COVANTA HOLDING CORPORATION UNDERWRITING AGREEMENT
Exhibit 1.1
COVANTA HOLDING CORPORATION
1.00% Senior Convertible Debentures due 2027
January 25, 2007
▇▇▇▇▇▇ Brothers Inc.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
As Representatives of the several
Underwriters named in Schedule 1 attached hereto,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
As Representatives of the several
Underwriters named in Schedule 1 attached hereto,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Covanta Holding Corporation, a Delaware corporation (the “Company”), proposes to issue and
sell $325,000,000 aggregate principal amount of 1.00% Senior Convertible Debentures due 2027 (the
“Firm Debentures”) to the underwriters (the “Underwriters”) named in Schedule 1 attached to
this agreement (this “Agreement”). In addition, the Company proposes to issue and sell to the
Underwriters up to an additional $48,750,000 aggregate principal amount of 1.00% Senior Convertible
Debentures due 2027 on the terms set forth in Section 2 (the “Option Debentures”). The Firm
Debentures and the Option Debentures, if purchased, are hereinafter collectively called the
“Debentures.” The Debentures will be issued pursuant to the Indenture, dated as of January 18,
2007, as supplemented by the First Supplemental Indenture, dated as of January 31, 2007 (as amended
and supplemented, the “Indenture”), between the Company and ▇▇▇▇▇ Fargo Bank, National Association,
as Trustee. The Debentures will be convertible into shares of common stock of the Company, par
value $0.10 per share (the “Common Stock”) in accordance with the terms of the Debentures and the
Indenture. The Common Stock into which the Debentures are convertible is hereinafter referred to as
the “Underlying Securities.” This is to confirm the agreement concerning the purchase of the
Debentures from the Company by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The Company represents,
warrants and agrees that:
(a) A registration statement on Form S-3 relating to the Debentures (i) has been
prepared by the Company in conformity with the requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder; (ii)
has been filed with the Commission under the Securities Act; and (iii) is effective under
the Securities Act. Copies of such registration statement and any amendment thereto have
been delivered by the Company to you as the representatives (the “Representatives”) of the
Underwriters. As used in this Agreement:
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(i)
“Applicable Time” means 8:00 a.m. (New York
City time) on January 26, 2007;
(ii) “Effective Date” means any date as of which any part of such registration
statement relating to the Debentures became, or is deemed to have become effective
under the Securities Act in accordance with the Rules and Regulations;
(iii) “Final Term Sheet” means the final term sheet in the form attached as
Schedule 2 hereto and prepared and filed pursuant to Section 5(a)(i) hereof;
(iv) “Issuer Free Writing Prospectus” means each “free writing prospectus” (as
defined in Rule 405 of the Rules and Regulations), including the Final Term Sheet,
prepared by or on behalf of the Company or used or referred to by the Company in
connection with the offering of the Debentures;
(v) “Preliminary Prospectus” means any preliminary prospectus relating to the
Debentures included in such registration statement or filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Debentures;
(vi) “Pricing Disclosure Package” means, as of the Applicable Time, the most
recent Preliminary Prospectus, together with each Issuer Free Writing Prospectus
filed or used by the Company on or before the Applicable Time, including the pricing
terms of the offering of the Debentures and the terms and conditions of the
Debentures specified in the Final Term Sheet, other than a road show that is an
Issuer Free Writing Prospectus but is not required to be filed under Rule 433 of the
Rules and Regulations;
(vii) “Prospectus” means the final prospectus relating to the Debentures,
including any prospectus supplement thereto relating to the Debentures, as filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations; and
(viii) “Registration Statement” means, collectively, the various parts of such
registration statement, each as amended as of the Effective Date for such part,
including any Preliminary Prospectus or the Prospectus and all exhibits to such
registration statement.
Any reference to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include any documents incorporated by reference therein pursuant to Form S-3 under
the Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the
case may be. Any reference to the “most recent Preliminary Prospectus” shall be deemed to
refer to the latest Preliminary Prospectus included in the Registration Statement or filed
pursuant to Rule 424(b) prior to or on the date hereof (including, for purposes hereof, any
documents incorporated by reference therein prior to
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or on the date hereof). Any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any document filed
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date
of such Preliminary Prospectus or the Prospectus, as the case may be, and incorporated by
reference in such Preliminary Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be deemed to include any
annual report of the Company on Form 10-K filed with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act after the Effective Date that is incorporated by
reference in the Registration Statement. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or suspending the
effectiveness of the Registration Statement, and no proceeding or examination for such
purpose has been instituted or threatened by the Commission. The Commission has not
notified the Company of any objection to the use of the form of the Registration Statement.
(b) The Company has been since the time of initial filing of the Registration Statement
and continues to be a “well-known seasoned issuer” (as defined in Rule 405) eligible to use
Form S-3 for the offering of the Debentures, including not having been an “ineligible
issuer” (as defined in Rule 405) at any time since the initial filing of the Registration
Statement. The Registration Statement is an “automatic shelf registration statement” (as
defined in Rule 405) and was filed not earlier than the date that is three years
prior to the applicable Delivery Date (as defined in Section 4).
(c) The Registration Statement conformed and will conform in all material respects on
the Effective Date and on the applicable Delivery Date, and any amendment to the
Registration Statement filed after the date hereof will conform in all material respects
when filed, to the requirements of the Securities Act and the Rules and Regulations. The
most recent Preliminary Prospectus conformed, and the Prospectus will conform, in all
material respects when filed with the Commission pursuant to Rule 424(b) and on the
applicable Delivery Date to the requirements of the Securities Act and the Rules and
Regulations. The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus conformed, and any further documents so incorporated will conform, when filed
with the Commission, in all material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the Commission thereunder.
(d) The Registration Statement did not, as of the Effective Date, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that no representation
or warranty is made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter specifically for
inclusion therein, which information is specified in Section 8(e).
(e) The Prospectus will not, as of its date and on the applicable Delivery Date,
contain an untrue statement of a material fact or omit to state a material fact required to
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be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Prospectus in reliance
upon and in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 8(e).
(f) The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, and any further documents filed and incorporated by reference therein
will not, when filed with the Commission, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the foregoing representation and warranty is given on the basis
that any statement contained in a document incorporated by reference therein shall be deemed
not to be contained therein if the statement has been modified or superseded by any
statement in a subsequently filed document incorporated by reference therein or in any
amendment or supplement thereto.
(g) The Pricing Disclosure Package did not, as of the Applicable Time, contain an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Pricing Disclosure Package in reliance upon
and in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 8(e).
(h) Each Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433 and the Final Term Sheet), when considered
together with the Pricing Disclosure Package as of the Applicable Time, did not contain an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(i) Each Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations on the date
of first use, and the Company has complied with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Debentures that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Representatives. The Company has
retained in accordance with the Rules and Regulations all Issuer Free Writing Prospectuses
that were not required to be filed pursuant to the Rules and Regulations.
(j) Each of the Company and its subsidiaries (as defined in Section 17) has been duly
organized, is validly existing and in good standing as a corporation or other
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business entity under the laws of its jurisdiction of organization and is qualified to
do business and in good standing as a foreign corporation or other business entity in each
jurisdiction in which its ownership or lease of property or the conduct of its businesses
requires such qualification, except where the failure to be so qualified or in good standing
would not, in the aggregate, reasonably be expected to have a material adverse effect on the
financial condition, results of operations, stockholders’ equity, properties or business of
the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”); each of the
Company and its subsidiaries has all power and authority necessary to own or hold its
properties and to conduct the businesses in which it is engaged. Schedule 3-A
hereto sets forth a true and correct list of all subsidiaries owned or controlled by the
Company that are required to be disclosed under Item 601(b)(21) of the Rules and
Regulations. None of the subsidiaries of the Company (other than the subsidiaries listed on
Schedule 3-B hereto (collectively, the “Significant Subsidiaries”)) is a
“significant subsidiary” (as defined in Rule 405).
(k) Assuming the concurrent closing of the Company’s issuance and sale of 5,320,000
shares of its Common Stock and the closing of the New Credit Facilities (as such term is
defined in the most recent Preliminary Prospectus), on the Initial Delivery Date (as defined
in Section 4), the Company will have a pro forma capitalization and pro forma as adjusted
capitalization as set forth in each of the most recent Preliminary Prospectus and the
Prospectus under the “Pro forma” and “Pro forma as adjusted” columns of the capitalization
table in the section entitled “Capitalization”, and all of the issued and outstanding shares
of capital stock of the Company have been duly authorized and validly issued, are fully paid
and non-assessable, conform to the description thereof contained or incorporated by
reference in the most recent Preliminary Prospectus and were issued in compliance with
federal and, to the best knowledge of the Company, state securities laws and not in
violation of any preemptive right, resale right, right of first refusal or similar right.
All of the Company’s options, warrants and other rights to purchase or exchange any
securities for shares of the Company’s capital stock have been duly authorized and validly
issued, conform to the description thereof contained in the most recent Preliminary
Prospectus and were issued in compliance with federal and, to the best knowledge of the
Company, state securities laws. All of the issued shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims, except for such liens, encumbrances, equities or
claims created pursuant to the New Credit Facilities or as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under the Debentures and the Indenture; the Debentures have been
duly authorized and, when issued and delivered by the Company and paid for by the
Underwriters pursuant to this Agreement and duly authenticated by the Trustee will have been
duly executed, authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the Indenture, and
will be enforceable against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium
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and similar laws affecting creditors’ rights generally and by general equity principles
(whether considered in a proceeding in equity or at law); the Indenture has been duly
authorized by the Company and, assuming the due authorization, execution and delivery of the
Indenture by the Trustee, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights generally and by
general equity principles (whether considered in a proceeding in equity or at law); the
Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the
“Trust Indenture Act”) and complies as to form with the requirements of the Trust Indenture
Act; and the Debentures and the Indenture conform in all material respects to the
descriptions thereof in the most recent Preliminary Prospectus and will be in substantially
the form filed as an exhibit to the Registration Statement.
(m) The Underlying Securities have been duly authorized by the Company and reserved for
issuance by the Company upon such conversion by all necessary corporate action and such
Underlying Securities, when issued upon such conversion, will be duly issued, fully paid and
non-assessable, and the issuance of such Underlying Securities will not be subject to
preemptive or similar rights of any shareholder of the Company arising by law, under the
charter or by-laws of the Company or under any agreement to which the Company or any of its
subsidiaries is a party. No holder of the Underlying Securities will be subject to personal
liability by reason of being such a holder.
(n) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(o) The execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby and the application of the proceeds
from the sale of the Debentures as described under “Use of Proceeds” in the most recent
Preliminary Prospectus will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, impose any lien, charge or encumbrance upon any property or
assets of the Company and its subsidiaries, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, license or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except to the extent disclosed under “Use of Proceeds” in the most
recent Preliminary Prospectus in the event the Company is unsuccessful in entering into the
New Credit Facilities; (ii) result in any violation of the provisions of the charter or
by-laws (or similar organizational documents) of the Company or any of its subsidiaries; or
(iii) result in any violation of any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets.
(p) No consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body having jurisdiction over the Company or
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any of its subsidiaries or any of their properties or assets is required for the
execution, delivery and performance of this Agreement by the Company, the consummation of
the transactions contemplated hereby, the application of the proceeds from the sale of the
Debentures as described under “Use of Proceeds” in the most recent Preliminary Prospectus,
except for the registration of the Debentures under the Securities Act, the qualification of
the Indenture under the Trustee Indenture Act, the listing of the Underlying Securities with
the New York Stock Exchange and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state or foreign
securities laws in connection with the purchase and sale of the Debentures by the
Underwriters.
