Executive
acknowledge and agree that such Confidential Information is extremely valuable
to the Corporation and shall be deemed to be a “trade secret.” In the event
that any part of the Confidential Information becomes generally known to the
public through legitimate origins (other than by the breach of this Agreement
by the Executive or by misappropriation), is required to be disclosed by legal,
administrative or judicial process (provided that the Executive has provided to
the Corporation reasonable prior notice of such request and the Corporation has
had a reasonable opportunity, at its expense, to dispute, defend or limit such
request for Confidential Information), that part of the Confidential
Information shall no longer be deemed Confidential Information for the purposes
of this Agreement, but the Executive shall continue to be bound by the terms of
this Agreement as to all other Confidential Information.

     c. Upon termination of this Agreement for any reason, the Executive will
promptly deliver to the Corporation all correspondence, drawings, blueprints,
manuals, letters, notes, notebooks, reports, programs, plans, proposals,
financial documents, or any other documents, including all copies in any form
or media, concerning the Corporation’s customers, marketing strategies,
products or processes and/or which contain any Confidential Information.

     8. Covenant-Not-To-Compete. The Executive will not without the consent of
the Corporation, at its sole discretion, during, or for a period of one (1)
year after termination of, this Agreement, in any form or manner, directly or
indirectly, on his own behalf or in combination with others, become engaged in
(as an individual, partner, stockholder, director, officer, principal, agent,
independent contractor, employee, trustee, lender of money or in any other
relation or capacity whatsoever, except as a holder of securities of a
corporation whose securities are publicly traded and which is subject to the
reporting requirements of the Securities Exchange Act of 1934, and then only to
the extent of owning not more than two percent (2%) of the issued and
outstanding securities of such corporation), or provide services similar to
those provided to the Corporation for, any business which renders services or
sells products, or proposes to render services or sell products, that compete
with the Business of the Corporation within the United States and any foreign
country in which the Corporation or any of its subsidiaries conducts business
during the term of this Agreement. For purposes of this Agreement, the
“Business” of the Corporation shall mean (i) the specialty insurance businesses
currently conducted by the Corporation’s subsidiaries, (ii) the ownership and
operation of waste-to-energy power generation projects, and (iii) the ownership
and operation of water and wastewater treatment facilities; provided, however,
that notwithstanding the foregoing, the Executive shall be permitted to engage
in the practice of law (other than in the legal department of an entity that
would otherwise result in a violation of this Section 8).

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     9. Covenant Not to Solicit.

     (a) Covenant Not to Solicit Employees. During Executive’s employment by
the Corporation and for a period of one (1) year following termination or
cessation of Executive’s employment pursuant to this Agreement, Executive
agrees and covenants that he will not, for any reason, directly or indirectly,
employ, solicit or endeavor to entice away from the Corporation or any of its
subsidiaries (whether for his own benefit or on behalf of another person or
entity), or facilitate the solicitation, employment or enticement of, any
employees of Corporation to work for Executive, any affiliate of Executive or
any competitor of Corporation, nor will Executive otherwise attempt to
interfere (to the Corporation’s detriment) in the relationship between the
Corporation or any of its subsidiaries and any such employees.

     (b) Covenant Not to Solicit Customers. During Executive’s employment
pursuant to this Agreement and for a period of one (1) year following
termination or cessation of Executive’s employment, Executive agrees and
covenants that he will not directly or indirectly in any form or manner,
contact, solicit, or facilitate the contacting or solicitation of any Customer
of the Corporation, for the purpose of competing with the Business of the
Corporation. For purposes of this Agreement, a “Customer” of the Corporation
shall mean and refer to (i) each person, entity, municipality or other
governmental entity that has received services or operated project with the
Corporation or any of its affiliates during the period of Executive’s
employment hereunder and (ii) each person, entity, municipality, or other
governmental entity formally solicited by the Corporation to provide services
or operate projects during the period of Executive’s employment hereunder;
provided, however, that notwithstanding the foregoing, the Executive shall be
permitted to act as an advisor or director of a business, provided that such
advise and business is not directly competitive with the Business.

     10. Equitable Remedies. In the event that the Executive breaches any of
the terms contained in Sections 7, 8 or 9 of this Agreement, the Executive
stipulates that said breach will result in immediate and irreparable harm to
the business and goodwill of the Corporation and that damages, if any, and
remedies at law for such breach would be inadequate. The Corporation shall
therefore be entitled to apply for and receive from any court of competent
jurisdiction an injunction to restrain any violation of this Agreement and for
such further relief as the court may deem just and proper. Following judgment
or other final determination by such court, the non-prevailing party in such
proceeding shall pay the costs and expenses (including court costs and
reasonable attorneys’ fees) of the prevailing party.

