THIRD AMENDMENT AND LIMITED WAIVER
TO DEBTOR-IN-POSSESSION
CREDIT AGREEMENT
This THIRD AMENDMENT AND LIMITED WAIVER TO
DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this "Amendment") is dated as of October
4, 2002 and entered into by and among COVANTA ENERGY CORPORATION, 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"), THE SUBSIDIARIES OF COMPANY
LISTED ON THE SIGNATURE PAGES HEREOF AS SUBSIDIARY GUARANTORS (collectively, the
"Subsidiary Guarantors"), THE LENDERS PARTY HERETO, BANK OF AMERICA, N.A., as
Administrative Agent for the Lenders ("Administrative Agent"), and DEUTSCHE BANK
AG, NEW YORK BRANCH, as Documentation Agent for the Lenders ("Documentation
Agent"), and is made with reference to that certain Debtor-in-Possession Credit
Agreement dated as of April 1, 2002, as amended by that certain First Amendment
to Credit Agreement and Security Agreement dated as of April 3, 2002 and that
certain Second Amendment to Credit Agreement dated as of May 10, 2002 (as so
amended, the "Credit Agreement"), by and among Borrowers, the financial
institutions parties thereto as 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, Borrowers and the undersigned Lenders desire (i) to
make certain amendments to the Credit Agreement, and (ii) to waive certain
existing Events of Default, in each case 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 THE CREDIT AGREEMENT; LIMITED WAIVER
1.1 Provisions Relating to Defined Terms.
A. Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the definitions of "Advance Limit" and "Material Contract" in their
entirety and inserting the following new definitions in the appropriate
alphabetical order:
"Advance Limit" means, with respect to Tranche A Loans (other
than Tranche A Loss Sharing Loans and Tranche A Loans made pursuant to
subsection 3.3B), as of any date of determination during any calendar
month set forth below, the aggregate amount set forth below for such
calendar month:
Calendar Month Advance Limit
------------------------------------- ----------------------------------
September 2002 $14,000,000
October 2002 $14,000,000
November 2002 $24,000,000
December 2002 $14,000,000
January 2003 $14,000,000
February 2003 $14,000,000
March 2003 $14,000,000
April 2003 $14,000,000
"; provided, however, that in the event of any Ottawa Disposition,
each of the amounts in the table set forth above (as such amounts may
have been previously reduced pursuant to any provision of this
Agreement (including this proviso) shall be reduced by the excess, if
any, of (a) 75% of the Ottawa Disposition Proceeds from such Ottawa
Disposition over (b) the greater of (1) zero and (2) the amount, if
any, by which the Tranche A Commitments (excluding the portion
representing the Tranche A Letter of Credit Sublimit then in effect)
exceed the Advance Limit then in effect (prior to giving effect to any
reduction to the Advance Limit resulting from such Ottawa
Disposition); and provided further, however, that in no event shall
the Advance Limit then in effect be reduced below $5,000,000 pursuant
to the immediately preceding proviso.
"CTB" means Covanta Tampa Bay, Inc.
"Designated Non-Material Asset Sales" means, collectively, the
sales of the Subsidiaries, divisions or businesses of Company and its
Subsidiaries (including the equity interests of certain Subsidiaries
and their assets or of Company's or any of its Subsidiaries' interests
in Projects) described on Annex A to the Third Amendment.
"Haripur DSR Liens" means Liens securing the debt service
reserve requirements of certain Borrowers for the Haripur Project in an
aggregate amount not to exceed $3,540,850.
"Hydranautics" means Hydranautics, Inc.
"Hydranautics L/C" means that certain bond or letter of credit
issued for the account of Hydranautics for the benefit of Tampa Bay,
Inc. to secure CTB's performance under the Tampa Bay O&M Contract, in
the maximum stated amount of $8,500,000.
"Insurance Premium Financers" means Persons who are
non-Affiliates of Company that advance insurance premiums for Company
and its Subsidiaries pursuant to Insurance Premium Financing
Arrangements.
"Insurance Premium Financing Arrangements" means,
collectively, such agreements as Company and its Subsidiaries shall
enter into after the Third Amendment Effective Date and prior to
December 1, 2002 with Insurance Premium Financers pursuant to which
such Insurance Premium Financers shall advance insurance premiums for
Company and its Subsidiaries in an aggregate amount not to exceed
$33,000,000 at any time and any orders entered by the Bankruptcy Court
in connection therewith. Such Insurance Premium Financing Arrangements
(i) shall provide for the benefit of such Insurance Premium Financers a
security interest in no property of Company or any of its Subsidiaries
other than gross unearned premiums for the insurance policies, (ii)
shall not purport to prohibit any portion of the Liens created in favor
of Administrative Agent (for the benefit of Lenders) pursuant to the
Collateral Documents or authorized by the Interim Borrowing Order or
Final Borrowing Order, (iii) shall provide that the Insurance Premium
Financers shall not be entitled to a cash payment on the Reorganization
Effective Date (except for regularly scheduled monthly payments of
principal and interest), (iv) shall not contain any provision or
contemplate any transaction prohibited by this Agreement and shall
otherwise be in form and substance reasonably satisfactory to Agents,
and (v) may provide that the security interests granted to Insurance
Premium Financers in connection with Insurance Premium Financing
Arrangements shall rank prior to the Liens of Lenders under this
Agreement.