(q) Except as described in the most recent Preliminary Prospectus, there are no
contracts, agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived in writing or otherwise
satisfied) to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities registered pursuant to the
Registration Statement.
(r) The Company has not sold or issued any securities that would be integrated with the
offering of the Debentures contemplated by this Agreement pursuant to the Securities Act,
the Rules and Regulations or the interpretations thereof by the Commission.
(s) Except as described in the most recent Preliminary Prospectus, (i) neither the
Company nor any of its subsidiaries has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the most recent Preliminary
Prospectus, any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, and (ii) since such date, there has not been any
change in the capital stock of the Company or the long-term debt of the Company or any of
its subsidiaries or any adverse change, or any development involving a prospective adverse
change, in or affecting the financial condition, results of operations, stockholders’
equity, properties, management or business of the Company and its subsidiaries taken as a
whole, in each case except as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(t) Since the date as of which information is given in the most recent Preliminary
Prospectus and except as described in the most recent Preliminary Prospectus, the Company
has not (i) incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of business, (ii)
entered into any material transaction not in the ordinary course of business or (iii)
declared or paid any dividend on its capital stock.
(u) The statements set forth or incorporated by reference in the most recent
Preliminary Prospectus under the caption “Description of the Debentures,” insofar as they
purport to constitute a summary of the material terms of the Debentures, under the
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caption “Description of Capital Stock,” insofar as they purport to constitute a summary
of the material terms of the Underlying Securities, under the caption “Certain United States
Federal Income Tax Considerations” insofar as they purport to describe the provisions of the
documents and matters referred to therein, and under the caption “Underwriting,” insofar as
they purport to describe the provisions of the documents referred to therein, fairly
summarize in all material respects the matters referred to therein.
(v) The historical financial statements of the Company and its subsidiaries (including
the related notes and supporting schedules) included or incorporated by reference in the
most recent Preliminary Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Securities Act and present fairly in all material
respects the financial condition, results of operations and cash flows of the entities
purported to be shown thereby at the dates and for the periods indicated and have been
prepared in conformity with accounting principles generally accepted in the United States
applied on a consistent basis throughout the periods involved.
(w) The historical financial statements of Quezon Power, Inc. and its subsidiary
(including the related notes and supporting schedules) included or incorporated by reference
in the most recent Preliminary Prospectus comply as to form in all material respects with
the requirements of Regulation S-X under the Securities Act and present fairly in all
material respects the financial condition, results of operations and cash flows of the
entities purported to be shown thereby at the dates and for the periods indicated and have
been prepared in conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved.
(x) The historical financial statements of Covanta ARC Holdings, Inc. (f/k/a American
Ref-Fuel Holdings Corp.) and its subsidiaries (including the related notes and supporting
schedules) and the historical financial statements of Ref-Fuel Holdings LLC and its
subsidiaries (including the related notes and supporting schedules) included or incorporated
by reference in the most recent Preliminary Prospectus comply as to form in all material
respects with the requirements of Regulation S-X under the Securities Act and present fairly
in all material respects the financial condition, results of operations and cash flows of
the entities purported to be shown thereby at the dates and for the periods indicated and
have been prepared in conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved.
(y) The historical financial statements of Covanta Energy Corporation and its
subsidiaries (including the related notes and supporting schedules) included or incorporated
by reference in the most recent Preliminary Prospectus comply as to form in all material
respects with the requirements of Regulation S-X under the Securities Act and present fairly
in all material respects the financial condition, results of operations and cash flows of
the entities purported to be shown thereby at the dates and for the periods indicated and
have been prepared in conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved.
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(z) The pro forma financial statements included or incorporated by reference in the
most recent Preliminary Prospectus include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the transactions and events
described therein, the related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma adjustments reflect the proper application of those
adjustments to the historical financial statement amounts in the pro forma financial
statements included or incorporated by reference in the most recent Preliminary Prospectus.
The pro forma financial statements included or incorporated by reference in the most recent
Preliminary Prospectus comply as to form in all material respects with the applicable
requirements of Regulation S-X under the Act.
(aa) Ernst & Young LLP, who have certified certain financial statements of the Company
and its consolidated subsidiaries, whose report appears in the most recent Preliminary
Prospectus or is incorporated by reference therein and who have delivered the initial letter
referred to in Section 7(h) hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(bb) Sycip Gorres Velayo & Co., a member practice of Ernst & Young Global, who have
certified certain financial statements of Quezon Power, Inc. and its subsidiary, whose
report appears in the most recent Preliminary Prospectus or is incorporated by reference
therein and who have delivered the letter referred to in Section 7(j) hereof, are
independent public accountants with respect to Quezon Power, Inc. and its subsidiary as
required by the Securities Act and the Rules and Regulations.
(cc) Pricewaterhouse Coopers LLP, whose report appears in the most recent Preliminary
Prospectus or is incorporated by reference therein and who have delivered the letter
referred to in Section 7(k) hereof, were independent public accountants with respect to
Covanta ARC Holdings, Inc. (f/k/a American Ref-Fuel Holdings Corp.) and subsidiaries as
required by the Securities Act and the Rules and Regulations during the periods covered by
the financial statements on which they reported contained or incorporated by reference in
the most recent Preliminary Prospectus.
(dd) Deloitte & Touche LLP, whose report appears in the most recent Preliminary
Prospectus or is incorporated by reference therein and who have delivered the letter
referred to in Section 7(l) hereof, were independent public accountants with respect to
Covanta Energy Corporation and subsidiaries as required by the Securities Act and the Rules
and Regulations during the periods covered by the financial statements on which they
reported contained or incorporated by reference in the most recent Preliminary Prospectus.
(ee) The Company and each of its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by
them, in each case, free and clear of all liens, encumbrances and defects, except such as
are described in the most recent Preliminary Prospectus or such as would not reasonably be
expected to result in a Material Adverse Effect; and all assets held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
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and enforceable leases, with such exceptions as would not reasonably be expected to
result in a Material Adverse Effect.
(ff) The Company and each of its subsidiaries carry, or are covered by, insurance from
insurers of recognized financial responsibility in such amounts and covering such risks as
the Company reasonably believes (i) is commercially adequate for the conduct of their
respective businesses and the value of their respective properties and (ii) is customary for
companies engaged in similar businesses in similar industries. All policies of insurance of
the Company and its subsidiaries are in full force and effect; the Company and its
subsidiaries are in compliance with the terms of such policies in all material respects; and
neither the Company nor any of its subsidiaries has received notice from any insurer or
agent of such insurer that material capital improvements or other material expenditures are
required or necessary to be made in order to continue such insurance.
(gg) The Company is not, and as of the applicable Delivery Date and, after giving
effect to the offer and sale of the Debentures and the application of the proceeds therefrom
as described under “Use of Proceeds” in the most recent Preliminary Prospectus and the
Prospectus, it will not be, an “investment company” within the meaning of such term under
the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the rules
and regulations of the Commission thereunder.
(hh) Except as described in the most recent Preliminary Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any of its subsidiaries is the
subject that would, in the aggregate, reasonably be expected to have a Material Adverse
Effect or would, in the aggregate, reasonably be expected to have a material adverse effect
on the performance of this Agreement or the issuance of the Debentures; and to the Company’s
knowledge, no such proceedings are threatened or contemplated by governmental authorities or
others.
(ii) There are no material legal or governmental proceedings or contracts or other
material documents of a character required to be described in the Registration Statement or
the most recent Preliminary Prospectus or, in the case of documents, to be filed as exhibits
to the Registration Statement, that are not described and filed as required.
(jj) Except as described in the most recent Preliminary Prospectus, no relationship,
direct or indirect, exists between or among the Company, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company, on the other hand, that is
required to be described in the most recent Preliminary Prospectus which is not so
described.
(kk) No labor disturbance by the employees of the Company or its subsidiaries exists
or, to the knowledge of the Company, is imminent that would reasonably be expected to have a
Material Adverse Effect.
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(ll) (i) Each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended (“ERISA”)) for which the Company or any
member of its “Controlled Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been
maintained in compliance with its terms and with the requirements of all applicable
statutes, rules and regulations including ERISA and the Code; (ii) with respect to each Plan
(a) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or
is reasonably expected to occur, (b) no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan
excluding transactions effected pursuant to a statutory or administrative exemption; (c) no
“accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived, has occurred or is reasonably expected to occur, (d)
the fair market value of the assets under each Plan exceeds the present value of all
benefits accrued under such Plan (determined based on those assumptions used to fund such
Plan) and (e) neither the Company or any member of its Controlled Group has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA (other than contributions
to the Plan or premiums to the PBGC in the ordinary course and without default) in respect
of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(c)(3) of
ERISA); and (iii) each Plan that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(mm) The Company and each of its subsidiaries have filed all federal, state, local and
foreign income and franchise tax returns required to be filed through the date hereof,
subject to permitted extensions, and have paid all taxes due thereon, and no tax deficiency
has been determined adversely to the Company or any of its subsidiaries, nor does the
Company have any knowledge of any tax deficiencies that would, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(nn) Neither the Company nor any of its subsidiaries (i) is in violation of its charter
or by-laws (or similar organizational documents), (ii) is in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, license or other agreement or instrument to which
it is a party or by which it is bound or to which any of its properties or assets is subject
or (iii) is in violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over it or its property or assets or has
failed to obtain any license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the conduct of its
business, except in the case of clauses (ii) and (iii), to the extent any such conflict,
breach, violation or default would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(oo) The Company and each of its subsidiaries (i) make and keep accurate books and
records and (ii) maintain a system of internal accounting controls sufficient to
12
provide reasonable assurance that (A) transactions are executed in accordance with
management’s general or specific authorization, (B) transactions are recorded as necessary
to permit preparation of the Company’s financial statements in conformity with accounting
principles generally accepted in the United States and to maintain accountability for its
assets, (C) access to the Company’s assets is permitted only in accordance with management’s
general or specific authorization and (D) the recorded accountability for the Company’s
assets is compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(pp) (i) The Company and each of its subsidiaries have established and maintain
disclosure controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), (ii) such disclosure controls and procedures are designed to ensure that the
information required to be disclosed by the Company and its subsidiaries in the reports they
will file or submit under the Exchange Act is accumulated and communicated to management of
the Company and its subsidiaries, including their respective principal executive officers
and principal financial officers, as appropriate, to allow timely decisions regarding
required disclosure to be made and (iii) such disclosure controls and procedures are
effective in all material respects to perform the functions for which they were established.
(qq) To the best of the Company’s knowledge, there is and has been no failure on the
part of the Company and any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with the applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in connection
therewith.
(rr) The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of governmental or
regulatory authorities (“Permits”) as are necessary under applicable law to own their
properties and conduct their businesses in the manner described in the most recent
Preliminary Prospectus, except for any of the foregoing that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect or except as described in the most
recent Preliminary Prospectus; each of the Company and its subsidiaries has fulfilled and
performed all of its material obligations with respect to the Permits; none of the Company
or its subsidiaries is aware of any proceedings relating to the revocation or material
modification thereof, except for any of the foregoing that would not reasonably be expected
to have a Material Adverse Effect or except as described in the most recent Preliminary
Prospectus.
(ss) The Company and each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses, know-how, software, systems
and technology (including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures) necessary for the conduct of their
respective businesses and have no reason to believe that the conduct of their respective
businesses will conflict with, and have not received any notice of any claim of conflict
with, any such rights of others, except for any failure to own or
13
possess such adequate rights or any such conflict that would not reasonably be expected
to result in a Material Adverse Effect.
