As filed with the Securities and Exchange Commission on October 5, 2001
Registration No. 333-65290
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COVANTA ENERGY CORPORATION
(Exact name of registrant as specified in charter)
Delaware 13-5549268
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
40 Lane Road Jeffrey R. Horowitz
Fairfield, New Jersey 07004 Senior Vice President-
(973) 882-9000 Legal Affairs and Secretary
(Address, including zip code, and telephone Covanta Energy Corporation
number, including area code, of Registrant's 40 Lane Road
principal executive offices) Fairfield, New Jersey 07004
(973) 882-9000
(Name, address, including zip
code and telephone
number, including area code,
of agent for service
of process)
COVANTA CAPITAL TRUST I
COVANTA CAPITAL TRUST II
COVANTA CAPITAL TRUST III
(Exact name of registrant as specified in charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Covanta Energy Corporation Jeffrey R. Horowitz
40 Lane Road Covanta Capital Trust I,
Fairfield, New Jersey 07004 Covanta Capital Trust II and
(973) 882-9000 Covanta Capital Trust III
(Address, including zip code, and telephone c/o Covanta Energy Corporation
number, including area code, of Registrant's 40 Lane Road
principal executive offices) Fairfield, New Jersey 07004
(973) 882-9000
(Name, address, including
zip code and telephone
number, including area
code, of agent for service
of process)
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Copies to
Joseph A. Tato, Esq. William F. Gorin, Esq.
Stephen G. Rooney, Esq. Cleary, Gottlieb, Steen & Hamilton
LeBoeuf, Lamb, Greene & MacRae, L.L.P. One Liberty Plaza
125 West 55th Street New York, New York 10006-1470
New York, New York 10019 (212) 225-2000
(212) 424-8000
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Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this registration statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------
1
The information in this prospectus is not complete and may be changed.
Neither we nor the Capital Trusts may sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 5, 2001
PROSPECTUS
$350,000,000
Covanta Energy Corporation
Debt Securities, Preferred Stock, Common Stock,
Depositary Shares, Warrants, Stock Purchase Contracts and
Stock Purchase Units and Hybrid Securities
Combining Features of these Securities
-----------------------
Covanta Capital Trust I
Covanta Capital Trust II
Covanta Capital Trust III
Preferred Securities fully and unconditionally guaranteed
to the extent provided in this Prospectus
by Covanta Energy Corporation
-----------------------
By this prospectus, we and the Capital Trusts may from time to time offer
securities to the public together or separately and in one or more series, in
amounts, at prices and on terms to be determined at the price of offering. We
will provide the specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
Covanta Energy Corporation's common stock and Series A preferred stock are
listed on the New York Stock Exchange under the symbol "COV." Any common stock
sold under an accompanying prospectus supplement will be listed on such
exchange, subject to notice of issuance.
Investing in our securities involves certain risks. See "Risk Factors" on
page 5.
-----------------------
Neither the Securities and Exchange Commission, any state securities
commission, nor any other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.
-----------------------
THE DATE OF THIS PROSPECTUS IS -----------------------, 2001.
2
You should rely only on the information contained or incorporated by
reference in this prospectus or any prospectus supplement. Neither we nor the
Capital Trusts have authorized anyone to provide you with different information.
Neither we nor the Capital Trusts are making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information provided in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of those documents.
All references in this prospectus to "Covanta," "our company," "we," "us"
or "our" mean Covanta Energy Corporation, unless we state otherwise or the
context otherwise requires. The term "Capital Trusts" refers to Covanta Capital
Trust I, Covanta Capital Trust II and Covanta Capital Trust III.