"Material Contract" means (i) the principal lease agreement,
if any, and the principal service or operating agreement, if any, with
respect to each waste-to-energy Project and the principal lease
agreement, if any, with respect to each independent power plant Project
to which Company or any of its Subsidiaries is a party, each of which
is in existence as of the Closing Date and is described on Schedule
1.1C annexed hereto, (ii) the Tampa Bay Hydranautics Subcontract, (iii)
the Tampa Bay O&M Contract, and (iv) any other contract or other
arrangement to which Company or any of its Subsidiaries is a party
(other than the Loan Documents) for which breach, nonperformance,
cancellation or failure to renew would reasonably be expected to have a
Material Adverse Effect.
"Ottawa Disposition" means (i) any sale, transfer, assignment
or other disposition of all or a portion of the ownership interests or
assets of the Senators Hockey Club or its Subsidiaries, (ii) any sale,
transfer, assignment or other disposition of the Senators Lease, or
(iii) any restructuring or refinancing of the obligations owed to, or
of the interests of, Company and its Subsidiaries relating to the
Senators Hockey Club and/or the Senators Lease.
"Ottawa Disposition Proceeds" means, in respect of any Ottawa
Disposition, the total Cash payments (including any Cash received by
way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) received by
Borrowers and their respective Subsidiaries in connection with such
Ottawa Disposition net of any bona fide direct costs incurred in
connection with such Ottawa Disposition, including (i) income taxes
reasonably estimated to be actually payable prior to the earlier of (a)
the date which is one year from the date of such Ottawa Disposition and
(b) the Stated Maturity Date (determined on the date of such Ottawa
Disposition) as a result of any gain recognized in connection with such
Ottawa Disposition, (ii) additional Taxes actually payable upon the
closing of such Ottawa Disposition (including any transfer Taxes or
Taxes on gross receipts), and (iii) reasonable out-of-pocket fees and
expenses (including reasonable legal fees) paid to Persons other than
Company and its Subsidiaries and their respective Affiliates and
counsel and advisors in connection with such Ottawa Disposition
(including fees necessary to obtain any required consents of such
Persons to such Ottawa Disposition).
"Reorganization Effective Date" means the effective date of a
confirmed plan of reorganization in the Chapter 11 Cases pursuant to
section 1129(a)(9) of the Bankruptcy Code.
"Tampa Bay Hydranautics Subcontract" means that certain
Technical Services and Operating Assistance Contract dated as of July
7, 2002 by and between CTB and Hydranautics, in the form delivered to
Administrative Agent on or prior to the Third Amendment Effective Date,
and as such contract may thereafter be amended, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.4(vi).
"Tampa Bay O&M Contract" means that certain Operation,
Maintenance, Repair and Replacement Agreement for a Seawater
Desalination Plant by and between CTB and Tampa Bay, Inc., in the form
delivered to Administrative Agent on or prior to the Third Amendment
Effective Date, and as such contract may thereafter be amended,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.14A.
"Third Amendment" means the Third Amendment and Limited Waiver
to this Agreement dated as of October 4, 2002.
"Third Amendment Effective Date" has the meaning assigned to
that term in Section 4.5 of the Third Amendment.
"Virginia DEQ Liens" means Liens created in favor of the
Department of Environmental Quality of the Commonwealth of Virginia on
cash deposits made by certain Borrowers in an aggregate amount not to
exceed (a) in the case of cash deposits securing performance of closure
obligations for the Alexandria, Virginia waste-to-energy Project,
$303,180 minus the maximum available amount of surety bonds outstanding
from time to time, if any, supporting such closure obligations, and (b)
in the case of cash deposits securing performance of closure
obligations for the Fairfax, Virginia waste-to-energy Project,
$1,200,000 minus the maximum available amount of surety bonds
outstanding from time to time, if any, supporting such closure
obligations.
B. The definition of "Asset Sale" in subsection 1.1 of the
Credit Agreement is hereby amended by inserting the phrase "and any Designated
Non-Material Asset Sale" immediately after the phrase "shall include any
Approved Asset Sale" contained therein.
1.2 Provisions Relating to Use of Proceeds and Priority of
Obligations.
A. Subsection 2.5A of the Credit Agreement is hereby amended
by deleting therefrom the following phrase:
"during the period prior to the date that is 120 days (to the extent
permitted under the Final Borrowing Order) after the appointment of an
official committee for the unsecured creditors, proceeds of the Loans,
the Letters of Credit and cash Collateral not to exceed $120,000 may be
used to pay reasonable fees and expenses of an official committee of
creditors, if any, appointed in the Chapter 11 Cases to analyze the
Prepetition Obligations and any Liens securing such claims"
and substituting therefor the following:
"during the period from the date of the appointment of the official
committee for the unsecured creditors in the Chapter 11 Cases to
September 25, 2002, proceeds of the Loans, the Letters of Credit and
cash Collateral not to exceed $345,000 may be used to pay reasonable
fees and expenses of such official committee of creditors (such fees
and expenses being referred to hereinafter as "Investigation Expenses")
to, among other things, analyze and investigate the Prepetition
Obligations and any Liens securing such claims (including such fees and
expenses incurred in preparing any pleadings seeking authority to
commence on behalf of the Debtors any adversary proceeding, and the
further use of cash Collateral in connection therewith, filed prior to
September 25, 2002)".