(tt) The Company and each of its subsidiaries (i) are, and at all times prior hereto
were, in compliance with all laws, regulations, ordinances, rules, orders, judgments,
decrees, permits or other legal requirements of any governmental authority, including
without limitation any international, national, state, provincial, regional, or local
authority, relating to the protection of human health or safety, the environment, or natural
resources, or to hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”) applicable to such entity, which compliance includes, without
limitation, obtaining, maintaining and complying with all permits and authorizations and
approvals required by Environmental Laws to conduct their respective businesses, and (ii)
have not received notice of any actual or alleged violation of Environmental Laws, or of any
potential liability for or other obligation concerning the presence, disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except in the case of
clause (i) or (ii) where such non-compliance, violation, liability, or other obligation
would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
Except as described in the most recent Preliminary Prospectus, (A) there are no proceedings
that are pending, or known to be contemplated, against the Company or any of its
subsidiaries under Environmental Laws in which a governmental authority is also a party,
other than such proceedings regarding which it is reasonably believed no monetary sanctions
of $100,000 or more will be imposed, (B) the Company and its subsidiaries are not aware of
any issues regarding compliance with Environmental Laws, or liabilities or other obligations
under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants
or contaminants, that would reasonably be expected to have a material effect on the capital
expenditures, earnings or competitive position of the Company and its subsidiaries and (C)
none of the Company and its subsidiaries anticipates material capital expenditures relating
to Environmental Laws.
(uu) The Company is in compliance in all respects with all presently applicable state
and local laws and regulations relating to the safety of its operations, including the
Operational Safety and Health Act of 1970, as amended, and the regulations thereunder,
except where such non-compliance would not reasonably be expected to have a Material Adverse
Effect.
(vv) For each of the insurance Subsidiaries of the Company chartered as an insurance
company under state law (the “Insurance Subsidiaries”), the Company has delivered true,
correct and complete copies of the statutory financial statements (including the annual
reports filed in each state in which one of such Insurance Subsidiaries is admitted or
approved) for each such Insurance Subsidiary for the years 2003 through 2005 and for the
nine months ended September 30, 2006. All such statements shall be referred to as “Insurance
Subsidiary Statements”; the Insurance Subsidiary Statements present fairly in all material
respects, on a consistent basis and in accordance with practices prescribed or permitted by
the appropriate regulatory agencies of each state in which the Insurance Subsidiary
Statements have been filed or may be required to be filed, the financial position at the end
of each such referenced period and
14
results of each such Insurance Subsidiary’s operations for each such referenced period;
the exhibits and schedules included in the Insurance Subsidiary Statements are fairly stated
in all material respects in relation to the subject Insurance Subsidiary and the Insurance
Subsidiary Statements comply in all material respects with applicable regulatory
requirements.
(ww) Each of the Insurance Subsidiaries is duly licensed as an insurance company under
the applicable insurance laws and the rules, regulations and interpretations of the
insurance regulatory authorities thereunder of each jurisdiction in which the conduct of its
existing business as described in the most recent Preliminary Prospectus requires such
licensing, except for such jurisdictions in which the failure to be so licensed would not,
individually or in the aggregate, be reasonably expected to result in a Material Adverse
Effect.
(xx) Each subsidiary of the Company that owns or operates an electric generation
facility located within the United States either: (i) has received an order from the Federal
Energy Regulatory Commission, not subject to any pending challenge, investigation,
complaint, or other proceeding (other than generic proceedings generally applicable in the
industry) (a) authorizing such subsidiary to engage in wholesale sales of electricity and,
to the extent permitted under its market-based rate tariff, other transactions at
market-based rates and (y) granting such waivers and blanket authorizations as are
customarily granted to entities with market-based rate authority, including blanket
authorizations to issue securities and to assume liabilities pursuant to Section 204 of the
Federal Power Act or (ii) with respect to any subsidiary that owns a “Qualifying Facility”
(“QF”) as defined under the Public Utility Regulatory Policies Act and the current rules and
regulations promulgated thereunder (“PURPA”), such facility is a QF under PURPA.
(yy) Neither the Company, nor any of its subsidiaries, is subject to (i) regulation as
a “public utility”, “public service company” or “utility holding company” (or any similar
designation) by any state in the United States, including regulation of rates for utility
service, securities issuances or other transactions, or (ii) regulation by any local, state,
federal or foreign governmental authority requiring any notice, consent or approval for the
issuance of the Debentures in the manner contemplated in this Agreement.
(zz) Other than the Insurance Subsidiaries, no subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary’s capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other subsidiary of the Company,
except as described in the most recent Preliminary Prospectus.
(aaa) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has (i) used any corporate
15
funds for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii) violated or
is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(bbb) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each
case, as would not reasonably be expected to have a Material Adverse Effect.
(ccc) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(ddd) The Company has not distributed and, prior to the later to occur of any Delivery
Date and completion of the distribution of the Debentures, will not distribute any offering
material in connection with the offering and sale of the Debentures other than any
Preliminary Prospectus, the Prospectus, the Final Term Sheet set forth on Schedule B and any
Issuer Free Writing Prospectus to which the Representatives have consented in accordance
with Section 1(i) or 5(a)(vii).
(eee) The Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to cause or result
in the stabilization or manipulation of the price of the shares of Common Stock (including
the Underlying Securities) in a manner which would violate applicable provisions of the
Securities Act or the Exchange Act.
(fff) No forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in the most recent Preliminary Prospectus
or the Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
16
Any certificate signed by any officer of the Company and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Debentures shall be deemed a
representation and warranty by the Company, as to matters covered thereby, but only as of the date
thereof, to each Underwriter.
2. Purchase of the Debentures by the Underwriters. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this Agreement, the Company
agrees to issue and sell to the several Underwriters, and each of the Underwriters, severally and
not jointly, agrees to purchase from the Company the principal amount of the Firm Debentures set
forth opposite that Underwriter’s name in Schedule 1 hereto, plus any additional principal amount
of Debentures which such Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof.
In addition, the Company grants to the Underwriters an option to purchase up to an additional
$48,750,000 aggregate principal amount of Option Debentures. Such option is exercisable in the
event that the Underwriters sell an aggregate principal amount of Debentures that exceeds the
aggregate principal amount of Firm Debentures in the offering and as set forth in Section 4 hereof.
On the basis of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, each Underwriter agrees, severally and not jointly, to purchase the
principal amount of Option Debentures that bears the same proportion to the aggregate principal
amount of Option Debentures to be sold on such Delivery Date as the principal amount of Firm
Debentures set forth in Schedule 1 hereto opposite the name of such Underwriter bears to the
aggregate principal amount of Firm Debentures.
The price of the Firm Debentures purchased by the Underwriters shall be equal to 97.5% of the
principal amount of the Debentures. The price of the Option Debentures purchased by the
Underwriters shall be 97.5% of the principal amount thereof plus unpaid interest that has accrued
with respect to the Firm Debentures from the Initial Delivery Date (as defined in Section 4) to,
but not including, the applicable Delivery Date.
The Company shall not be obligated to deliver any of the Firm Debentures or Option Debentures
to be delivered on the applicable Delivery Date, except upon payment for all such Debentures to be
purchased on such Delivery Date as provided herein.
3. Offering of Debentures by the Underwriters. Upon authorization by the
Representatives of the release of the Firm Debentures, the several Underwriters propose to offer
the Firm Debentures for sale upon the terms and conditions to be set forth in the Prospectus.
4. Delivery of and Payment for the Debentures. Delivery of and payment for the Firm
Debentures shall be made at 10:00 A.M., New York City time, on the fourth full business day
following the date of this Agreement or at such other date or place as shall be determined by
agreement between the Representatives and the Company. This date and time are sometimes referred
to as the “Initial Delivery Date.” Delivery of the Firm Debentures shall be made to the
Representatives for the account of each Underwriter against payment by the several Underwriters
through the Representatives of the respective aggregate purchase prices of the Firm Debentures
being sold by the Company to or upon the order of the Company by wire transfer in immediately
available funds to the accounts specified by the Company. Time shall be of the essence, and
17
delivery at the time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. The Company shall deliver the Firm Debentures
through the facilities of DTC unless the Representatives shall otherwise instruct.
The option granted in Section 2 may be exercised in whole or from time to time in part by
written notice being given to the Company by the Representatives; provided if such date falls on a
day that is not a business day, the option granted in Section 2 will expire on the next succeeding
business day; provided further that the Option Debentures must be purchased during a 13 day period
beginning on and including the date of the original issuance of the Firm Debentures. Such notice
shall set forth the aggregate principal amount of Option Debentures as to which the option is being
exercised, the names in which the principal amount of Option Debentures are to be registered, the
denominations in which the principal amount of Option Debentures are to be issued and the date and
time, as determined by the Representatives, when the principal amount of Option Debentures are to
be delivered; provided, however, that this date and time shall not be earlier than the Initial
Delivery Date nor earlier than the second business day after the date on which the option shall
have been exercised nor later than the fifth business day after the date on which the option shall
have been exercised. Each date and time the principal amount of Option Debentures are delivered is
sometimes referred to as an “Option Debentures Delivery Date,” and the Initial Delivery Date and
any Option Debentures Delivery Date are sometimes each referred to as a “Delivery Date.”
Delivery of the Option Debentures by the Company and payment for the Option Debentures by the
several Underwriters through the Representatives shall be made at 10:00 A.M., New York City time,
on the date specified in the corresponding notice described in the preceding paragraph or at such
other date or place as shall be determined by agreement between the Representatives and the
Company. On the Option Debentures Delivery Date, the Company shall deliver or cause to be
delivered the Option Debentures to the Representatives for the account of each Underwriter against
payment by the several Underwriters through the Representatives of the respective aggregate
purchase prices of the Option Debentures being sold by the Company to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds to the accounts
specified by the Company. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of each Underwriter
hereunder. The Company shall deliver the Option Debentures through the facilities of DTC unless
the Representatives shall otherwise instruct.