     11. Continuing Obligation. The obligations, duties and liabilities of the
Executive pursuant to Sections 7, 8 or 9 of this Agreement are continuing,
absolute and unconditional and shall remain in full force and effect as
provided therein despite any termination of this Agreement for any reason
whatsoever, including, without limitation, the expiration of the Term of this
Agreement. Notwithstanding anything else contained in this Agreement to the
contrary, the parties hereto agree that in the event the Executive breaches any
of the terms contained in Sections 7, 8 or 9 of this Agreement, the obligation
of the Corporation to pay any Base Salary or Bonus under this Agreement (or
pursuant to any severance payment set forth in Section 12 of this Agreement)
shall terminate as of the date of such breach by the Executive.

     12. Termination of Employment.

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     a. Termination by Corporation of Executive for Cause. The Corporation
shall have the right to terminate the Executive’s employment at any time for
“cause.” For purposes hereof, “cause” shall mean that the Executive has:

	 	i.	 	been convicted of, or plead nolo contendere to, a felony or
crime involving moral turpitude; or
	 
	 	ii.	 	committed an act of personal dishonesty or fraud involving
personal profit in connection with the Executive’s employment by the
Corporation; or
	 
	 	iii.	 	committed a breach of any covenant, provision, term,
condition, understanding or undertaking set forth in this Agreement,
including, without limitation, the provisions contained in Sections
7, 8 or 9 hereof, where such breach results in or is reasonably
likely to result in a material adverse affect on the Corporation; or
	 
	 	iv.	 	committed an act which the Board of Directors of the
Corporation has properly found to have involved willful misconduct
or gross negligence on the part of the Executive, which results in
or is reasonably likely to result in a material adverse affect on
the Corporation; or
	 
	 	v.	 	exhibited documented habitual absenteeism or been unable or
repeatedly failed to perform any reasonable or customary tasks
typically required in connection with the Executive’s employment and
position with the Corporation or its subsidiaries;

provided, however, that no termination under clause (iii), (iv) or (v) of this
Section 12(a) shall be effective unless the Executive shall have first received
written notice describing in reasonable detail the basis for the termination
and within fifteen (15) days following delivery of such notice the Executive
shall have failed to cure such alleged behavior constituting “cause,” provided,
further, that this notice requirement prior to termination shall be applicable
only if such behavior or breach is capable of being cured. If the Corporation
shall terminate the Executive’s employment pursuant to this Section 12(a), the
Corporation shall only be obligated to pay to the Executive the Base Salary,
but not any Bonus, payable to the Executive pursuant to this Agreement, accrued
up to and including the date on which the Executive’s employment is so
terminated. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive.

     b. Termination by Corporation of Executive Because of Executive’s
Disability, Injury or Illness. The Corporation shall have the right to
terminate the Executive’s employment if the Executive is unable to perform the
duties assigned to him by the Corporation because of the Executive’s
disability, injury or illness; provided, however, that in the event of such
disability, injury or illness, the Executive’s inability to perform such duties
must have existed for a total of three (3) months during the Term of this
Agreement before such termination can be made effective. If the Corporation
shall terminate the Executive’s employment pursuant to this Section 12(b), the
Corporation shall be obligated to pay to the Executive the Base Salary and the
Bonus payable to the Executive under this Agreement. Payments of the Base
Salary for the remaining term of the Agreement shall be paid in equal bi-weekly
installments, unless otherwise agreed to by the parties. The Bonus, if any,
payable to the Executive shall be paid to Executive

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30 days following the termination of Executive’s employment, unless
otherwise agreed to by the parties. Thereafter, the Corporation shall have no
further obligation whatsoever to the Executive.

     c. Termination by Corporation as a Result of Executive’s Death. The
obligations of the Corporation to the Executive under this Agreement (except as
provided in this Section 12(c)) shall automatically terminate upon the
Executive’s death and the Corporation shall pay to the Executive’s estate the
Base Salary and the Bonus payable to the Executive under this Agreement.
Payments of the Base Salary for the remaining term of the Agreement shall be
paid in equal bi-weekly installments, unless otherwise agreed to by the
Corporation and the Executive’s estate. The Bonus, if any, payable to the
Executive’s estate shall be paid 30 days following the termination of
Executive’s employment, unless otherwise agreed to by the Corporation and the
Executive’s estate. Thereafter, the Corporation shall have no further
obligation whatsoever to the Executive’s estate.