B. Subsection 2.5A of the Credit Agreement is hereby further
amended by inserting the following sentence immediately prior to the last
sentence of such subsection:
"Subject to the foregoing restrictions, proceeds of Loans and cash
Collateral not to exceed $500,000 (exclusive of amounts permitted
hereunder to be applied to Investigation Expenses) in the aggregate may
be used to pay reasonable fees and expenses of professionals for the
official committee of creditors appointed in the Chapter 11 Cases to
prosecute, after September 25, 2002, the claims of such committee,
acting on behalf of Debtors, against the holders of Company's 9.25%
Debentures and their trustee, as such claims are described in the
complaint filed as part of adversary case number 02-03004 (subject to
the requirements for Bankruptcy Court approval of the payment of such
fees and expenses under the Bankruptcy Code and the rights of Lenders
to object thereto).".
C. Subsection 2.5A of the Credit Agreement is hereby further
amended by adding at the end thereof the following sentence:
"Notwithstanding anything contained herein to the contrary, (i) in no
event shall any portion of the $500,000 referred to in subsection 2.5A
as permitted to be used by the official committee of creditors
appointed in the Chapter 11 Cases be used to pursue any claim or
prosecute any action against the Lenders, the Prepetition Lenders or
the Agents (other than Administrative Agent solely in its capacity as
collateral agent for the holders of Company's 9.25% Debentures), and
(ii) in no event shall any consent, authorization or lack of
prohibition contained herein with respect to the right of such
committee to use cash Collateral to prosecute any action (other than
the express authorization in this subsection 2.5A with respect to
Investigation Expenses) in any way be deemed to confer on such
committee any right to use cash Collateral to pursue any adversary
action, suit, arbitration, proceeding or other litigation of any type
against the Lenders, the Prepetition Lenders or the Agents (other than
Administrative Agent solely in its capacity as collateral agent for the
holders of Company's 9.25% Debentures) now or at any time in the future
(it being understood that the references to the Lenders, the
Prepetition Lenders and the Agents in clauses (i) and (ii) of this
sentence shall not be construed to include the holders of Company's
9.25% Debentures or their trustee, in such capacities).".
D. Subsection 2.10 of the Credit Agreement is hereby amended
by deleting the last proviso in the first sentence thereof in its entirety and
substituting therefor the following proviso:
"provided further, however, that in no event shall there be paid from
proceeds of the Loans, the Letters of Credit or any cash Collateral any
fees or expenses incurred in challenging liens or claims as described
in subsection 10.19C, except that, subject to the Carve-Outs, the
professionals for an official creditors' committee may be paid the
reasonable fees and expenses described in the last proviso of the first
sentence of subsection 2.5A and in the penultimate sentence of such
subsection, subject in each case to the limitations contained in such
subsection.".
E. Subsection 2.10 of the Credit Agreement is hereby further
amended by adding immediately prior to the "." at the end thereof the phrase
"(it being understood that Virginia DEQ Liens, the Haripur DSR Liens and the
claims of Insurance Premium Financers for unpaid amounts owing to them under the
Insurance Premium Financing Arrangements as of the Reorganization Effective
Date, if a breach under such Insurance Premium Financing Arrangements has
occurred and is continuing on such date, shall not be deemed to breach this
subsection 2.10 so long as such Virginia DEQ Liens, such Haripur DSR Liens and
such Insurance Premium Financing Arrangements do not otherwise breach any other
provision of this Agreement)".
1.3 Provisions Relating to Negative Covenants.
A. Subsection 7.1 of the Credit Agreement is hereby amended by
(i) deleting the word "and" at the end of clause (vii) thereof, (ii) deleting
the "." at the end of clause (viii) thereof and substituting therefor "; and",
and (iii) adding at the end thereof the following new clause (ix):
"(ix) after the Third Amendment Effective Date, Company may
become and remain liable with respect to Indebtedness consisting solely
of its obligations under Insurance Premium Financing Arrangements,
which obligations shall not exceed $33,000,000 at any time."
B. Subsection 7.2A of the Credit Agreement is hereby amended
by (i) deleting the word "and" at the end of clause (v) thereof, (ii) deleting
the "." at the end of clause (vi) thereof and substituting therefor ";", and
(iii) adding at the end thereof the following new clauses (vii), (viii) and
(ix):
"(vii) Liens created pursuant to Insurance Premium Financing
Arrangements otherwise permitted under this Agreement, so long as such
Liens attach only to gross unearned premiums for the insurance
policies;
(viii) Virginia DEQ Liens; provided that the terms of such
Virginia DEQ Liens, and the documentation therefor, shall be reasonably
satisfactory to Agents; and
(ix) Haripur DSR Liens; provided that the terms of such
Haripur DSR Liens, and the documentation therefor, shall be reasonably
satisfactory to Agents."
C. Subsection 7.4 of the Credit Agreement is hereby amended by (i) deleting the
word "and" at the end of clause (iv) thereof, (ii) deleting the "." at the end
of clause (v) thereof and substituting therefor "; and", and (iii) adding at the
end thereof the following new clause (vi):
"(vi) CTB may become and remain liable under the terms of the
Tampa Bay Hydranautics Subcontract to reimburse Hydranautics for the
amount of any drawing under the Hydranautics L/C that results from any
reason other than the fault of Hydranautics; provided that no
amendment, supplement or modification that would reasonably be expected
to be adverse to the interests of Lenders shall be made to the Tampa
Bay Hydranautics Subcontract without the prior written consent of
Requisite Lenders."