TABLE OF CONTENTS
Page
FORWARD-LOOKING STATEMENTS....................................................1
ABOUT THIS PROSPECTUS.........................................................2
COVANTA ENERGY CORPORATION....................................................3
COVANTA CAPITAL TRUSTS........................................................3
RISK FACTORS..................................................................5
WHERE YOU CAN FIND MORE INFORMATION..........................................16
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................17
USE OF PROCEEDS..............................................................18
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS.............18
DESCRIPTION OF DEBT SECURITIES...............................................19
DESCRIPTION OF CAPITAL STOCK.................................................30
DESCRIPTION OF WARRANTS......................................................35
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS.............36
DESCRIPTION OF PREFERRED SECURITIES..........................................37
DESCRIPTION OF GUARANTEES....................................................46
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING
SUBORDINATED DEBT SECURITIES AND THE GUARANTEE...............................48
PLAN OF DISTRIBUTION.........................................................50
LEGAL MATTERS................................................................52
EXPERTS......................................................................52
i
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus are forward-looking statements. These
statements involve known and unknown risks and relate to future events, our
future financial performance or our projected business results. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these terms or other
comparable terminology.
Although we believe that our expectations are reasonable, we can give no
assurance that these expectations will prove correct. Factors that could cause
our actual results to differ materially from those contemplated in the
forward-looking statements include, among others, the following:
o economic, capital market and other business conditions in the United
States and in foreign countries affecting power generation enterprises
specifically and commerce generally including interest, inflation and
exchange rates, weather conditions, creditworthiness of customers and
suppliers, changes in fuel costs and supply, unscheduled outages,
environmental incidents, electric transmission restraints and risks
and uncertainties associated with the recently deregulated energy
industry,
o trade, monetary, fiscal, taxation, energy regulation and environmental
policies of governments, agencies and similar organizations in
geographic areas where we have a financial interest,
o financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory Commission and similar
entities with regulatory oversight, including, without limitation, the
impact of newly adopted FASB 133 relating to accounting for
derivatives which became effective as of January 1, 2001. The impact
of FASB 133 may vary between accounting periods based on changes in
pricing of various items bought and sold by us,
o the cost and other effects of legal and administrative proceedings,
settlements, investigations and claims,
o limitations on our ability to control the development or operation of
projects of which we own 50% or less,
o limitations on the ability of our management to project the future
operational results of development projects, which lack any
operational history,
o developments in the California power markets, including, but not
limited to, governmental intervention, deterioration in the financial
condition of counterparties, default in receivables due, adverse
results in current or future litigation and adverse changes in the
tariffs of the California Independent System Operator Corporation,
o performance of our projects undertaken and the success of efforts to
invest in and develop new opportunities, and
o other factors, including the risks outlined under "Risk Factors" and
those that may be identified in a prospectus supplement accompanying
this prospectus and in other information contained in our publicly
available SEC filings, including, but not limited to, factors
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2000 and our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001.
We do not undertake a duty to update any of the forward-looking statements after
the date of this prospectus.
1
ABOUT THIS PROSPECTUS
This document is called a prospectus and is part of a registration
statement that we and the Capital Trusts have filed with the Securities and
Exchange Commission using a "shelf" registration or continuous offering process.
Using this process, we and the Capital Trusts may, from time to time, offer any
combination of the securities described in this prospectus, either separately or
in units, in one or more offerings with a total initial offering price of up to
$350,000,000. This prospectus provides you with a general description of the
securities we and the Capital Trusts may offer. Each time we or the Capital
Trusts offer securities, we will provide a prospectus supplement to this
prospectus. The prospectus supplement will describe the specific terms of that
offering, and may also include a discussion of any special considerations
applicable to those securities. The prospectus supplement may also add, update
or change the information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any prospectus
supplement, you should rely on the information in the prospectus supplement.
Please carefully read this prospectus and the prospectus supplement, in addition
to the information contained in the documents we refer you to under the headings
"Where You Can Find More Information" and "Incorporation of Certain Documents by
Reference." The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the securities offered under this prospectus. The registration statement,
including the exhibits, can be read at the SEC website or at the SEC offices
mentioned under the heading "Where You Can Find More Information."