     d. Termination of Executive by the Corporation for Any Other Reason. The
Corporation shall have the right to terminate the Executive’s employment for
any other reason upon ten (10) days prior written notice to the Executive. In
the event of a termination by the Corporation of the Executive’s employment for
any reason other than the reasons set forth in Sections 12(a), 12(b) or 12(c)
hereof, the Corporation shall be obligated to pay to the Executive the Base
Salary and the Bonus payable to the Executive under this Agreement. Payments
of the Base Salary for the remaining term of the Agreement shall be paid in
equal bi-weekly installments, unless otherwise agreed to by the parties. The
Bonus, if any, payable to the Executive shall be paid 30 days following the
termination of Executive’s employment, unless otherwise agreed to by the
parties. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive.

     e. Termination by Executive. The Executive may resign and terminate his
employment by the Corporation for any reason whatsoever upon thirty (30) days
prior written notice to the Corporation. Thereafter, the Corporation shall
have no obligation to the Executive, except for paying the Executive the
portion of the Base Salary accrued up to and including the date of termination
and those obligations provided as a matter of federal or state law.

     f. Good Reason. If, during the Term of this Agreement, the Executive
resigns for Good Reason (as defined below), the Corporation shall be obligated
to pay to the Executive the Base Salary and the Bonus payable to the Executive
under this Agreement. Payments of the Base Salary for the remaining term of
the Agreement shall be paid in equal bi-weekly installments, unless otherwise
agreed to by the parties. The Bonus, if any, payable to the Executive shall be
paid 30 days following the termination of Executive’s employment, unless
otherwise agreed to by the parties. Thereafter, the Corporation shall have no
further obligation whatsoever to the Executive. For purposes of this
Agreement, “Good Reason” shall mean (i) a requirement by the Corporation that
the Executive report for the performance of his services hereunder on a regular
or permanent basis at any location or office more than fifty (50) miles from
the current principal executive offices of Covanta Energy Corporation in
Fairfield, New Jersey, (ii) the assignment to the Executive of duties and
responsibilities materially inconsistent with the intents and purposes of
Executive’s employment pursuant to this Agreement, or (iii) a material breach
by the Corporation of its obligations to the Executive pursuant to this
Agreement.

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     13. Capacity. The Executive hereby represents and warrants that, in
entering into this Agreement, he is not in violation of any contract or
agreement, whether written or oral, with any other person, firm, partnership,
corporation or other entity to which he is a party or by which he is bound and
will not violate or interfere with the rights of any other person, firm,
partnership, corporation or other entity. In the event that such a violation
or interference does occur, or is alleged to occur, notwithstanding the
representation and warranty made hereunder, the Executive shall indemnify the
Corporation from and against any and all manner of expenses and liabilities
incurred by the Corporation or any affiliated company of the Corporation in
connection with such violation or interference or alleged violation or
interference.

     14. Entire Agreement. This Agreement and the other agreements described
herein contains the entire agreement between the parties with respect to the
subject matter hereof and shall not be modified except in writing by the
parties hereto. Furthermore, the parties hereto specifically acknowledge and
agree that this Agreement and the other agreements described herein supersedes
all prior agreements between the Executive and the Corporation in whatever
capacity so entered into, whether written or oral, and all such prior
agreements, whether written or oral, shall be of no further force or effect
from and after the date hereof; provided, however, that this provision shall
not apply to any agreements between the Executive and any subsidiary of the
Corporation.

     15. Severability. If any phrase, clause or provision of this Agreement is
declared invalid or unenforceable by a court of competent jurisdiction, such
phrase, clause or provision shall be deemed severed from this Agreement, but
will not affect any other provisions of this Agreement, which shall otherwise
remain in full force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly restrictive by a
court of competent jurisdiction, it shall not be stricken in its entirety and
held totally void and unenforceable, but shall remain effective to the maximum
extent permitted by such court.

     16. Notices. Any notice, request or other communication required to be
given pursuant to the provisions hereof shall be in writing and shall be deemed
to have been given when delivered in person, on the next business day after
being delivered to a nationally-recognized overnight courier service (for such
next-day delivery) or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, return receipt requested and
addressed to the other party at its or his last known address. The address of
any party may be changed by notice in writing to the other party duly served in
accordance herewith.

     17. Waiver. The waiver by the Corporation or the Executive of any breach
of any term or condition of this Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or condition
hereof.

     18. Governing Law. This Agreement and the enforcement hereof shall be
governed and controlled in all respects by the internal laws, and not the laws
of conflict, of the State of Illinois.