D. Subsection 7.7 of the Credit Agreement is hereby amended by (i) deleting the
word "and" at the end of clause (viii) thereof, (ii) deleting the "." at the end
of clause (ix) thereof and substituting therefor ";", and (iii) adding at the
end thereof the following new clauses (x), (xi) and (xii):
"(x) Company and its Subsidiaries may make Designated
Non-Material Asset Sales, provided that (a) the fair market value of
the assets (net of related liabilities assumed by the purchaser) sold
in such Designated Non-Material Asset Sales shall not exceed $5,000,000
in the aggregate, (b) the consideration (including any earnout or other
contingent payments) received for such assets shall be in an amount at
least equal to the fair market value thereof, at least 75% of the
consideration received shall be cash, any non-cash consideration
received shall be reasonably satisfactory to Agents, and the terms of
any earnout or other contingent payments shall be subject to the
consent of Agents, (c) the principal documentation for such Designated
Non-Material Asset Sale and any earnout or contingent payments relating
thereto shall have been delivered to Agents, (d) the transaction costs
and expenses incurred by Borrowers and their respective Subsidiaries in
connection with such Designated Non-Material Asset Sales shall not
exceed $2,000,000 in the aggregate, (e) upon consummation of any
Designated Non-Material Asset Sale, none of the Borrowers or any of
their respective Subsidiaries shall have any debts or other
obligations, contingent or otherwise, relating to the sold
Subsidiaries, divisions, businesses or assets (other than Contingent
Obligations in respect of customary and appropriate indemnification and
purchase price adjustment obligations incurred in connection with such
Designated Non-Material Asset Sale), and (f) all of the Net Asset Sale
Proceeds from any such Designated Non-Material Asset Sale shall be
applied as a Mandatory Payment in accordance with the applicable
provisions of subsection 2.4A (it being understood that prior to any
such Designated Non-Material Asset Sale Company shall have provided
evidence reasonably satisfactory to Agents that Company and its
Subsidiaries have made arrangements to effect such application on a
timely basis);
(xi) Xxxxx Spain S.A., a Foreign Subsidiary, may commence
voluntary bankruptcy proceedings in Spain in accordance with applicable
law; provided that (a) at the time of commencement of such bankruptcy
proceedings, Xxxxx Spain S.A. shall not be engaged in any business
activities and shall have no material assets other than the net
intercompany receivable against Company, (b) the aggregate amount of
costs (including legal costs) incurred by Borrowers and their
respective Subsidiaries in connection with such bankruptcy proceedings
shall not exceed $225,000, and (c) Administrative Agent shall have
received an Officer's Certificate from Company certifying as to the
foregoing; and
(xii) Xxxxx Entertainment Services of Spain S.A., a Foreign
Subsidiary, may be liquidated in accordance with applicable law;
provided that (a) at the time of such liquidation, such Foreign
Subsidiary shall not be engaged in any business activities, (b)
Borrowers and their respective Subsidiaries shall have in the aggregate
no more than $90,000 of debts or other obligations, contingent or
otherwise, relating to such Foreign Subsidiary and the assets being
liquidated, (c) the aggregate amount of costs (including legal costs)
incurred by Borrowers and their respective Subsidiaries in connection
with such liquidation shall not exceed $30,000, and (d) Administrative
Agent shall have received an Officer's Certificate from Company
certifying as to the foregoing."
E. Subsection 7.13 of the Credit Agreement is hereby amended
by adding immediately prior to the "." at the end thereof the following new
proviso:
"; provided, however, that Virginia DEQ Liens, Haripur DSR Liens and
the claims of Insurance Premium Financers for unpaid amounts owing to
them under Insurance Premium Financing Arrangements as of the
Reorganization Effective Date, if a breach under such Insurance Premium
Financing Arrangements has occurred and is continuing on such date,
shall not be deemed to breach this subsection 7.13 so long as such
Virginia DEQ Liens, such Haripur DSR Liens and such Insurance Premium
Financing Arrangements do not otherwise breach any other provision of
this Agreement."
F. Subsection 7.14A of the Credit Agreement is hereby amended
by adding immediately prior to the "." at the end thereof the following new
proviso:
"; provided, however, that CTB may make the modifications to the
principal operating agreement for the Tampa Bay Water Project contained
in the Tampa Bay O&M Contract, and assume such contract, in each case
with the approval of the Bankruptcy Court."
G. Subsection 7.14B of the Credit Agreement is hereby amended
by adding at the end thereof the following sentence:
"To the extent one or more orders of the Bankruptcy Court are issued to
approve Virginia DEQ Liens, Haripur DSR Liens and Insurance Premium
Financing Arrangements otherwise permitted under this Agreement, such
orders and the applications for such orders shall not be deemed to
violate this subsection 7.14B, and such orders and the modifications to
the Final Borrowing Order which result therefrom shall be deemed for
all purposes of this Agreement to have the approval of Agents and
Requisite Lenders."
1.4 Miscellaneous Provisions.
Subsection 10.19C of the Credit Agreement is hereby amended by
adding immediately prior to the "." at the end thereof the phrase ", except as
provided by Court order and consented to by Agents".