2
COVANTA ENERGY CORPORATION
We are an international developer, owner and operator of power generation
facilities and provider of related infrastructure services. We own or operate 62
power generation facilities, 46 in the United States and 16 outside of the
United States. These facilities have a capacity of approximately 2,653 gross
megawatts (MW). Our power generation facilities use a variety of fuels,
including water (hydroelectric), natural gas, coal, geothermal fluid, municipal
solid waste, wood waste, landfill gas, heavy fuel oil and diesel fuel. Our
waste-to-energy facilities process 10 million tons of municipal solid waste per
year. We also offer single-source design, construction and operating
capabilities for water and wastewater treatment facilities. We operate nine
water supply and water treatment facilities that process the equivalent of
approximately 61 million gallons of wastewater per day (mgd).
We intend to continue to expand our portfolio by acquiring, developing,
constructing and operating power facilities in markets which meet our energy
demand, regulatory and governmental stability and investment return
requirements. We have a water treatment facility with a total treatment capacity
of 28 mgd under construction. We also have several pending acquisition prospects
and an active development portfolio. We are also in the process of expanding
some of our existing facilities.
Effective March 13, 2001, we changed our name to Covanta Energy Corporation
from Ogden Corporation. Our new name symbolizes the "cooperation" and
"advantages" inherent in our partnership approach to our business.
We are incorporated in Delaware with executive offices located in
Fairfield, New Jersey.
COVANTA CAPITAL TRUSTS
Each Capital Trust is a statutory business trust created under Delaware law
under (i) a trust agreement executed by Covanta, as sponsor of such Capital
Trust, and the Issuer Trustees of such Capital Trust and (ii) a certificate of
trust filed with the Delaware Secretary of State. Each trust agreement will be
amended and restated in its entirety substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each trust agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended. Each Capital Trust exists for the exclusive purposes
of:
o issuing and selling the trust securities representing undivided
beneficial interests in the assets of such Capital Trust,
o using the proceeds from the sale of such trust securities to acquire a
series of corresponding subordinated debt securities, issued by
Covanta, and
o engaging in only other necessary, convenient or incidental activities.
Accordingly, the corresponding subordinated debt securities will be the
sole revenue source of each Capital Trust. Each of the Capital Trusts is a
separate legal entity, and the assets of one are not available to satisfy the
obligations of any others.
Each Capital Trust may offer preferred securities representing undivided
beneficial ownership interests in the assets of such Capital Trust. Covanta will
be the owner of all of the common securities of each Capital Trust. The common
securities of each Capital Trust will rank equally, and payments will be made
ratably, with the preferred securities of the Capital Trust, except that upon
the occurrence and continuance of an event of default under the applicable trust
agreement resulting from an event of default with respect to the corresponding
subordinated debt securities (described below), Covanta's rights as holder of
the common securities to payment in respect of distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the preferred securities of such Capital Trust. See "Description of
Preferred Securities--Subordination of Common Securities." Covanta will acquire
common securities in an aggregate liquidation amount equal to not less than 3%
of the total capital of each Capital Trust.
The payment of periodic cash distributions with respect to the preferred
securities of each Capital Trust and payments on liquidation and on redemption
with respect to the preferred securities in each case out of funds held by such
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Capital Trust will be guaranteed by Covanta as and to the extent described in
this prospectus. See "Description of Guarantees." Covanta's obligations under
each guarantee are an unsecured obligation of Covanta and will rank subordinate
and junior in right of payment to all Covanta's indebtedness. Except as
otherwise provided in the applicable prospectus supplement:
o concurrently with the issuance by a Capital Trust of its preferred
securities, such Capital Trust will invest the proceeds and any
contributions made in respect of the common securities in the
corresponding subordinated debt securities with terms directly
corresponding to the terms of such Capital Trust's preferred
securities,
o the corresponding subordinated debt securities will be the sole assets
of such Capital Trust, and
o payments under the corresponding subordinated debt securities will be
the only revenue of such Capital Trust.