     19. Assignment of Inventions. The Executive shall disclose promptly in
writing to a designated representative of the Corporation all material of a
proprietary nature, including, but not limited to, ideas, inventions,
discoveries, improvements, developments, designs, methods,

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systems, computer programs, trade secrets or any other intellectual
property whether or not patentable or copyrightable, specifically including,
but not limited to, copyright and mask works, formulae, compositions, products,
processes, apparatus, and new uses of existing materials or machines (hereafter
collectively called “Inventions”) made, conceived or first reduced to practice
by the Executive solely or jointly with others while employed by the
Corporation and which relate to or result from the actual or anticipated
business, work, research or investigation of the Corporation or any of its
affiliates or which are suggested by or result from any task assigned to or
performed by the Executive for the Corporation or any of its affiliates. The
Corporation shall be the owner of all property rights in any such Inventions,
including, but not limited to, rights arising from the obtaining of letters of
patent or copyright in respect thereof, which shall be vested in the
Corporation. The Executive will at the Corporation’s request execute any and
all assignment, patent or copyright forms and the like, deemed reasonably
necessary by the Corporation, and will assist in drafting of any description or
specification of the Inventions as may be required by the Corporation to
protect the Corporation’s rights in and to the Inventions, including, but not
limited to, application(s) for letters of patent. The Corporation’s rights
hereunder shall not be limited to this country but shall extend to any country
in the world and shall attach to each Invention notwithstanding that it is
perfected, improved, reduced to specific form or used after termination the
Executive’s employment. The Executive agrees to lend such assistance as he may
be able, at the Corporation’s request without charge in connection with any
proceedings relating to such letters of patent, trade secrets, copyright or
application thereof, as may be determined by the Corporation to be reasonably
necessary. In such case the Corporation will reimburse expenses which the
Executive may reasonably incur in assisting the Corporation to obtain, assert,
defend and protect such letters of patent, trade secrets, copyright or other
protection.

     20. Successors. This Agreement is personal to the Executive and shall not
be assignable by the Executive otherwise by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

	 	 	 
	 

	 	DANIELSON HOLDING CORPORATION
	

	 	 
	

	 	By: /s/ Philip Tinkler
	

	 	
 
	

	 	Name: Philip Tinkler
	

	 	
 
	

	 	Its: Chief Financial Officer
	

	 	
 
	

	 	 
	

	 	EXECUTIVE
	

	 	 
	

	 	/s/ Jeffrey R. Horowitz
	

	 	
 
	

	 	Jeffrey R. Horowitz

9exv10w2

 

Exhibit 10.2

COVANTA POWER INTERNATIONAL HOLDINGS, INC.

FIRST AMENDMENT TO CREDIT AGREEMENT

               This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
April 20, 2004 and entered into by and among COVANTA POWER INTERNATIONAL
HOLDINGS, INC., a Delaware corporation (“Company”), and THE SUBSIDIARIES OF
COMPANY LISTED ON THE SIGNATURE PAGES HEREOF AS BORROWERS (collectively,
Company and such Subsidiaries of Company are “Borrowers” and each a
“Borrower”), WELLS FARGO BANK, N.A., as Debenture Disbursing Agent (the
“Debenture Disbursing Agent”), BANK OF AMERICA, N.A., as Administrative Agent
for the Lenders (“Administrative Agent”), and DEUTSCHE BANK SECURITIES, INC.,
as Documentation Agent for the Lenders (“Documentation Agent”), and is made
with reference to that certain Credit Agreement dated as of March 10, 2004 (the
“Credit Agreement”), by and among Company, the financial institutions
identified on the signature pages thereof as Lenders (the “Lenders”),
Documentation Agent and Administrative Agent. Capitalized terms used herein
without definition shall have the same meanings herein as set forth in the
Credit Agreement (as amended by this Amendment).

RECITALS

               WHEREAS, Subsection 9.6 of the Credit Agreement permits Debenture
Disbursing Agent, Agents and Borrowers to amend any provision of subsection
9.25 of the Credit Agreement that only affects the rights and obligations of
Debenture Disbursing Agent without the concurrence of Lenders; and

               WHEREAS, Borrowers and Debenture Disbursing Agent desire to make certain
amendments to subsection 9.25, subject to the terms and conditions set forth
below;

               NOW, THEREFORE, in consideration of the premises and agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

		
	      SECTION 1. 	AMENDMENTS TO SUBSECTION 9.25 OF THE CREDIT AGREEMENT

		
	      1.1 	Provisions Relating to Non-Confirming Holders and Disbursing Agents.

               A. Subsection 9.25A(i) of the Credit Agreement is hereby amended by
deleting subsection 9.25A(i) in its entirety and substituting the following
therefor:

     “(i) Notwithstanding anything in subsection 2.1A to the contrary, on
the Closing Date and the Determination Date, a portion of the Loans equal
to the percentage of all Loans reflected on Schedule 2.1 opposite the
name of the Allowed Class 6 Disbursing Agent shall be allocable to the
Allowed Class 6 Disbursing Agent subject the terms and conditions set
forth in this subsection 9.25, and a portion of the Loans equal to the
percentage of all Loans reflected on Schedule 2.1 opposite the name of
the Debenture Disbursing Agent shall be allocable to the Debenture
Disbursing Agent subject to the

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terms and conditions set forth in this subsection 9.25 (including
any adjustments as a result of any deemed assignments of such Loans by
the Debenture Disbursing Agent pursuant to this subsection 9.25).
Notwithstanding that the Loans referenced in the preceding sentence are
reflected on Schedule 2.1 as being allocable to Debenture Disbursing
Agent or Allowed Class 6 Disbursing Agent, as the case may be, none of
the Debenture Disbursing Agent, the Allowed Class 6 Disbursing Agent nor
any of the Non-Confirming Holders shall receive any Loans (and each of
such Loans and the status (and rights and obligations) of any such
Persons as a Lender or as a holder of Debenture Interests or Allowed
Class 6 Interests shall be suspended) until (a) in the case of the
Debenture Disbursing Agent and the Non-Confirming Holders with respect to
Debenture Interests, the Debenture Closing Date, or (b) in the case of
the Allowed Class 6 Disbursing Agent and the Non-Confirming Holders with
respect to Allowed Class 6 Interests, the Allowed Class 6 Closing Date;
provided, however, that the foregoing provisions of this sentence shall
cease to apply with respect to any Non-Confirming Holder that becomes a
Lender in accordance with clause (iii) of this subsection 9.25A. On the
Debenture Closing Date and the Determination Date (if the Debenture
Closing Date shall have occurred prior to the Determination Date), the
portion of the Loan allocable to the Debenture Disbursing Agent as
aforesaid, the delivery of which at such time remains suspended pursuant
to the preceding sentence, shall be registered in the name of the
Debenture Disbursing Agent; and on the Allowed Class 6 Closing Date and
the Determination Date (if the Allowed Class 6 Closing Date shall have
occurred prior to the Determination Date), the portion of the Loan
allocable to the Allowed Class 6 Disbursing Agent as aforesaid, the
delivery of which at such time remains suspended pursuant to the
preceding sentence, shall be registered in the name of the Allowed Class
6 Disbursing Agent. All Loans that would otherwise be distributed on the
Allowed Class 6 Closing Date or the Determination Date (if the Allowed
Class 6 Closing Date shall have occurred prior to the Determination Date)
on account of Allowed Class 6 Interests shall be held on such date by the
Allowed Class 6 Disbursing Agent; and all Loans that would otherwise be
distributed on the Debenture Closing Date or the Determination Date (if
the Debenture Closing Date shall have occurred prior to the Determination
Date) on account of 9.25% Debentures shall be held on such date by the
Debenture Disbursing Agent.”.

               B. Subsection 9.25A(iii) of the Credit Agreement is hereby amended by
deleting subsection 9.25A(iii) in its entirety and substituting the following
therefor:

     “(iii) Each Non-Confirming Holder shall hold a Debenture Interest or
an Allowed Class 6 Interest, as applicable, and shall not be deemed a
Lender for any purpose under this Agreement, except that a Non-Confirming
Holder may elect to become a Lender solely with respect to its Debenture
Interest by executing and delivering to Administrative Agent and the
Debenture Disbursing Agent a Lender Acknowledgement and satisfying the
other applicable requirements for becoming a Lender set forth in this
subsection 9.25; provided, that a Non-Confirming Holder shall not be
permitted at any time to become a Lender with respect to its Allowed
Class 6 Interest, and a Non-Confirming Holder may not execute and deliver
to Administrative Agent a Lender Acknowledgement with respect to the
Debenture Interest held by it except during the following periods: (a)
the 45-day period commencing with the Closing Date, (b) the 30-day period
after the date of delivery to the Debenture Disbursing Agent