5. Further Agreements of the Company and the Underwriters. (a) The Company agrees:
(i) To prepare the Prospectus in a form approved by the Representatives and to file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
Commission’s close of business on the second business day following the execution and
delivery of this Agreement and to notify the Underwriters promptly of such filing; to
prepare the Final Term Sheet, containing solely a description of the terms of the Debentures
and of the offering, in the form attached as Schedule 2 hereto and to file such Final Term
Sheet pursuant to Rule 433(d) under the Securities Act and to notify the Underwriters
promptly of such filing; to make no further amendment or any supplement
18
to the Registration Statement or the Prospectus prior to the last Delivery Date except
as provided herein; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection with the offering or
sale of the Debentures; to advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment or supplement to the Registration Statement or the
Prospectus has been filed and to furnish the Representatives with copies thereof; to advise
the Representatives, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus, of the suspension of the qualification of
the Debentures for offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding or examination for any such purpose, of any notice from the Commission
objecting to the use of the form of the Registration Statement or any post-effective
amendment thereto or of any request by the Commission for the amending or supplementing of
the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for
additional information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(ii) To pay the applicable Commission filing fees relating to the Debentures within the
time required by Rule 456(b)(1)(i) without regard to the proviso therein;
(iii) To deliver promptly to the Representatives such number of the following documents
as the Representatives shall reasonably request: (A) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment thereto (in each case
excluding exhibits other than this Agreement), (B) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus, (C) each Issuer Free Writing
Prospectus and (D) any document incorporated by reference in any Preliminary Prospectus or
the Prospectus; and, if the delivery of a prospectus is required at any time after the date
hereof in connection with the offering or sale of the Debentures or any other securities
relating thereto and if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or supplemented
Prospectus that will correct such statement or omission or effect such compliance;
(iv) To file promptly with the Commission any amendment or supplement to the
Registration Statement or the Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the Commission;
19
(v) Prior to filing with the Commission any amendment or supplement to the Registration
Statement, the Prospectus, any document incorporated by reference in the Prospectus or any
amendment to any document incorporated by reference in the Prospectus, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(vi) Not to make any offer relating to the Debentures that would constitute an Issuer
Free Writing Prospectus without the prior written consent of the Representatives;
(vii) To comply with all applicable requirements of Rule 433 with respect to any Issuer
Free Writing Prospectus; and if at any time after the date hereof any events shall have
occurred as a result of which any Issuer Free Writing Prospectus, as then amended or
supplemented, would conflict with the information in the Registration Statement, the most
recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or,
if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing
Prospectus, to notify the Representatives and, upon their request, to file such document and
to prepare and furnish without charge to each Underwriter as many copies as the
Representatives may from time to time reasonably request of an amended or supplemented
Issuer Free Writing Prospectus that will correct such conflict, statement or omission or
effect such compliance;
(viii) As soon as practicable after the Effective Date (it being understood that the
Company shall have until at least 400 or, if the fourth quarter following the fiscal quarter
that includes the Effective Date is the last fiscal quarter of the Company’s fiscal year,
425 days after the end of the Company’s current fiscal quarter), to make generally available
to the Company’s security holders and to deliver to the Representatives an earnings
statement of the Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158);
(ix) Promptly from time to time to take such action as the Representatives may
reasonably request to qualify the Debentures for offering and sale under the securities laws
of Canada and such other jurisdictions as the Representatives may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of the
Debentures; provided that in connection therewith the Company shall not be required to (i)
qualify as a foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (ii) file a general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would not
otherwise be subject;
(x) For a period commencing on the date hereof and ending on the 60th day
after the date of the Prospectus (the “Lock-Up Period”), not to, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition by any person
at any
20
time in the future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Debentures and shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee compensation plans
existing on the date hereof), or sell or grant options, rights or warrants with respect to
any shares of Common Stock or securities convertible into or exchangeable for Common Stock
(other than the grant of options pursuant to option plans existing on the date hereof), (2)
enter into any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, (3) file or cause to be
filed a registration statement with respect to the registration of any shares of Common
Stock or securities convertible, exercisable or exchangeable into Common Stock or any other
securities of the Company (other than any registration statement on Form S-8) or (4)
publicly disclose the intention to do any of the foregoing, in each case without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc. on behalf of the Underwriters, and to cause each
officer, director and stockholder of the Company set forth on Schedule 4 hereto to
furnish to ▇▇▇▇▇▇ Brothers Inc., prior to the Initial Delivery Date, a letter or letters,
substantially in the form of Exhibit A hereto (the “Lock-Up Agreements”);
notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the
Company issues an earnings release or material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the last day of
the Lock-Up Period, then the restrictions imposed in this paragraph shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the earnings release
or the announcement of the material news or the occurrence of the material event, unless
▇▇▇▇▇▇ Brothers Inc., on behalf of the Underwriters, waives such extension in writing;
(xi)
To use its reasonable best efforts to effect and maintain the listing of any shares of Common Stock issuable upon conversion of the Debentures on the New York Stock
Exchange or another U.S. national securities exchange or established automated
over-the-counter trading market in the United States of America;
(xii) To apply the net proceeds from the sale of the Debentures being sold by the
Company as set forth in the Prospectus;
(xiii) To reserve and keep available at all times, free of preemptive rights, the
maximum number of the Underlying Securities;
(xiv) Between the date hereof and the Initial Delivery Date, the Company will not do or
authorize any act or thing that would result in an adjustment of the conversion price or
conversion rate of the Debentures; and
(xv) Without the consent of the Representatives, the Company will not take any action
prior to the Initial Delivery Date which would require the Prospectus to be amended or
supplemented pursuant to Section 5(a)(iv).
21
(b) Each Underwriter severally agrees that such Underwriter shall not include any “issuer
information” (as defined in Rule 433) in any “free writing prospectus” (as defined in Rule 405)
used or referred to by such Underwriter without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent, “Permitted Issuer
Information”); provided that (i) no such consent shall be required with respect to any such issuer
information contained in any document filed by the Company with the Commission prior to the use of
such free writing prospectus and (ii) “issuer information,” as used in this Section 5(b), shall not
be deemed to include information prepared by or on behalf of such Underwriter on the basis of or
derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees and
taxes incident to and in connection with (a) the authorization, issuance, sale and delivery of the
Debentures and the Underlying Securities and any stamp duties or other taxes payable in that
connection, and the preparation and printing of certificates for the Debentures and the Underlying
Securities; (b) the preparation, printing and filing under the Securities Act of the Registration
Statement (including any exhibits thereto), any Preliminary Prospectus, the Prospectus, any Issuer
Free Writing Prospectus and any amendment or supplement thereto; (c) the distribution of the
Registration Statement (including any exhibits thereto), any Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto, or any
document incorporated by reference therein, all as provided in this Agreement; (d) the production
and distribution of this Agreement, any supplemental agreement among Underwriters, and any other
related documents in connection with the offering, purchase, sale and delivery of the Debentures;
(e) the qualification of the Debentures under the securities laws of the several jurisdictions as
provided in Section 5(a)(x) and the preparation, printing and distribution of a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriters); (f) the preparation, printing
and distribution of one or more versions of the Preliminary Prospectus and the Prospectus for
distribution in Canada (often in the form of a Canadian “wrapper” (including related fees and
expenses of Canadian counsel to the Underwriters); (g) the investor presentations on any “road
show” undertaken in connection with the marketing of the Debentures, including, without limitation,
expenses associated with any electronic roadshow, travel and lodging expenses of the
representatives and officers of the Company and the cost of any aircraft chartered in connection
with the road show; and (h) all other costs and expenses incident to the performance of the
obligations of the Company, including the costs and charges of any transfer agent and any
registrar, any fees charged by rating agencies for rating the Debentures, the fees and expenses of
the Trustee and any paying agent (including related fees and expenses of any counsel to such
parties), and all expenses and application fees related to the listing of the Underlying Securities
on the NYSE.
7. Conditions of Underwriters’ Obligations. The respective obligations of the Underwriters
hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations
and warranties of the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); the Company shall have complied with all filing
22
requirements applicable to any Issuer Free Writing Prospectus used or referred to after
the date hereof; no stop order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus
shall have been issued and no proceeding or examination for such purpose shall have been
initiated or threatened by the Commission; and any request of the Commission for inclusion
of additional information in the Registration Statement or the Prospectus or otherwise shall
have been complied with; and the Commission shall not have notified the Company of any
objection to the use of the form of the Registration Statement.
(b) No Underwriter shall have discovered and disclosed to the Company on or prior to
such Delivery Date that the Registration Statement, the Prospectus or the Pricing Disclosure
Package, or any amendment or supplement thereto, contains an untrue statement of a fact
which, in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Debentures, the Indenture, the Registration
Statement, the Prospectus and any Issuer Free Writing Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) ▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇ LLP shall have furnished to the Representatives its
written opinion and statement, as counsel to the Company, addressed to the Underwriters and
dated such Delivery Date, in form and substance reasonably satisfactory to the
Representatives, substantially in the form attached hereto as Exhibit B-1.
(e) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall have furnished to the Representatives its written
opinion and statement, as special counsel to the Company, addressed to the Underwriters and
dated such Delivery Date, in form and substance reasonably satisfactory to the
Representatives, substantially in the form attached hereto as Exhibit B-2.
(f) The General Counsel of the Company shall have furnished to the Representatives its
written opinion, addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, substantially in the form attached
hereto as Exhibit B-3.
(g) LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP shall have furnished to the Representatives its
written opinion, as regulatory counsel to the Company, addressed to the Underwriters and
dated such Delivery Date, in form and substance reasonably satisfactory to the
Representatives.
23
(h) The Representatives shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
counsel for the Underwriters, such opinion letter and statement, dated such Delivery Date,
with respect to the issuance and sale of the Debentures, the Registration Statement, the
Prospectus and the Pricing Disclosure Package and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them to pass upon such
matters.
(i) At the time of execution of this Agreement, the Representatives shall have received
from Ernst & Young LLP a letter, in form and substance satisfactory to the Representatives,
addressed to the Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the respective dates as
of which specified financial information is given in the most recent Preliminary Prospectus,
as of a date not more than three days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to underwriters in connection with registered
public offerings.
(j) With respect to the letter of Ernst & Young LLP referred to in the preceding
paragraph and delivered to the Representatives concurrently with the execution of this
Agreement (the “initial letter”), the Company shall have furnished to the Representatives a
letter (the “bring-down letter”) of such accountants, addressed to the Underwriters and
dated such Delivery Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than three days
prior to the date of the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth in the
initial letter.
(k) At the time of execution of this Agreement, the Representatives shall have received
from Sycip Gorres Velayo & Co., a member practice of Ernst & Young Global, a letter, in form
and substance satisfactory to the Representatives, addressed to the Underwriters and dated
the date hereof (i) confirming that they are independent public accountants within the
meaning of the Securities Act with respect to Quezon Power, Inc. and its subsidiary and (ii)
the consolidated financial statements of Quezon Power, Inc. and its subsidiary audited by
them and incorporated by reference in any Preliminary Prospectus or the Prospectus comply as
to form in all material respects with the applicable accounting requirements of the
Securities Act and the related rules and regulations adopted by the Commission.
24
(l) At the time of execution of this Agreement, the Representatives shall have received
from PricewaterhouseCoopers LLP a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that
they were independent public accountants within the meaning of the Securities Act with
respect to Covanta ARC Holdings, Inc. (f/k/a American Ref-Fuel Holdings Corp.) and
subsidiaries during the periods covered by the financial statements on which they reported
and were in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission during such periods, and
(ii) stating the conclusions and findings of such firm with respect to financial information
relating to Covanta ARC Holdings, Inc. (f/k/a American Ref-Fuel Holdings Corp.) and its
subsidiaries incorporated by reference into the most recent Preliminary Prospectus
Supplement, the Prospectus Supplement and the Registration Statement.
(m) At the time of execution of this Agreement, the Representatives shall have received
from Deloitte & Touche LLP a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that
they were independent public accountants within the meaning of the Securities Act with
respect to Covanta Energy Corporation and its subsidiaries for the period covered by the
financial statements on which they reported and (ii) the consolidated financial statements
of Covanta Energy Corporation and its subsidiaries audited by them and incorporated by
reference in any Preliminary Prospectus or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the related rules and
regulations adopted by the Commission.