1.5 Provisions Relating to Events of Default.
Subsection 8.6(a) of the Credit Agreement is hereby amended by
adding immediately prior to the ";" at the end of clause (vii) thereof the
phrase "(except that one or more orders or rulings may be entered by the
Bankruptcy Court to approve Virginia DEQ Liens, Haripur DSR Liens and Insurance
Premium Financing Arrangements, to the extent such Virginia DEQ Liens, Haripur
DSR Liens and Insurance Premium Financing Arrangements and any other aspects of
such orders or rulings do not otherwise breach any other provision of this
Agreement)".
1.6 Schedules to the Credit Agreement.
Schedule 3.1A(i) to the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor a new Schedule 3.1A(i), in
the form attached hereto as Annex B.
1.7 Limited Waivers.
A. Subject to Section 1.6B, Lenders hereby waive (i) any
Events of Default arising from any breach of subsection 7.6A(i) of the Credit
Agreement to the extent but only to the extent that such breach arose solely
from Borrowers making cash expenditures of a type which would be classified
under the line item labeled "IPP West Disbursements - Non-Filing Entities" under
the heading "Core Energy Operations" (such expenditures, the "Cumulative IPP
West Expenditures") exceeding the amount permitted under subsection 7.6A(i) of
the Credit Agreement for the period ending August 31, 2002 and/or the period
ending September 30, 2002, and (ii) any Events of Default in existence prior to
the Third Amendment Effective Date arising from (a) any breach of subsections
6.1(iii), 6.1(iv), 6.1(xx) or 6.1(xxi) of the Credit Agreement, (b) any breach
of subsection 6.1(v) of the Credit Agreement to the extent and only to the
extent that such breach arose solely from Company's failure to deliver
Compliance Certificates demonstrating in reasonable detail compliance during and
at the end of each of the applicable accounting periods with the restrictions
contained in subsection 7.6B of the Credit Agreement, and (c) any breach of
subsection 6.1(ii) of the Credit Agreement, to the extent and only to the extent
that such breach arose solely from Company's failure to deliver notice of the
Events of Default described in this Section 1.6A.
B. The waivers contained in Section 1.6A shall cease to be
effective if (i) Borrowers fail to deliver all of the financial statements,
schedules and other information required to be delivered under subsections
6.1(iii), 6.1(iv), 6.1(xx) and 6.1(xxi) of the Credit Agreement prior to (a)
October 15, 2002 in the case of the financial statements and other information
required to be delivered under subsection 6.1(iii) for the Fiscal Quarter ending
June 30, 2002 (it being understood that, for purposes of the waiver contained in
Section 1.6A, the information required to be delivered for the Fiscal Quarter
ending June 30, 2002 shall not include (w) management's discussion and analysis
of, or any footnotes to, the financial statements for such Fiscal Quarter, (x)
the adjustments required under SOP 90-7, (y) any statements from an officer of
Company certifying the information contained in such financial statements, and
(z) the adjustments for evaluating intangibles and goodwill under FAS 142, so
long as prior to November 15, 2002 Company shall have delivered (1) such
management discussion and analysis and such footnotes, (2) revised financial
statements for such Fiscal Quarter to the extent required to reflect adjustments
required under SOP 90-7 and adjustments for evaluating intangibles and goodwill
under FAS 142, and (3) a written statement of the chief accounting officer or
chief financial officer of Company certifying the information contained in such
financial statements and describing in reasonable detail all of the revisions to
such financial statements that resulted from including the foregoing
adjustments), and (b) November 15, 2002 in all other cases, (ii) as of November
30, 2002, Borrowers shall have failed to demonstrate to Administrative Agent in
reasonable detail that they were in full compliance with subsection 7.6B of the
Credit Agreement for all periods ending on or prior to September 30, 2002, or
(iii) Cumulative IPP West Expenditures through August 31, 2002 or September 30,
2002 exceed in either case the sum of the correlative amounts for the line item
labeled "IPP West Disbursements - Non-Filing Entities" under the heading "Core
Energy Operations" set forth in the Monthly Budget for such month by more than
$250,000.
C. Without limiting the generality of the provisions of
subsection 10.6 of the Credit Agreement, the limited waivers set forth above
shall be limited precisely as written, and nothing herein shall be deemed to (a)
constitute a waiver of compliance by Company with respect to (i) subsection
6.1(ii), 6.1(iii), 6.1(iv), 6.1(v), 6.1(xx), 6.1(xxi), 7.6A(i) or 7.6B of the
Credit Agreement in any other instance, or (ii) any other term, provision or
condition of the Credit Agreement, or (b) prejudice any right or remedy that any
Agent or any Lender may now have or may have in the future under or in
connection with the Credit Agreement. Except as specifically waived by this
limited waiver, the Credit Agreement shall remain in full force and effect and
is hereby ratified and confirmed as hereby amended.
SECTION 2. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Amendment
and to amend the Credit Agreement in the manner provided herein, Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:
2.1 Corporate Power and Authority. Subject to compliance with
the Final Borrowing Order and any applicable provisions of the Bankruptcy Code,
each Loan Party has all requisite corporate power and authority to enter into
this Amendment and to carry out the transactions contemplated 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 Loan Party and the performance of the Amended Agreement has been
duly authorized by all necessary corporate action on the part of each Loan
Party.