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of any notice
described in clause (v) of this subsection 9.25A, and
(c) solely in the case of a Non-Confirming Holder who is not a
Non-Confirming Holder as of the Debenture Closing Date, the 30-day period
after such Non-Confirming Holder validly receives a Debenture Interest by
assignment or purchase from another Non-Confirming Holder. Each Lender
Acknowledgement shall apply with respect to all Debenture Interests of
such Non-Confirming Holder, and upon receipt by Administrative Agent of
such executed Lender Acknowledgement (together with, if such
Non-Confirming Holder was not a Non-Confirming Holder on the Debenture
Closing Date, a representation that such Non-Confirming Holder is an
Eligible Assignee and payment of a processing and recordation fee to
Administrative Agent of $5,000 (in addition to any fee payable to the
Debenture Disbursing Agent)), any forms, certificates or other evidence
with respect to United States federal income tax withholding matters that
an assignee of Loans would be required to deliver to Administrative Agent
pursuant to subsection 9.1B(i), and the ratable portion of the Agent
Indemnification Amount (if any) owed with respect to the Loans to be
deemed assigned by the Debenture Disbursing Agent to such Non-Confirming
Holder, Administrative Agent shall accept such Lender Acknowledgment, the
Debenture Disbursing Agent shall confirm to Administrative Agent the
amount of the Debenture Interest held by such Non-Confirming Holder, such
Non-Confirming Holder shall cease to be a Non-Confirming Holder and shall
thereupon become a Lender for all purposes under the Loan Documents
holding a Loan and Commitment in amounts equal to the amounts so
confirmed by the Debenture Disbursing Agent, the Debenture Disbursing
Agent shall be deemed to have assigned such Loan and Commitment to such
Lender on such date for all purposes of this Agreement, and
Administrative Agent shall record such assignment information in the
Register.”.

               C. Subsection 9.25A(v) of the Credit Agreement is hereby amended by
deleting subsection 9.25A(v) in its entirety and substituting the following
therefor:

     “(v) Borrowers shall notify Administrative Agent and the Debenture
Disbursing Agent in writing not less than 30 days prior to seeking any
amendment, waiver or other modification to the Loan Documents that would
require the approval or concurrence of all Lenders. Any notice provided
pursuant to this clause (v) shall be provided by facsimile transmission
and shall be deemed to have been given upon receipt of such facsimile by
Administrative Agent and the Debenture Disbursing Agent in complete and
legible form. Promptly after receipt of such notice, the Debenture
Disbursing Agent shall notify the relevant Non-Confirming Holders on the
register maintained by the Debenture Disbursing Agent promptly in
accordance with its procedures established for such purposes. No such
amendment, waiver or modification shall be deemed to be effective prior
to the expiration of such 30-day period.”.

3

 

		
	      1.2 	Provisions Relating to Definitions.

               Subsection 9.25B of the Credit Agreement is hereby amended by deleting the
definitions of “Debenture Disbursing Agent”, “Disbursing Agent” and “Debenture
Interest”, and substituting therefore the following, which shall be inserted in
proper alphabetical order:

          “Debenture Disbursing Agent” means Wells Fargo Bank, N.A., in its
capacity as disbursing agent for Covanta for the benefit of the holders
of the 9.25% Debentures under the Approved Plan of Reorganization, the
Confirmation Order, the Debenture Disbursing Agent Authorization Order
and the disbursing agreement relating thereto to be entered into on or
after the Closing Date.

          “Debenture Interest” means, with respect to any Non-Confirming
Holder, the claim or right to payment in respect of the 9.25% Debentures
of such Non-Confirming Holder in any Loan distributed to the Debenture
Disbursing Agent; provided, however, that any Debenture Interest shall
cease to be a Debenture Interest at such time that the Non-Confirming
Holder with respect thereto shall become a Lender in accordance with
subsection 9.25.

          “Disbursing Agent” means either Debenture Disbursing Agent or
Allowed Class 6 Disbursing Agent, and “Disbursing Agents” means each of
them.

		
	      1.3 	Provisions Relating to Authority; Execution and Delivery of the Loan Documents.

               Subsection 9.25C of the Credit Agreement is hereby amended by deleting
subsection 9.25C in its entirety and substituting the following therefor:

     “C. Execution and Delivery; Authority. The Debenture Disbursing
Agent is executing and delivering this Agreement and the Intercreditor
Agreement in its capacity as the disbursing agent for Covanta for the
benefit of the Non-Confirming Holders on account of the 9.25% Debentures
under the Approved Plan of Reorganization, the Confirmation Order and
pursuant to the Debenture Disbursing Agent Authorization Order. The
Allowed Class 6 Disbursing Agent is executing and delivering this
Agreement and the Intercreditor Agreement as the agent for the
Non-Confirming Holders holding Loans originally representing Allowed
Class 6 Claims under the Approved Plan of Reorganization and the
Confirmation Order.”.