(n) The Company shall have furnished to the Representatives a certificate, dated such
Delivery Date, of its Chief Executive Officer and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the Company in Section 1
are true and correct on and as of such Delivery Date, and the Company has complied
with all its agreements contained herein and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to such Delivery Date;
(ii) No stop order suspending the effectiveness of the Registration Statement
has been issued; and no proceedings or examination for that purpose have been
instituted or, to the knowledge of such officers, threatened; and the Commission has
not notified the Company of any objection to the use of the form of the Registration
Statement or any post-effective amendment thereto; and
(iii) They have carefully examined the Registration Statement, the Prospectus
and the Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration
Statement, as of the Effective Date, (2) the Prospectus, as of its date and on the
applicable Delivery Date, or (3) the Pricing Disclosure Package, as of the
Applicable Time, did not and do not contain any untrue statement of a material fact
and did not and do not omit to state a material fact required to be
25
stated therein or necessary to make the statements therein (except in the case
of the Registration Statement, in the light of the circumstances under which they
were made) not misleading, and (B) since the Effective Date, no event has occurred
that should have been set forth in a supplement or amendment to the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus that has not been so
set forth;
(o) Except as described in the most recent Preliminary Prospectus, (i) neither the
Company nor any of its subsidiaries shall have sustained, since the date of the latest
audited financial statements included or incorporated by reference in the most recent
Preliminary Prospectus, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree or (ii) there shall not have been any change
in the capital stock of the Company or the long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change, in or
affecting the financial condition, results of operations, stockholders’ equity, properties,
management or business of the Company and its subsidiaries taken as a whole, the effect of
which, in any such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Debentures being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
(p) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall
have occurred in the rating accorded the debt securities of the Company or any of its
subsidiaries by any “nationally recognized statistical rating organization” (as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations), and
(ii) no such organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt securities of the
Company or any of its subsidiaries.
(q) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in hostilities involving the United
States or there shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in general economic,
political or financial conditions, including, without limitation, as a result of terrorist
activities after the date hereof (or the effect of international conditions on the financial
markets in the United States shall be such), as to make it, in the judgment of the
Representatives, impracticable or inadvisable
26
to proceed with the public offering or delivery of the Debentures being delivered on
such Delivery Date on the terms and in the manner contemplated in the Prospectus.
(r) The Lock-Up Agreements between the Representatives and the officers, directors and
certain stockholders of the Company set forth on Schedule 4, delivered to the
Representatives on or before the date of this Agreement, shall be in full force and effect
on such Delivery Date.
(s) The Company shall have furnished to the Representatives a certificate, dated the
date hereof, of its Chief Financial Officer, in the form attached hereto as Exhibit
C.
(t) With respect to the certificate of the Chief Financial Officer of the Company
referred to in the preceding paragraph and delivered to the Representatives concurrently
with the execution of this Agreement, the Company shall have furnished to the
Representatives a bring-down certificate of its Chief Financial Officer stating, as of a
date not more than three days prior to the date of the bring-down certificate, the
conclusions of the Chief Financial Officer with respect to the financial information covered
by the initial certificate referred to in the preceding paragraph.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its directors,
officers and employees and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales of
Debentures), to which that Underwriter, director, officer, employee or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) any Preliminary Prospectus, the
Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any
Issuer Free Writing Prospectus or in any amendment or supplement thereto or (C) any
Permitted Issuer Information used or referred to in any “free writing prospectus” (as
defined in Rule 405) used or referred to by any Underwriter, (D) any “road show” (as defined
in Rule 433) not constituting an Issuer Free Writing Prospectus (a “Non-Prospectus Road
Show”) or (E) any Blue Sky application or other document prepared or executed by the Company
(or based upon any written information furnished by the Company for use therein)
specifically for the purpose of qualifying any or all of the Debentures under the securities
laws of any state or other jurisdiction (any such application, document or information being
hereinafter called a “Blue Sky Application”), or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing
27
Prospectus or in any amendment or supplement thereto or in any Permitted Issuer
Information, any Non-Prospectus Road Show or any Blue Sky Application, any material fact
required to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Underwriter and each such director, officer, employee or
controlling person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the Registration Statement,
the Prospectus, any Issuer Free Writing Prospectus or in any such amendment or supplement
thereto or in any Permitted Issuer Information, any Non-Prospectus Road Show or any Blue Sky
Application, in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein, which information consists solely of the
information specified in Section 8(e). The foregoing indemnity agreement is in addition to
any liability which the Company may otherwise have to any Underwriter or to any director,
officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, its directors, officers and employees, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or
in any Non-Prospectus Road Show or Blue Sky Application, or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus,
any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show or Blue Sky Application, any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company through the Representatives by or on behalf of
that Underwriter specifically for inclusion therein, which information is limited to the
information set forth in Section 8(e). The foregoing indemnity agreement is in addition to
any liability that any Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of
any claim or the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this Section 8,
28
notify the indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to the extent it
has been materially prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any such claim or action shall
be brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the indemnified party shall have the right to employ
counsel to represent jointly the indemnified party and those other indemnified parties and
their respective directors, officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be sought under this
Section 8 if (i) the indemnified party and the indemnifying party shall have so mutually
agreed; (ii) the indemnifying party has failed within a reasonable time to retain counsel
reasonably satisfactory to the indemnified party; (iii) the indemnified party and its
directors, officers, employees and controlling persons shall have reasonably concluded that
there may be legal defenses available to them that are different from or in addition to
those available to the indemnifying party; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the indemnified parties or their respective
directors, officers, employees or controlling persons, on the one hand, and the indemnifying
party, on the other hand, and representation of both sets of parties by the same counsel
would be inappropriate due to actual or potential differing interests between them, and in
any such event the fees and expenses of such separate counsel shall be paid by the
indemnifying party. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding and does not include any findings of fact or admissions of
fault or culpability as to the indemnified party, or (ii) be liable for any settlement of
any such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the indemnifying party or if
there be a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or
29
8(b) in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such indemnified party
as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, from the offering of the
Debentures or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company, on the
one hand, and the Underwriters, on the other, with respect to the statements or omissions
that resulted in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the offering of
the Debentures purchased under this Agreement (before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, on the one hand, and
the total underwriting discounts and commissions received by the Underwriters with respect
to the Debentures purchased under this Agreement, as set forth in the table on the cover
page of the Prospectus, on the other hand. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by the Company
or the Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if contributions pursuant
to this Section 8(d) were to be determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be deemed to
include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the net proceeds from the
sale of the Debentures underwritten by it exceeds the amount of any damages that such
Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute as provided in this Section
8(d) are several in proportion to their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm that the statements regarding delivery of the
Debentures by the Underwriters set forth on the cover page of, and the concession and
reallowance figures and the paragraph relating to stabilization by the Underwriters
appearing under the caption “Underwriting” in, the most recent Preliminary Prospectus and
the Prospectus are correct, and the Underwriters severally confirm and the Company
30
acknowledges and agrees that such statements constitute the only information concerning
such Underwriters furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in any Preliminary Prospectus, the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or
in any Non-Prospectus Road Show.
9. Defaulting Underwriters. If, on any Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Debentures that the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the principal amount of the Firm
Debentures set forth opposite the name of each remaining non-defaulting Underwriter in Schedule
1 hereto bears to the total principal amount of the Firm Debentures set forth opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto; provided,
however, that the remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Debentures on such Delivery Date if the total principal amount of the Debentures that the
defaulting Underwriter or Underwriters agreed but failed to purchase on such date exceeds 9.09% of
the total principal amount of the Debentures to be purchased on such Delivery Date, and any
remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the
principal amount of the Debentures that it agreed to purchase on such Delivery Date pursuant to the
terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Debentures to be purchased on such Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase the
Debentures that the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to any Option Debentures Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the Option Debentures)
shall terminate without liability on the part of any non-defaulting Underwriter or the Company,
except that the Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 6 and 11. As used in this Agreement, the term “Underwriter” includes, for all
purposes of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Debentures that a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have
to the Company for damages caused by its default. If other Underwriters are obligated or agree to
purchase the Debentures of a defaulting or withdrawing Underwriter, either the Representatives or
the Company may postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be terminated by the
Representatives by notice given to and received by the Company prior to delivery of and payment for
the Firm Debentures if, prior to that time, any of the events
31
described in Sections 7(o), 7(p) and 7(q) shall have occurred or if the Underwriters shall
decline to purchase the Debentures for any reason permitted under this Agreement.
11. Reimbursement of Underwriters’ Expenses. If (a) the Company shall fail to tender the
Debentures for delivery to the Underwriters for any reason or (b) the Underwriters shall decline to
purchase the Debentures for any reason permitted under this Agreement, the Company will reimburse
the Underwriters for all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement and the proposed purchase
of the Debentures, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by reason of the default of
one or more Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
12. Research Analyst Independence. The Company acknowledges that the Underwriters’ research
analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that such
Underwriters’ research analysts may hold views and make statements or investment recommendations
and/or publish research reports with respect to the Company and/or the offering that differ from
the views of their respective investment banking divisions. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the
Underwriters with respect to any conflict of interest that may arise from the fact that the views
expressed by their independent research analysts and research departments may be different from or
inconsistent with the views or advice communicated to the Company by such Underwriters’ investment
banking divisions. The Company acknowledges that each of the Underwriters is a full service
securities firm and as such from time to time, subject to applicable securities laws, may effect
transactions for its own account or the account of its customers and hold long or short positions
in debt or equity securities of the companies that may be the subject of the transactions
contemplated by this Agreement.
13. No Fiduciary Duty. The Company acknowledges and agrees that in connection with this
offering, sale of the Debentures or any other services the Underwriters may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the Company and any other person, on
the one hand, and the Underwriters, on the other, exists; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to the Company, including, without limitation, with respect to the
determination of the public offering price of the Debentures, and such relationship between the
Company, on the one hand, and the Underwriters, on the other, is entirely and solely commercial,
based on arms-length negotiations; (iii) any duties and obligations that the Underwriters may have
to the Company shall be limited to those duties and obligations specifically stated herein; and
(iv) the Underwriters and their respective affiliates may have interests that differ from those of
the Company. The Company hereby waives any claims that the Company may have against the
Underwriters with respect to any breach of fiduciary duty in connection with this offering.
14. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:
32
(a) if to the Underwriters, shall be delivered or sent by mail or facsimile
transmission to (i) ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Syndicate Registration (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the
case of any notice pursuant to Section 8(c), to the Director of Litigation, Office
of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇) (ii) ▇.▇. ▇▇▇▇▇▇ Securities
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Desk (Fax:
▇▇▇-▇▇▇-▇▇▇▇) and (iii) ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇ (Fax:
▇▇▇-▇▇▇-▇▇▇▇); and
(b) if to the Company, shall be delivered or sent by mail or facsimile
transmission to Covanta Holding Corporation, ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
Attention: General Counsel (Fax: ▇▇▇-▇▇▇-▇▇▇▇).
Any such statements, requests, notices or agreements shall take effect at the time of receipt
thereof. The Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made by the Representatives on behalf of the Underwriters.
15. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those persons, except that (A)
the representations, warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the directors, officers and employees of
the Underwriters and each person or persons, if any, who control any Underwriter within the meaning
of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for the benefit of the directors of the
Company, the officers and employees of the Company and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section 15, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any provision contained
herein.
16. Survival. The respective indemnities, representations, warranties and agreements of the
Company and the Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and payment for the
Debentures and shall remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
17. Definition of the Terms “Business Day” and “Subsidiary”. For purposes of this Agreement,
(a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York are generally authorized or obligated by law or executive
order to close and (b) “subsidiary” means any subsidiary of the Company required to be identified
pursuant to Item 601(b)(21) of Regulation S-K of the Rules and Regulations.