2.3 No Conflict. The execution and delivery by each Loan Party
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
Loan Party of this Amendment and the performance by each Loan Party 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 Loan Party, and each of this Amendment and the Amended
Agreement is the legally valid and binding obligations of each Loan Party
enforceable against each Loan Party 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.
2.6 Incorporation of Representations and Warranties From
Credit Agreement. The representations and warranties contained in Section 5 of
the Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
2.7 Notice to Committee. Notice of this Amendment has been
given to and received by counsel to the official committee of unsecured
creditors in the Chapter 11 Cases and the informal committee of holders of
Company's 9.25% Debentures.
2.8 Absence of Default. As of the date hereof after giving
effect hereto, there exists no Event of Default or Potential Event of Default
under the Credit Agreement.
SECTION 3. ACKNOWLEDGEMENT AND CONSENT
Each Borrower and Subsidiary Guarantor hereby (i) acknowledges
that such Loan Party has read this Amendment and consents to the terms hereof
and further hereby confirms and agrees that, notwithstanding the effectiveness
of this Amendment, the obligations of such Loan Party under each of the Loan
Documents to which such Loan Party is a party shall not be impaired and each of
the Loan Documents to which such Loan Party is a party are, and shall continue
to be, in full force and effect and are hereby confirmed and ratified in all
respects, (ii) ratifies and confirms the effectiveness of the First Amendment
and the Second Amendment in all respects, and (iii) confirms that the provisions
of the First Amendment and the Second Amendment are binding on each of the
Borrowers.
SECTION 4. MISCELLANEOUS
4.1 Reference to and Effect on the Credit Agreement and the
Other Loan Documents.
A. On and after the Third Amendment Effective Date, 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.
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. Except as specifically provided in Section 1.6 of this
Amendment, 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.
4.2 Fees and Expenses. Each Borrower acknowledges that all
costs, fees and expenses as described in subsection 10.2 of the Credit Agreement
incurred by Administrative Agent, Documentation Agent or the Lenders and their
respective counsel (including, without limitation, O'Melveny & Xxxxx 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.
4.3 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.
4.4 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.
4.5 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. This Amendment shall become
effective upon the first date on which all of the following conditions precedent
shall have been satisfied (the date of satisfaction of such conditions being
referred to herein as the "Third Amendment Effective Date"): (i) Borrower, each
Subsidiary Guarantor and Lenders constituting Requisite Lenders shall have each
executed a counterpart hereof; (ii) Company, Administrative Agent and
Documentation Agent shall have received written or telephonic notification of
such execution and authorization of delivery of such counterparts; (iii) Company
shall have paid in full all outstanding statements for fees and expenses of
O'Melveny & Xxxxx LLP and Ernst & Young Corporate Finance LLC, to the extent
submitted to Company prior to 12:00 Noon (New York City time) on September 27,
2002; (iv) Company shall have paid to Administrative Agent, for distribution to
each Lender that has executed and delivered a counterpart to this Third
Amendment prior to 12:00 Noon (New York City time) on October 4, 2002, an
amendment fee equal to 0.125% of the sum of such Lender's Tranche A Loan
Exposure and Tranche B Loan Exposure, in each case calculated as of the Third
Amendment Effective Date, and (v) Agents shall have received substantially final
drafts of the Tampa Bay Hydranautics Subcontract and the Tampa Bay O&M
Agreement, which shall not contain any provision or contemplate any transaction
prohibited by the Amended Agreement and shall otherwise be in form and substance
reasonably satisfactory to Agents.
[Remainder of this page intentionally left blank]
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 ENERGY CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Authorized Officer
Each of the entities named on Schedule A
annexed hereto, as Borrowers
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Authorized Officer
Each of the entities named on Schedule B annexed
hereto, as Borrowers
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx
Authorized Officer
SUBSIDIARY GUARANTORS:
Each of the entities named on Schedule C annexed
hereto, as Subsidiary Guarantors
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Authorized Officer
Each of the entities named on Schedule D annexed
hereto, as Subsidiary Guarantors
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx
Authorized Officer
AGENTS AND LENDERS:
BANK OF AMERICA, N.A.,
as Administrative Agent and Co-Arranger
and as a Lender
By: /s/ XXXXXXX X. XXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxx
Managing Director
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent and Co-Arranger and
as a Lender
By: /s/ XXXXX X. XXXXX
----------------------------------------
Xxxxx X. Xxxxx
Director
By: /s/ XXXX X. XXXXX
----------------------------------------
Xxxx X. Xxxxx
Managing Director
Head of Workout
BAYERISCHE HYPO-UND VEREINSBANK AG,
as a Lender
By: /s/ XXXX X. XXXXXXX
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Director
By: /s/ XXXXXXXXX XXXXXXXX
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: Director
BNP PARIBAS,
as a Lender
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXXXXX X. XXXXX, XX.
----------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Managing Director
COMMERZBANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES, as a Lender
By: /s/ XXXXXX XXXXXXX
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Vice President
By: /s/ XXXXX XXXXX
----------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By: /s/ XXXXX X. XXXXXXX
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
MIZUHO CORPORATE BANK, LTD., NEW YORK BRANCH
as a Lender
By: /s/ XXXXXX XXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
FLEET NATIONAL BANK,
as a Lender
By: /s/ XXXXXXX X. X'XXXXX
---------------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Workout Officer
HSBC BANK USA,
as a Lender
By: /s/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: HSBC Bank USA Vice President
IIB BANK LTD, IFSC BRANCH
as a Lender
By: /s/ XXXXX XXXXXX
---------------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Signatory
By: /s/ XXXXX XXXXX
---------------------------------------
Name: Xxxxx Xxxxx
Title: Authorized Signatory
SANPAOLO IMI S.p.A.,
as a Lender
By: /s/ XXXXX XXXXXXX
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: G.M.