		
	      SECTION 2. 	BORROWER’S REPRESENTATIONS AND WARRANTIES

               In order to induce the Debenture Disbursing Agent and the Agents to enter
into this Amendment and to amend the Credit Agreement in the manner provided
herein, Borrowers represent and warrant to Debenture Disbursing Agent and the
Agents that the following statements are true, correct and complete:

     2.1 Corporate Power and Authority. Each Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated

4

 

by, and perform its obligations under, the Credit Agreement as amended by
this Amendment (the “Amended Agreement”).

     2.2 Authorization of Agreements. The execution and delivery of this
Amendment has been duly authorized by all necessary corporate action on the
part of each Borrower and the performance of the Amended Agreement has been
duly authorized by all necessary corporate action on the part of each Borrower.

     2.3 No Conflict. The execution and delivery by each Borrower of this
Amendment and the performance by each Borrower of the Amended Agreement do not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Organizational
Documents of Company or any of its Subsidiaries or any order, judgment or
decree of any court or other Government Authority binding on Company or any of
its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
(which Contractual Obligation is enforceable on a post-Petition Date basis) of
Company or any of its Subsidiaries or an applicable order of the Bankruptcy
Court, (iii) result in or require the creation or imposition of any Lien upon
any of the properties or assets of Company or any of its Subsidiaries, or (iv)
require any approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of Company or any of its Subsidiaries.

     2.4 Governmental Consents. The execution and delivery by each Borrower of
this Amendment and the performance by each Borrower of the Amended Agreement do
not and will not require any Governmental Authorization.

     2.5 Binding Obligation. This Amendment has been duly executed and
delivered by each Borrower, and each of this Amendment and the Amended
Agreement is the legally valid and binding obligation of each Borrower
enforceable against each Borrower in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability.

     SECTION 3. CONDITIONS TO EFFECTIVENESS

               This Amendment shall become effective upon (i) receipt by Administrative
Agent and Company of written or telefacsimile notice that each of Company, the
other Borrowers, Debenture Disbursing Agent, Administrative Agent and
Documentation Agent has executed this Amendment and authorized its delivery,
and (ii) execution and delivery by Debenture Disbursing Agent of counterparts
to the Credit Agreement and the Intercreditor Agreement in the form attached
hereto as Annex A.

		
	      SECTION 4. 	ACKNOWLEDGEMENT AND CONSENT

               Each Borrower hereby acknowledges that such Borrower has read this
Amendment and consents to the terms hereof and hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Borrower under each of the Loan Documents to which such Borrower is a party
shall not be impaired and each of

5

 

the Loan Documents to which such Borrower is a party are, and shall
continue to be, in full force and effect and are hereby confirmed and ratified
in all respects.

		
	      SECTION 5. 	MISCELLANEOUS

		
	      5.1 	Reference to and Effect on the Credit Agreement and the Other
Loan Documents.

               A. On and after the effective date of this Amendment, each reference in
the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by this Amendment (the “Amended
Agreement”).

               B. Except as specifically amended by this Amendment, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

               C. The execution, delivery and performance of this Amendment shall not
constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of any Agent or any Lender under, the Credit Agreement or any
of the other Loan Documents.

     5.2 Fees and Expenses. Each Borrower acknowledges that all costs, fees
and expenses as described in subsection 9.2 of the Credit Agreement incurred by
Administrative Agent, Documentation Agent and their respective counsel
(including, without limitation, O’Melveny & Myers LLP and Ernst & Young
Corporate Finance LLC) with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Borrowers.

     5.3 Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.

     5.4 Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE
APPLICATION OF ANOTHER LAW.

     5.5 Counterparts; Effectiveness. This Amendment may be executed in any
number of 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.

[Remainder of this page intentionally left blank]

6

 

EXECUTION

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

BORROWERS:

	 	 	 	 	 
	 	COVANTA POWER INTERNATIONAL HOLDINGS, INC.,

 	 
	 	By:  	/s/ Ashish Sarkar
 	 
	 	 	Name:  	Ashish Sarkar 	 
	 	 	Title:  	Authorized Officer 	 
	 
	 	COVANTA POWER DEVELOPMENT, INC.

COVANTA POWER DEVELOPMENT OF BOLIVIA, INC.

COVANTA WASTE TO ENERGY OF ITALY, INC.