33
18. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
19. Counterparts. This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be deemed to be an
original but all such counterparts shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
34
If the foregoing correctly sets forth the agreement between the Company and the Underwriters,
please indicate your acceptance in the space provided for that purpose below.
| Very truly yours, COVANTA HOLDING CORPORATION |
||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and General Counsel |
|||
35
Accepted:
▇▇▇▇▇▇ Brothers Inc.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ Brothers Inc.
| By: | /s/ Authorized Representative |
By ▇.▇. ▇▇▇▇▇▇ Securities Inc.
| By: | /s/ Authorized Signatory |
By ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
| By: | /s/ Authorized Signatory |
SCHEDULE 1
| Principal Amount of | ||||
| Underwriters | Firm Debentures | |||
▇▇▇▇▇▇ Brothers Inc. |
$ | 100,750,000 | ||
▇.▇. ▇▇▇▇▇▇ Securities Inc. |
84,500,000 | |||
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated |
84,500,000 | |||
Banc of America Securities LLC |
22,750,000 | |||
Barclays Capital Inc. |
22,750,000 | |||
UBS Securities LLC |
9,750,000 | |||
Total |
$ | 325,000,000 | ||
SCHEDULE 2
Final Term Sheet
Issuer Free Writing Prospectus
Filed by: Covanta Holding Corporation
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement on Form S-3: No. 333-134173
Registration Statement on Form S-3: No. 333-140082
Filed by: Covanta Holding Corporation
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement on Form S-3: No. 333-134173
Registration Statement on Form S-3: No. 333-140082
Covanta Holding Corporation
Concurrent Offerings of
5,320,000 Shares of Common Stock
(the “Common Stock Offering”)
(the “Common Stock Offering”)
and
$325,000,000
aggregate principal amount of
1.00% Senior Convertible Debentures due 2027
(the “Debentures Offering”)
aggregate principal amount of
1.00% Senior Convertible Debentures due 2027
(the “Debentures Offering”)
This free writing prospectus relates only to the Common Stock Offering of shares of common stock,
par value $0.10 per share (the “Common Stock”) and the Debentures Offering of 1.00% Senior
Convertible Debentures due 2027 (the “Debentures”) and should be read together with (1) the
preliminary prospectus supplement dated January 19, 2007 relating to the Common Stock Offering (the
“Common Stock Preliminary Prospectus Supplement”) and the prospectus dated May 16, 2006 (the
“Common Stock Base Prospectus”), including the documents incorporated by reference in the Common
Stock Preliminary Prospectus Supplement and the Common Stock Base Prospectus and (2) the
preliminary prospectus supplement dated January 19, 2007 relating to the Debentures Offering (the
“Debenture Preliminary Prospectus Supplement”) and the prospectus dated January 19, 2007 (the
“Debenture Base Prospectus”), including the documents incorporated by reference in the Debenture
Preliminary Prospectus Supplement and the Debenture Base Prospectus.
Issuer:
|
Covanta Holding Corporation | |
Common Stock symbol:
|
CVA | |
| The Common Stock Offering |
||
Securities:
|
5,320,000 shares of Common Stock | |
Over-allotment option:
|
798,000 shares of Common Stock | |
Issue price:
|
$23.50 per share | |
Closing sale price of stock
on January 25, 2007:
|
$23.77 per share | |
Net proceeds (estimated): |
$118.3 million ($136.1 million if the over-allotment option is exercised in full) | |
Underwriting compensation per share: |
$1.175 | |
Aggregate underwriting compensation: |
$6,251,000 ($7,188,650 if the over-allotment option is exercised in full) | |
Selling concession per share: |
$0.71 | |
Trade date:
|
January 25, 2007 | |
Settlement date:
|
January 31, 2007 | |
Underwriters:
|
▇▇▇▇▇▇ Brothers Inc., ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (Joint Book-Running Managers) and Banc of America Securities LLC, Barclays Capital Inc., Pacific Growth Equities, LLC and UBS Securities LLC (Co-Managers) | |
| The Debentures Offering |
||
Securities:
|
1.00% Senior Convertible Debentures due 2027 | |
Ratings:
|
B by Standard & Poor’s and B1 by Moody’s | |
Aggregate principal amount:
|
$325,000,000 | |
Over-allotment option:
|
$48,750,000 | |
Issue price:
|
100% | |
Annual interest rate:
|
1.00% | |
Issue price of
Common Stock Offering:
|
$23.50 per share | |
Conversion premium
over issue price of
Common Stock Offering:
|
20.0% | |
Conversion rate (subject to adjustment): |
35.4610 shares per $1,000 principal amount of Debentures | |
Conversion price (approximately) (subject to adjustment): |
$28.20 per share | |
Conversion rights:
|
Subject to fulfillment of certain conditions and during the periods described in the Debenture Preliminary Prospectus Supplement. | |
Interest payment dates:
|
February 1 and August 1 | |
First interest payment date:
|
August 1, 2007 | |
Maturity date:
|
February 1, 2027 | |
Contingent interest:
|
Yes, commencing on February 1, 2012 | |
Comparable yield:
|
7.25% | |
Call feature:
|
Redeemable on or after February 1, 2012 | |
Puts:
|
February 1, 2012, February 1, 2017 and February 1, 2022 |
Increase to conversion rate upon a Fundamental Change (subject to adjustment):
| Stock price | ||||||||||||||||||||||||||||||||||||||||
| Effective Date | $23.50 | $28.20 | $30.00 | $35.00 | $40.00 | $45.00 | $50.00 | $55.00 | $60.00 | $65.00 | ||||||||||||||||||||||||||||||
January 31, 2007 |
7.0921 | 4.4158 | 3.7251 | 2.3830 | 1.5723 | 1.0611 | 0.7273 | 0.5030 | 0.3486 | 0.2403 | ||||||||||||||||||||||||||||||
February 1, 2008 |
7.0921 | 4.3822 | 3.6468 | 2.2458 | 1.4273 | 0.9292 | 0.6152 | 0.4112 | 0.2752 | 0.1828 | ||||||||||||||||||||||||||||||
February 1, 2009 |
7.0921 | 4.2062 | 3.4277 | 1.9881 | 1.1899 | 0.7308 | 0.4574 | 0.2893 | 0.1829 | 0.1140 | ||||||||||||||||||||||||||||||
February 1, 2010 |
7.0921 | 3.8428 | 3.0190 | 1.5716 | 0.8416 | 0.4639 | 0.2620 | 0.1502 | 0.0858 | 0.0473 | ||||||||||||||||||||||||||||||
February 1, 2011 |
7.0914 | 3.0982 | 2.2289 | 0.8745 | 0.3420 | 0.1388 | 0.0607 | 0.0287 | 0.0135 | 0.0048 | ||||||||||||||||||||||||||||||
If the stock price per share of Issuer’s common stock is:
| • | in excess of $65.00 per share (subject to adjustment), the conversion rate will not be increased; or | ||
| • | less than $23.50 per share (subject to adjustment), the conversion rate will not be increased. |
Conversion rate cap:
|
42.5531 shares per $1,000 principal amount of Debenture | |
Net proceeds (estimated): |
$314.9 million ($362.4 million if the over-allotment option is exercised in full) | |
Underwriting compensation per Debenture: |
$25 | |
Aggregate underwriting compensation: |
$8,125,000 ($9,343,750 if the over-allotment is exercised in full) | |
Selling concession per Debenture: |
$15.00 | |
Trade date:
|
January 25, 2007 | |
Settlement date:
|
January 31, 2007 | |
Debenture CUSIP:
|
▇▇▇▇▇▇▇▇▇ | |
Underwriters:
|
▇▇▇▇▇▇ Brothers Inc., ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (Joint Book-Running Managers) and Banc of America Securities LLC, Barclays Capital Inc. and UBS Securities LLC (Co-Managers) |
The Issuer has filed registration statements (including prospectuses) with the SEC for the Common
Stock Offering and the Debenture Offering to which this communication relates. Before you invest,
you should read the prospectus in applicable registration statement and other documents the Issuer
has filed with the SEC for more complete information about the Issuer and the Common Stock Offering
and the Debenture Offering. You may get these documents for free by visiting ▇▇▇▇▇ on the SEC Web
site at ▇▇▇.▇▇▇.▇▇▇. Alternatively, the Issuer, any underwriter or any dealer participating in the
offerings will arrange to send you the applicable prospectus if you request it by calling toll-free
▇-▇▇▇-▇▇▇-▇▇▇▇.
ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND
SHOULD BE DISREGARDED, SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT
OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.
SCHEDULE 3-A
List of Subsidiaries
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corp.
Amor 14 Corporation
▇▇▇▇▇▇ Mountain Power
Covanta Acquisition, Inc.
Covanta Alexandria /Arlington, Inc.
Covanta Babylon, Inc.
Covanta Bessemer, Inc.
Covanta Bristol, Inc.
Covanta ▇▇▇▇▇▇▇▇▇▇ Environmental Support, Inc.
Covanta Energy Americas, Inc.
Covanta Energy Construction, Inc.
Covanta Energy Corporation
Covanta Energy Group, Inc.
Covanta Energy International, Inc.
Covanta Energy Resource Corp.
Covanta Energy Services, Inc.
Covanta Energy West, Inc.
Covanta Engineering Services, Inc.
Covanta Fairfax, Inc.
Covanta Geothermal Operations Holdings, Inc.
Covanta Geothermal Operations, Inc.
Covanta Haverhill Associates
Covanta Haverhill Properties, Inc.
Covanta Haverhill, Inc.
Covanta Heber Field Energy, Inc.
Covanta Hennepin Energy Resource Co., Limited Partnership
Covanta Hillsborough, Inc.
Covanta Holding Corporation
Covanta Honolulu Resource Recovery Venture
Covanta Huntington Limited Partnership
Covanta Huntington Resource Recovery One Corp.
Covanta Huntington Resource Recovery Seven Corp.
Covanta Huntsville, Inc.
Covanta Hydro Energy, Inc.
Covanta Hydro Operations West, Inc.
Covanta Hydro Operations, Inc.
Covanta Imperial Power Services, Inc.
Covanta Indianapolis, Inc.
Covanta Kent, Inc.
Covanta Lake II, Inc.
Covanta Lancaster, Inc.
Covanta ▇▇▇, Inc.
Covanta Long Island, Inc.
Covanta ▇▇▇▇▇▇ Land Corp.
Covanta ▇▇▇▇▇▇, Inc.
Covanta Mid-Conn., Inc.
Covanta ▇▇▇▇▇▇▇▇▇▇, Inc.
Covanta New Martinsville Hydroelectric Corporation
Covanta New Martinsville Hydro-Operations Corporation
Covanta Oahu Waste Energy Recovery, Inc.
Covanta Omega Lease, Inc.
Covanta Onondaga Five Corp.
Covanta Onondaga Four Corp.
Covanta Onondaga Limited Partnership
Covanta Onondaga Operations, Inc.
Covanta Onondaga Three Corp.
Covanta Onondaga Two Corp.
Covanta Onondaga, Inc.
Covanta Operations of Union, LLC
Covanta OPW Associates, Inc.
Covanta OPWH, Inc.
Covanta Pasco, Inc.
Covanta Pinellas, Inc.
Covanta Plant Services of New Jersey, Inc.
Covanta Power Development of Mauritius, Inc. (formerly known as Covanta Power Development of Bolivia, Inc.)
Covanta Power Development, Inc.
Covanta Power Equity Corporation
Covanta Power International Holdings, Inc.
Covanta Power Pacific, Inc.
Covanta Power Plant Operations
Covanta Projects of Hawaii, Inc.
Covanta Projects of Wallingford, L.P.
Covanta Projects, Inc.
Covanta RRS Holdings, Inc.
Covanta SBR Associates
Covanta Secure Services, LLC
Covanta SIGC Energy II, Inc.
Covanta SIGC Energy, Inc.
Covanta SIGC Geothermal Operations, Inc.
Covanta Stanislaus, Inc.
Covanta Systems, LLC
Covanta Tampa Bay, Inc.
Covanta Tampa Construction, Inc.
Covanta Union, Inc.
Covanta Wallingford Associates, Inc.