By: /s/ XXXXXX XXXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: SUP
BANC OF AMERICA SECURITIES LLC, as Agent for
BANK OF AMERICA, N.A.,
as a Lender
By: /s/ XXXXX XXXXXX
---------------------------------------
Name: Xxxxx Xxxxxx
Title:
THE BANK OF NEW YORK,
as a Lender
By: /s/ XXXXX X. XXXX
---------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ XXXXXX X. XXXXXXXXXXX, XX.
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx, Xx.
Title: Director
THE HUNTINGTON NATIONAL BANK,
as a Lender
By: /s/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
THE TORONTO-DOMINION BANK,
as a Lender
By: /s/ XXXX X. XXXXX
---------------------------------------
Name: Xxxx X. Xxxxx
Title: MGR. CR. ADMIN.
UBS AG, STAMFORD BRANCH
as a Lender
By: /s/ XXXXX XXXXX
---------------------------------------
Name: Xxxxx Xxxxx
Title: Director
Recovery Management
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Director
Recovery Management
WESTLB AG, NEW YORK BRANCH
(formerly known as Westdeutsche Landesbank
Girozentrale, New York Branch) as a Lender
By: /s/ XXXX X. XXXXXXXX
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
By: /s/ XXXXXX X. XXXXXXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Director
Schedule A
----------
Other Borrowers
1. AMOR 14 Corp.
2. Covanta Acquisition, Inc.
3. Covanta Alexandria/Arlington, Inc.
4. Covanta Babylon, Inc.
5. Covanta Bessemer, Inc.
6. Covanta Bristol, Inc.
7. Covanta Xxxxxxxxxx Environmental Support, Inc.
8. Covanta Energy Americas, Inc.
9. Covanta Energy Construction, Inc.
10. Covanta Energy Resource Corp.
11. Covanta Energy Sao Xxxxxxxx, Inc.
12. Covanta Energy Services, Inc.
13. Covanta Energy West, Inc.
14. Covanta Engineering Services, Inc.
15. Covanta Fairfax, Inc.
16. Covanta Financial Services, Inc.
17. Covanta Geothermal Operations Holdings, Inc.
18. Covanta Geothermal Operations, Inc.
19. Covanta Heber Field Energy, Inc.
20. Covanta Hennepin Energy Resource Co., L.P.
21. Covanta Hillsborough, Inc.
22. Covanta Honolulu Resource Recovery Venture
23. Covanta Huntington Limited Partnership
24. Covanta Huntington Resource Recovery One Corp.
25. Covanta Huntington Resource Recovery Seven Corp.
26. Covanta Huntington, Inc.
27. Covanta Huntsville, Inc.
28. Covanta Hydro Energy, Inc.
29. Covanta Hydro Operations West, Inc.
30. Covanta Hydro Operations, Inc.
31. Covanta Imperial Power Services, Inc.
32. Covanta Indianapolis, Inc.
33. Covanta Kent, Inc.
34. Covanta Key Largo, Inc.
35. Covanta Lake, Inc.
36. Covanta Lancaster, Inc.
37. Covanta Xxx, Inc.
38. Covanta Long Island, Inc.
39. Covanta Xxxxxx Land Corp.
40. Covanta Xxxxxx, Inc.
41. Covanta Mid-Conn., Inc.
42. Covanta Xxxxxxxxxx, Inc.
43. Covanta New Martinsville Hydro-Operations Corp.
44. Covanta Northwest Puerto Rico, Inc.
45. Covanta Oahu Waste Energy Recovery, Inc.
46. Covanta Oil & Gas, Inc.
47. Covanta Onondaga Five Corp.
48. Covanta Onondaga Four Corp.
49. Covanta Onondaga Limited Partnership
50. Covanta Onondaga Operations, Inc.
51. Covanta Onondaga Three Corp.
52. Covanta Onondaga Two Corp.
53. Covanta Onondaga, Inc.
54. Xxxxx Services Corporation
55. Covanta Operations of Union LLC
56. Covanta OPW Associates, Inc.
57. Covanta OPWH, Inc.
58. Covanta Pasco, Inc.
59. Covanta Plant Services of New Jersey, Inc.
60. Covanta Power Development of Bolivia, Inc.
61. Covanta Power Development, Inc.
62. Covanta Power Equity Corp.
63. Covanta Projects of Hawaii, Inc.
64. Covanta Projects of Wallingford, LP
65. Covanta RRS Holdings, Inc.
66. Covanta Secure Services USA, Inc.
67. Covanta Secure Services, Inc.
68. Covanta SIGC Energy II, Inc.
69. Covanta SIGC Energy, Inc.
70. Covanta SIGC Geothermal Operations, Inc.
71. Covanta Stanislaus, Inc.
72. Covanta Systems, Inc.
73. Covanta Tampa Bay, Inc.
74. Covanta Tulsa, Inc.
75. Covanta Union, Inc.
76. Covanta Wallingford Associates, Inc.
77. Covanta Xxxxxx Energy Resources Co., LP
78. Covanta Waste Solutions, Inc.
79. Covanta Waste to Energy of Italy, Inc.
80. Covanta Waste to Energy, Inc.
81. Covanta Water Holdings, Inc.
82. Covanta Water Systems, Inc.
83. Covanta Water Treatment Services, Inc.
84. DSS Environmental, Inc.
85. ERC Energy II, Inc.
86. ERC Energy, Inc.
87. Heber Field Company
88. Heber Field Energy II, Inc.
89. Heber Geothermal Company
90. Heber Loan Partners