OPI QUEZON, INC.,

 	 
	 	By:  	/s/ Ashish Sarkar
 	 
	 	 	Name:  	Ashish Sarkar 	 
	 	 	Title:  	Authorized Officer 	 
	 

S-1

 

AGENTS AND LENDERS:

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Administrative Agent and Co-Arranger

 	 
	 	By:  	/s/ Henry Y. Yu
 	 
	 	 	Name:  	Henry Y. Yu 	 
	 	 	Title:  	Managing Director 	 
	 

S-2

 

	 	 	 	 	 
	 	DEUTSCHE BANK SECURITIES, INC.,

as Documentation Agent and Co-Arranger

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	                              /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

S-3

 

DEBENTURE DISBURSING AGENT:

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A., as Debenture

Disbursing Agent

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

S-4

 

Annex A

ACKNOWLEDGMENT AND COUNTERPART

     ACKNOWLEDGMENT
AND COUNTERPART (this “Counterpart”), dated as of April 20,
2004 is entered into in connection with the Credit Agreement dated as of March
10, 2004 (said Credit Agreement, as it may heretofore have been and as it may
hereafter be further amended, restated, supplemented or otherwise modified from
time to time being the “Credit Agreement”; capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed therein), by and
among Covanta Power International Holdings, Inc. (“Company”) and the
Subsidiaries of Company listed on the signature pages thereof, as Borrowers;
certain Persons listed on the signature pages thereof as Lenders (together with
any other lenders that subsequently become party thereto, the “Lenders”); Bank
of America, N.A., as administrative agent for Lenders, and Deutsche Bank
Securities, Inc., as documentation agent for Lenders. The undersigned, by
executing and delivering this Counterpart, hereby acknowledges and agrees (a)
that upon acceptance of this Counterpart by Administrative Agent it shall
become party to the Credit Agreement as “Debenture Disbursing Agent” in
accordance with the terms thereof and shall have the rights and obligations of
Debenture Disbursing Agent under the Credit Agreement, (b) that it shall be
bound by all of the terms of the Credit Agreement as Debenture Disbursing
Agent, and (c) that this Counterpart may be attached to the Credit Agreement.
The undersigned hereby further agrees that the address and facsimile number of
the undersigned for notice purposes pursuant to subsection 9.8 of the Credit
Agreement shall be as set forth below or such shall be designated by the
undersigned in a written notice delivered to Administrative Agent.

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

	 	 
	 	 	Notice Address: 	 	 	 
	 

A-1

 

ACKNOWLEDGMENT AND COUNTERPART

     ACKNOWLEDGMENT
AND COUNTERPART (this “Counterpart”), dated as of April 20,
2004 is entered into in connection with the Intercreditor Agreement dated as of
March 10, 2004 (said Intercreditor Agreement, as it may heretofore have been
and as it may hereafter be further amended, restated, supplemented or otherwise
modified from time to time being the “Intercreditor
Agreement”; capitalized
terms used herein not otherwise defined herein shall have the meanings ascribed
therein), by and among Covanta Power International Holdings, Inc. (“Company”)
and the Subsidiaries of Company listed on the signature pages thereof, as
Borrowers; Covanta Energy Americas, Inc.; certain Persons listed on the
signature pages thereof as Term Loan Lenders (together with any other lenders
that subsequently become party thereto, the “Term Loan Lenders”); certain
financial institutions listed on the signature pages thereof as Revolver
Lenders; Deutsche Bank AG, New York Branch, as administrative agent for
Revolver Lenders; Bank of America, N.A., as administrative agent for Term Loan
Lenders, as collateral agent, and cash management bank; Deutsche Bank
Securities, Inc., as documentation agent for Term Loan Lenders; the companies
listed on the signature pages thereof as Management Services and Reimbursement
Agreement Beneficiaries; the companies listed on the signature pages thereof as
Management Services and Reimbursement Agreement Obligors; U.S. Bank National
Association, as agent for the holders of the Prepetition Unsecured Claims
Participation Interest, and U.S. Bank National Association, as Allowed Class 6
Disbursing Agent. The undersigned, by executing and delivering this
Counterpart, hereby acknowledges and agrees (a) that upon acceptance of this
Counterpart by Administrative Agent it shall become party to the Intercreditor
Agreement as “Debenture Disbursing Agent” in accordance with the terms thereof
and shall have the rights and obligations of Debenture Disbursing Agent under
the Intercreditor Agreement, (b) that it shall be bound by all of the terms of
the Intercreditor Agreement as Debenture Disbursing Agent, and (c) that this
Counterpart may be attached to the Intercreditor Agreement. The undersigned
hereby further agrees that the address and facsimile number of the undersigned
for notice purposes pursuant to Section 7.1(a) of the Intercreditor Agreement
shall be initially as set forth below.

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

	 	 
	 	 	Notice Address: 	 	 	 
	 

A-2

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