Covanta ▇▇▇▇▇▇ Energy Resource Co., Limited Partnership
Covanta ▇▇▇▇▇▇ Holdings I, Inc.
Covanta ▇▇▇▇▇▇ Holdings II, Inc.
Covanta Waste to Energy of Italy, Inc.
Covanta Waste to Energy, LLC
Covanta Water Holdings, Inc.
Covanta Water Systems, Inc.
Covanta Water Treatment Services, Inc.
DSS Environmental, Inc.
ERC Energy II, Inc.
ERC Energy, Inc.
Generating Resource Recovery Partners L.P.
Haverhill Power, LLC
Heber Field Energy II, Inc.
Heber Loan Partners
LMI, Inc.
Mammoth Geothermal Company
Mammoth Power Company
Michigan Waste Energy, Inc.
Mt. Lassen Power
OPI Quezon, LLC
Pacific Energy Operating Group, L.P.
Pacific Energy Resources Incorporated
Pacific Geothermal Company
Pacific Hydropower Company
Pacific Oroville Power, Inc.
Pacific Recovery Corporation
Pacific Wood Fuels Company
Covanta Otay 3 Company
Penstock Power Company
Three Mountain Operations, Inc.
Three Mountain Power, LLC
Covanta ARC Holdings Inc. (formerly known as American Ref-Fuel Holdings Corp.)
Covanta ARC LLC (formerly known as American Ref-Fuel Company LLC)
Covanta Ref-Fuel Management LLC (formerly known as ARC Ref-Fuel Management LLC)
Covanta Ref-Fuel Management II, LLC (formerly known as Covanta Ref-Fuel Management II, Inc., formerly known as ARC Ref-Fuel Management II, Inc.)
Covanta ARC Company (formerly known as American Ref-Fuel Company (a general partnership))
Covanta Hempstead LLC (formerly known as ARC Hempstead LLC)
Covanta Hempstead II, LLC (formerly known as Covanta Hempstead, Inc., formerly known as ARC Hempstead II, Inc.)
Covanta Hempstead Company (formerly known as American Ref-Fuel Company of Hempstead)
Covanta Essex LLC (formerly known as ARC Essex LLC)
Covanta Essex II, LLC (formerly known as Covanta Essex II, Inc., formerly known as ARC Essex II, Inc.)
Covanta Essex Company (formerly known as American Ref-Fuel Company of Essex County)
Covanta SECONN LLC (formerly known as ARC SECONN LLC)
Covanta Connecticut (S.E.), LLC (formerly known as Covanta Connecticut (S.E.), Inc. formerly known as ARC of Connecticut (S.E.), Inc.)
Covanta Southeastern Connecticut, L.P. (formerly known as ARC of Southeastern Connecticut, L.P.)
Covanta Southeastern Connecticut Company (formerly known as American Ref-Fuel Company of Southeastern Connecticut)
Covanta Niagara, LLC (formerly known as ARC Niagara LLC)
Covanta Niagara II, LLC (formerly known as Covanta Niagara II, Inc. formerly known as ARC Niagara II, Inc.)
Covanta Niagara, L.P. (formerly known as American Ref-Fuel Company of Niagara, L.P.)
Covanta Operations of SEMASS LLC (formerly known as ARC Operations of SEMASS LLC)
Covanta Operations of SEMASS II, LLC (formerly known as ARC Operations of SEMASS II, Inc.)
Covanta SEMASS, L.P. (formerly known as American Ref-Fuel Operations of SEMASS, L.P.)
Covanta Company of SEMASS, L.P. (formerly known as American Ref-Fuel Company of SEMASS, L.P.)
Covanta SEMASS LLC (formerly ARC SEMASS LLC)
Covanta SEMASS II, LLC (formerly known as ARC SEMASS II, Inc.)
SEMASS Partnership
Covanta Delaware Valley LLC (formerly known as ARC Delaware Valley LLC)
Covanta Delaware Valley II, LLC (formerly known as ARC Delaware Valley II, Inc.)
Covanta Delaware Valley, L.P. (formerly known as American Ref-Fuel Company of Delaware Valley, L.P.)
TransRiver LLC (formerly known as ARC TransRiver LLC)
TransRiver II, LLC (formerly known as TransRiver II, Inc. f/k/a ARC TransRiver II, Inc.)
TransRiver Marketing Company, L.P.
TransRiver Portsmouth LLC
TransRiver Transfer Systems, LLC (formerly known as ARC Transfer Systems LLC)
TransRiver Waste LLC (formerly known as ARC Waste LLC)
Covanta Capital District LLC (formerly known as ARC Capital District LLC)
Covanta Capital District II LLC (formerly known as ARC Capital District II LLC)
Covanta Capital District, L.P. (formerly known as American Ref-Fuel Company of the Capital District, L.P.)
Covanta Ref-Fuel Finance LLC (formerly known as Covanta Ref-Fuel Corp.)
UAH-Groveville Hydro Associates
UAH Management Corp.
Covanta Ref-Fuel LLC (formerly known as Ref-Fuel LLC)
Covanta Ref-Fuel II LLC (formerly known as Covanta Ref-Fuel II Corp.)
Covanta Ref-Fuel Holdings LLC (formerly known as Ref-Fuel Holdings LLC)
MSW Energy Erie LLC
MSW Energy Holdings LLC
MSW Energy Holdings II LLC
MSW Energy Finance Co., Inc.
MSW Energy Finance Co. II, Inc.
MSW Energy ▇▇▇▇▇▇ LLC
MSW I Sub, LLC (formerly known as MSW I Sub, Inc.)
Covanta Development Company LLC (formerly known as American Ref-Fuel Company of Camden LLC)
Edison (Bataan) Cogeneration Corporation
Hidro Operaciones Don ▇▇▇▇▇ S.A.
Covanta Energy India (Balaji) Limited
Covanta Energy India Investments, Ltd.
Covanta Energy India (Samalpatti) Ltd.
Covanta Energy Philippine Holdings, Inc.
▇▇▇▇▇ Power Development-Cayman, Inc.
Covanta Philippines Operating, Inc.
Madurai Power Corporation Pvt. Ltd.
Covanta Bangladesh Operating Ltd.
Covanta Chinese Investments Ltd.
Covanta Energy China (Alpha) Ltd.
▇▇▇▇▇ ▇▇▇▇▇-Jinjiang Cogeneration Co. Ltd.
Covanta Energy China (Beta) Ltd.
Covanta Energy China (Delta) Ltd.
Taixing ▇▇▇▇▇-Yanjiang Cogeneration Co. Ltd.
Covanta Energy China (Gamma) Ltd.
Covanta One Ltd.
Covanta Five Ltd.
Covanta Samalpatti Operating Pvt. Ltd.
Covanta Madurai Operating Pvt. Ltd.
Goa Holdings Ltd.
Magellan Cogeneration, Inc.
Enereurope Holdings III, B.V.
▇▇▇▇▇ Energy (Gulf) Limited
▇▇▇▇▇ Energy India (Bakreshwar) Ltd.
Bal-Sam India Holdings, Ltd.
Covanta Energy India (CBM) Ltd.
Covanta Two Ltd.
Covanta Cayman (Sahacogen) Ltd.
Covanta Three Ltd.
Covanta Cayman (Rojana) Ltd.
Covanta Four Ltd.
Power Operations and Maintenance Ltd.
Covanta India Operating Pvt. Ltd.
▇▇▇▇▇ Taiwan Investments Ltd.
Covanta Mauritius O&M Ltd. (formerly known as OPDB, Ltd.
Covanta Energy India Pvt. Ltd.
Covanta Energy (Thailand) Ltd.
Covanta Energy Asia Pacific Ltd.
Covanta Waste to Energy Asia Investments
Olmec Insurance Ltd.
Covanta Energy Limited
Covanta Italy Holding, S.r.l.
Covanta Italy I S.r.l.
Covanta Italy II S.r.l.
SCHEDULE 3-B
List of Significant Subsidiaries
Covanta ARC Holdings, Inc.
Covanta ARC LLC
Covanta Energy Corporation
Covanta Essex Company
Covanta Essex LLC
Covanta Hempstead Company
Covanta Hempstead LLC
Covanta Ref-Fuel Finance LLC
Covanta Ref-Fuel Holdings LLC
Covanta Ref-Fuel LLC
Covanta RRS Holdings Inc.
Covanta of SEMASS L.P.
MSW Energy Holdings II LLC
MSW Energy Holdings LLC
Covanta Energy ▇▇▇▇▇▇ LLC
Quezon Power, Inc.
Covanta International Power Holdings, Inc.
SCHEDULE 4
PERSONS DELIVERING LOCK-UP AGREEMENTS
Directors
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
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Stockholders
SZ Investments, L.L.C.
EGI-Fund (05-07) Investors, L.L.C.
Equity Group Investments, L.L.C.
Third Avenue Management LLC
EGI-Fund (05-07) Investors, L.L.C.
Equity Group Investments, L.L.C.
Third Avenue Management LLC
Exhibit A
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ Brothers Inc.
▇.▇. ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you and certain other firms (the “Underwriters”) propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”) providing for the purchase by
the Underwriters of $325,000,000 aggregate principal amount of 1.00% Senior Convertible Debentures
due 2027 (the “Debentures”) of Covanta Holding Corporation, a Delaware corporation (the “Company”),
and that the Underwriters propose to reoffer the Debentures to the public (the “Offering”).
In consideration of the execution of the Underwriting Agreement by the Underwriters, and for
other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the
prior written consent of ▇▇▇▇▇▇ Brothers Inc. on behalf of the Underwriters, the undersigned will
not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter
into any transaction or device that is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of Common Stock (including,
without limitation, shares of Common Stock that may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and Exchange Commission
and shares of Common Stock that may be issued upon exercise of any options or warrants) or
securities convertible into or exercisable or exchangeable for Common Stock (other than pledges of
Common Stock to secure loans with broker-dealers and other financial institutions that existed
prior to the date hereof where such broker-dealers and other financial institutions are entitled to
foreclose on such pledges in accordance with the terms thereof), (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of shares of Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash
or otherwise, (3) make any demand for or exercise any right or cause to be filed a registration
statement, including any amendments thereto, with respect to the registration of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for Common Stock or any
other securities of the Company or (4) publicly disclose the intention to do any of the foregoing,
for a period commencing on the date hereof and ending on the 60th day after the date of
the Prospectus relating to the Offering (such 60-day period, the
“Lock-Up Period”)[; provided, however, nothing herein shall prevent or restrict the
undersigned from offering for sale, selling, pledging or otherwise disposing of, solely for the
payment of income taxes, not more than [ ] of the shares of the Common Stock held of record or that
may be deemed to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission during the Lock-Up Period without the consent
of ▇▇▇▇▇▇ Brothers Inc. on behalf of the Underwriters]1.
Notwithstanding the foregoing, and subject to the conditions below, the undersigned may
transfer any shares of Common Stock held of record or that may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations of the Securities and Exchange
Commission without the prior written consent of ▇▇▇▇▇▇ Brothers Inc.:
| (i) | as a bona fide gift or gifts; | ||
| (ii) | to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned; | ||
| (iii) | as a distribution to limited partners, members or stockholders of the undersigned, to the undersigned’s affiliates or to any investment fund or other entity controlled or managed by the undersigned; | ||
| (iv) | to any beneficiary of the undersigned pursuant to a will or other testamentary document or applicable laws of descent; or | ||
| (v) | to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests of which are held by the undersigned or immediate family of the undersigned; |
provided, that (a) ▇▇▇▇▇▇ Brothers Inc. shall have received a signed copy of this lock-up agreement
from each donee, trustee, distributee, or transferee, as the case may be, (b) any such transfer
shall not involve a disposition for value, and (c) the undersigned does not otherwise voluntarily
effect any such public filing or report regarding such transfers.
Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the
Company issues an earnings release or material news or a material event relating to the Company
occurs or (2) prior to the expiration of the Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of the Lock-Up Period,
then the restrictions imposed by this Lock-Up Letter Agreement shall continue to apply until the
expiration of the 18-day
| 1 | Applicable to only ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ Bucks. |
2
period beginning on the issuance of the earnings release or the announcement of the material
news or the occurrence of the material event, unless ▇▇▇▇▇▇ Brothers Inc. waives such extension in
writing. The undersigned hereby further agrees that, prior to engaging in any transaction or
taking any other action that is subject to the terms of this Lock-Up Letter Agreement during the
period from the date of this Lock-Up Letter Agreement to and including the 34th day
following the expiration of the Lock-Up Period, it will give notice thereof to the Company and will
not consummate such transaction or take any such action unless it has received written confirmation
from the Company that the Lock-Up Period (as such may have been extended pursuant to this
paragraph) has expired.
In furtherance of the foregoing, the Company and its transfer agent are hereby authorized to
decline to make any transfer of securities if such transfer would constitute a violation or breach
of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies the Underwriters that it does not intend to
proceed with the Offering, if the Underwriting Agreement does not become effective, or if the
Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Debentures, the undersigned
will be released from its obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will proceed with
the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors, including market
conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of
which are subject to negotiation between the Company and the Underwriters.
[Signature page follows]
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The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will
execute any additional documents necessary in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
| Very truly yours, |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Dated: January 25, 2007
4
EXHIBIT B-1
FORM OF OPINION OF ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
1. The Company is duly incorporated, legally existing and in good standing as a corporation
under the laws of the State of Delaware. The Company has all corporate power and authority
necessary under the Delaware General Corporation Law (the “DGCL”) and the Governing Documents to
own or hold its properties and conduct the business in which it is engaged.
2. There are no preemptive rights under federal law or under the DGCL to subscribe for or
purchase shares of the Common Stock. There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any shares of the Common Stock
pursuant to the Governing Documents or, to the best of our knowledge, any agreement or other
instrument.
3. Each of the Agreement, the Indenture and the Debentures has been duly and validly
authorized by the Company under the DGCL and the Governing Documents, and has been duly executed
and delivered by the Company.
4. The Underlying Securities issuable upon conversion of the Debentures have been duly
authorized and reserved for issuance by all necessary corporate action on the part of the Company
under the DGCL and the Certificate of Incorporation and, when issued upon conversion of the
Debentures in accordance with the Indenture and the terms of the Debentures, will be validly
issued, fully paid and non-assessable under the DGCL, and the issuance of the Underlying Securities
will not be subject to any preemptive or similar rights under (A) Delaware law or (B) the Governing
Documents, or (C) to the best of our knowledge, any other agreement.
5. The execution, delivery and performance of the Agreement, the Indenture and the Debentures
by the Company, the issuance and delivery of the Debentures by the Company on the date hereof
pursuant to the Agreement and the Indenture, the issuance of the Underlying Securities upon
conversion of the Debentures, the consummation of the transactions contemplated by the Agreement
and the application of the proceeds from the sale of the Debentures as described under “Use of
Proceeds” in each of the most recent Preliminary Prospectus and the Prospectus do not and will not
(A) conflict with or result in a breach or violation of any of the terms or provisions of, or
impose any lien, charge or encumbrance upon any property or assets of the Company and its
Significant Subsidiaries or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, license or other agreement or instrument filed or included as an exhibit to the
Company’s annual report on Form 10-K for the year ended December 31, 2005 or to any of the
Company’s quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
2006, respectively, except to the extent disclosed under such “Use of Proceeds” section in the
event that the Company is unsuccessful in entering into the New Credit Facilities; (B) result in
any violation of the provisions of the charter or by-laws (or similar organizational documents) of
the Company or any of its Significant Subsidiaries; or (C) result in any violation of any statute
or any rule or regulation, or any order known to us issued by any court or governmental agency or
body having jurisdiction over the Company or any of its Significant Subsidiaries or any of their
properties or assets.
6. Except for the registration of the Debentures under the Securities Act, the qualification
of the Indenture under the Trust Indenture Act, the listing of the Underlying Securities with the
New York Stock Exchange and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state or foreign securities
laws (as to which we do not express any opinion) in connection with the purchase and sale of the
Debentures by the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having jurisdiction over the Company or
any of its Significant Subsidiaries or any of their properties or assets is required for the
execution, delivery and performance of the Agreement, the Indenture and the Debentures by the
Company, the issuance and delivery of the Debentures by the Company on the date hereof pursuant to
the Agreement and the Indenture, the issuance of the Underlying Securities upon conversion of the
Debentures and the consummation of the transactions contemplated by the Agreement.
7. To the best of our knowledge, except as described in each of the most recent Preliminary
Prospectus and the Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right (other than rights which have been waived or
otherwise satisfied) to require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered pursuant to the Registration
Statement.
8. To the best of our knowledge, except as described in each of the most recent Preliminary
Prospectus and the Prospectus, there are no legal or governmental proceedings pending to which the
Company or any of its Significant Subsidiaries is a party or of which any property or assets of the
Company or any of its Significant Subsidiaries is the subject, the adverse determination of which
would reasonably be expected to result in a Material Adverse Effect or would reasonably be expected
to result in a material adverse effect on the performance of the Agreement or the consummation of
the transactions contemplated thereby; and, to the best of our knowledge, no such proceedings are
threatened or contemplated by governmental authorities or other persons or entities.
9. The Registration Statement became effective under the Securities Act as of the date it was
filed with the Commission, and each of the Preliminary Prospectus and the Prospectus was filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations on January 19, 2007 and January
___, 2007, respectively. To the best of our knowledge, (A) no stop order suspending the
effectiveness of the Registration Statement has been issued and (B) no proceeding or examination
for such purpose has been instituted or threatened by the Commission.
10. (A) The Registration Statement, on the latest Effective Date and on the applicable
Delivery Date, and (B) the Prospectus, when filed with the Commission pursuant to Rule 424(b) and
on the applicable Delivery Date (except in each case as to financial statements and other financial
or statistical data contained or incorporated by reference therein, upon which we do not express
any opinion), complied as to form in all material respects with the requirements of the Securities
Act and the Rules and Regulations.
2
11. The statements made in each of the most recent Preliminary Prospectus and the Prospectus
under the caption “Description of Capital Stock,” insofar as they purport to constitute a summary
of the terms of the Common Stock (including the Underlying Securities), constitute an accurate
summary of the terms of the Common Stock in all material respects.
12. The statements made in each of the most recent Preliminary Prospectus and the Prospectus
under the caption “Certain United States Federal Income Tax Considerations,” insofar as they
purport to constitute summaries of matters of United States federal tax law and regulations or
legal conclusions with respect thereto, constitute accurate summaries of the matters described
therein in all material respects.
13. To the best of our knowledge, there are no contracts or other documents of a character
required to be described in the Registration Statement or the most recent Preliminary Prospectus or
to be filed as exhibits to the Registration Statement or incorporated by reference therein that are
not described and filed therewith or incorporated by reference therein as required.
14. The Company is not an “investment company” within the meaning of and subject to regulation
under the Investment Company Act of 1940, as amended.
We have acted as special securities counsel to the Company on a regular basis, including in
connection with the preparation of the Registration Statement, the Prospectus and the Pricing
Disclosure Package and, based on the foregoing, no information has been disclosed to us that gives
us reason to believe that and, on the basis of the foregoing, no facts have come to our attention
which causes us to believe that:
(a) the Registration Statement, as of the latest Effective Date, contained any untrue
statement of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading;
(b) the Prospectus, as of its date and as of the date hereof, contained or contains any
untrue statement of a material fact or omitted or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or
(c) the Pricing Disclosure Package, as of the Applicable Time, contained any untrue
statement of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading,
except that, in each case, we express no opinion or belief with respect to the financial
statements, any pro forma financial information and schedules or other financial or statistical
data contained in or incorporated by reference in or omitted from the Registration Statement, the
Prospectus or the Pricing Disclosure Package. The foregoing statement is qualified to the effect
that we do not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or the Pricing Disclosure
Package, except to the extent set forth in paragraphs 11 and 12 of our opinion letter to you dated
the date hereof.
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EXHIBIT B-2
FORM OF OPINION OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
1. The Underwriting Agreement has been duly delivered by the Company.
2. The Indenture has been duly delivered by the Company and is the legally valid and binding
agreement of the Company, enforceable against the Company in accordance with its terms.
3. The Debentures, when executed, issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by you in accordance with the terms of the Underwriting
Agreement, will be legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms. A registered holder of Debentures is a beneficiary under
the Indenture.
4. The statements in the Base Prospectus under the caption “Description of the Securities” and
in the Prospectus Supplement under the caption “Description of the Debentures,” insofar as they
purport to describe or summarize certain provisions of the Indenture or the Debentures are accurate
summaries or descriptions in all material respects.
5. The Registration Statement has become effective under the Act. With your consent, based
solely on telephonic confirmation by a member of the Staff of the Commission on January 31, 2007 we
confirm that no stop order suspending the effectiveness of the Registration Statement has been
issued under the Act and no proceedings therefor have been initiated by the Commission. The
Prospectus has been filed in accordance with Rule 424(b) and 430B under the Act.
6. The Indenture has been qualified under the Trust Indenture Act of 1939, as amended.
EXHIBIT B-3
FORM OF OPINION OF GENERAL COUNSEL
The Company and each of its Significant Subsidiaries (other than Quezon Power, Inc.) has been
duly organized and is validly existing and in good standing as a corporation or other business
entity under the laws of its jurisdiction of organization. The Company and each of its Significant
Subsidiaries (other than Quezon Power, Inc.) is qualified to do business and in good standing as a
foreign corporation or other business entity in each jurisdiction in which its ownership or lease
of property or the conduct of its businesses requires such qualification, except where the failure
to be so qualified or in good standing, in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect. Each of the Significant Subsidiaries has all power and
authority necessary to own or hold its properties and conduct the businesses in which it is engaged.
EXHIBIT C
FORM OF CERTIFICATE OF THE COMPANY’S CHIEF FINANCIAL OFFICER
Reference is hereby made to the Underwriting Agreement, dated as of the date hereof, between
Covanta Holding Corporation (the “Company”) and you, as representatives of the several underwriters
named therein, relating to the offering of the Company’s 1.00% Senior Convertible Debentures due
2027 (the “Underwriting Agreement”).
Pursuant to Section 7(r) of the Underwriting Agreement, I, ▇▇▇▇ ▇. ▇▇▇▇▇▇, in my capacity as
Senior Vice President and Chief Financial Officer of the Company, hereby certify on behalf of the
Company that nothing has come to my attention that causes me to believe that:
| • | at January 22, 2007, there was any material increase in long-term debt as compared with the amounts shown on the September 30, 2006 unaudited condensed consolidated balance sheet incorporated by reference in the Registration Statement (as such term is defined in the Underwriting Agreement) or | ||
| • | for the period from December 1, 2006 to January 22, 2007, there were any material decreases, as compared with the corresponding period in the preceding year, in total operating revenues or the total or per-share amounts of pre-tax net income (loss). |
In making the statements provided above, I note that I have received neither (i) final
operating or financial reports for December, 2006, nor (ii) operating or financial reports with
respect to the month of January, 2007 or any portion thereof.