91. J.R. Jacks Construction Corp.
92. Xxxxx Constructors, Inc.
93. Xxxxx Environmental & Energy Services Co., Inc.
94. OPI Quezon, Inc.
95. Second Imperial Geothermal Co., L.P.
96. Three Mountain Operations, Inc.
97. Three Mountain Power LLC
Schedule B
----------
Other Borrowers
1. Xxxxx Facility Management Corporation of Anaheim
2. LaGuardia Fuel Facilities Corp.
3. Lenzar Electro-Optics, Inc.
4. Newark Automotive Fuel Facilities Corporation, Inc.
5. Xxxxx Allied Abatement & Decontamination Service, Inc.
6. Xxxxx Allied Maintenance Corp.
7. Xxxxx Allied Payroll Services, Inc.
8. Xxxxx Attractions, Inc.
9. Xxxxx Aviation Distributing Corp.
10. Xxxxx Aviation Fueling Company of Virginia, Inc.
11. Xxxxx Aviation Service Company of Colorado, Inc.
12. Xxxxx Aviation Service Company of New Jersey, Inc.
13. Xxxxx Aviation Service Company of New York, Inc.
14. Xxxxx Aviation Service Company of Pennsylvania, Inc.
15. Xxxxx Aviation Service International Corporation
16. Xxxxx Aviation, Inc.
17. Xxxxx Cargo Spain, Inc.
18. Xxxxx Central and South America, Inc.
19. Xxxxx Facility Holdings, Inc.
20. Xxxxx Film and Theatre, Inc.
21. Xxxxx Firehole Entertainment Corp.
22. Xxxxx International Europe, Inc.
23. Xxxxx New York Services, Inc.
24. Xxxxx Support Services, Inc.
25. PA Aviation Fuel Holdings, Inc.
26. Philadelphia Fuel Facilities Corporation
Schedule C
----------
Subsidiary Guarantors
1. Covanta Energy Group, Inc.
2. Covanta Energy International, Inc.
3. Covanta Equity of Stanislaus, Inc.
4. Covanta Haverhill Properties, Inc.
5. Covanta Haverhill, Inc.
6. Covanta Omega Lease, Inc.
7. Covanta Power International Holdings, Inc.
8. Covanta Projects, Inc.
9. Haverhill Power, Inc.
10. LMI, Inc.
11. Michigan Waste Energy, Inc.
12. OFS Equity of Alexandria/Arlington, Inc.
13. OFS Equity of Babylon, Inc.
14. OFS Equity of Delaware, Inc.
15. OFS Equity of Huntington, Inc.
16. OFS Equity of Indianapolis, Inc.
17. OFS Equity of Stanislaus, Inc.
18. Xxxxx Management Services, Inc.
19. Covanta Equity of Alexandria/Arlington, Inc.
Schedule D
----------
Subsidiary Guarantors
1. Xxxxx Technology Services Corporation
2. Xxxxx Transition Corporation
ANNEX A
Designated Non-Material Asset Sales
--------------------------------------------------------------------------------
ASSET DESCRIPTION
--------------------------------------------------------------------------------
Empressa Xxxxx Hermosa S.A. Sale of 12% equity interest in this entity
in Bolivia.
--------------------------------------------------------------------------------
Island Power Corporation Sale of 40% equity interest in
this entity, which owns a power plant in
Occidental Mindoro that sells electricity to the
island's National Power Corporation.
--------------------------------------------------------------------------------
Sao Xxxxxxxx Investors, Ltda. Transfer of 90% equity interest in this entity,
a partner in a consortium to build a power
project in Brazil. Project is in development
stages and permits are being obtained.
--------------------------------------------------------------------------------
El Gorguel Energia S.L. Sale of 100% of all interests in this entity in
Spain involved in beginning stages of
development of energy project.
--------------------------------------------------------------------------------
Covanta Energy Do Brasil Ltda Transfer of 100% of all partnership interests
(and assumption of all liabilities by purchaser)
in this entity that operated a development
office in Brazil.
--------------------------------------------------------------------------------
Graecor
Beteilingungsverwultungs GmbH Sale of 100% of all interests in this shell
entity in Austria.
--------------------------------------------------------------------------------
Xxxxx and LCI Ltd (Isle of Man) Sale of 100% of all interests in the two Isle of
Man shell entities and the two South African
Xxxxx and LCI Management Ltd entities in related transactions to a single
(Isle of Man) purchaser.
Culemborg Metropole Casino
(Proprietary) Ltd. (South
Africa)
Xxxxx Entertainment of Capetown
Ltd. (South Africa)
--------------------------------------------------------------------------------
ANNEX B
Schedule 3.1A(i)
----------------
Tranche A Letter of Credit Obligations
--------------------------------------
See Attached.