Unless otherwise specified in an applicable prospectus supplement, Covanta
may redeem the corresponding subordinated debt securities and cause the
redemption of trust securities, or we may dissolve the Capital Trust and, after
satisfaction of creditors of the Capital Trust as provided by applicable law,
cause the corresponding subordinated debt securities to be distributed to the
holders of preferred securities in liquidation of their interests in such
Capital Trust. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
Unless otherwise specified in the applicable prospectus supplement, each
Capital Trust has a term of approximately 50 years but may dissolve earlier as
provided in the applicable trust agreement. Each Capital Trust's business and
affairs will be conducted by its trustees, each appointed by Covanta as holder
of the common securities. Unless otherwise specified in the applicable
prospectus supplement, the trustees for each Capital Trust will be Bankers Trust
Company, as the Property Trustee, Wilmington Trust Company, as the Delaware
Trustee, and two individual trustees as Administrative Trustees who are
employees or officers of Covanta. Each of these trustees is referred to as an
"Issuer Trustee." The Property Trustee will act as sole indenture trustee under
the trust agreement for purposes of compliance with the Trust Indenture Act.
Unless otherwise specified in the applicable prospectus supplement, Bankers
Trust Company will act as trustee under each guarantee and the subordinated
indenture until removed or replaced by the holder of the common securities of
such Capital Trust. See "Description of Guarantees" and "Description of the Debt
Securities--Subordinated Debt Securities." Unless an event of default under the
applicable trust agreement resulting from an event of default with respect to
corresponding subordinated debt securities for such Capital Trust has occurred
and is continuing, Covanta, as the holder of the common securities of such
Capital Trust, may remove any of the Issuer Trustees. If such an event of
default has occurred, both Covanta and the holders of a majority in liquidation
amount of the preferred securities will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee for such Capital Trust.
In no event will the holders of the preferred securities have the right to vote
to appoint, remove or replace the Administrative Trustees; such voting rights
are vested exclusively in Covanta, as the holder of the common securities. The
duties and obligations of each Issuer Trustee are governed by the applicable
trust agreement. See "Description of Guarantees" and "Description of the Trust
Preferred Securities."
The principal executive office of each Capital Trust is c/o Covanta Energy
Corporation, 40 Lane Road, Fairfield, New Jersey 07004 and its telephone number
is 973-882-9000.
4
RISK FACTORS
Before you invest in any of the securities described in this prospectus,
you should be aware of the significant risks described below. You should
carefully consider these risks, together with all of the other information
included in this prospectus, the accompanying prospectus supplement and the
information incorporated by reference, before you decide whether to purchase any
of these securities.
The risk factors listed in this section, as well as any cautionary language
in this prospectus, provide examples of risks, uncertainties and events that may
cause our actual results to differ materially from the expectations we describe
in our forward-looking statements. Before you invest in any of the securities
described in this prospectus, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus, the
accompanying prospectus supplement and the information incorporated by
reference, could have a material adverse effect on our business, financial
condition and results of operations and on the price of these securities.
In this description of risk factors, the words "Covanta," "our company,"
"we," "us" or "our" refer to Covanta Energy Corporation and, unless the context
otherwise requires, its consolidated subsidiaries other than the Capital Trusts.
Risks Relating To Our Corporate And Financial Structure
Our master credit facility contains covenants which restrict our activities
and could affect our growth.
The Revolving Credit and Participation Agreement, which we call the Master
Credit Facility, with our credit providers is a consolidation of most of our
major outstanding credit facilities. The Master Credit Facility matures in May
2002 and is secured by a lien on substantially all of our unencumbered real and
personal property. It contains covenants which during its term preclude us from
investing in or acquiring new energy and water projects not identified in the
Master Credit Facility. These covenants also significantly restrict our ability
to:
o make other investments or acquisitions,
o incur or guarantee indebtedness,
o create contingent obligations,
o permit cash usage to exceed budgeted amounts, and
o engage in sale-and-leaseback transactions.
In addition, the Master Credit Facility requires us to maintain financial
ratios and measures such as a minimum debt service coverage ratio, a maximum
leverage ratio and a minimum consolidated net worth. The Master Credit Facility
provides that we can not make corporate borrowings from other than under that
facility. The revolving line of credit under the Master Credit Facility is
$146.0 million, of which $122.0 million is dedicated to provide letters of
credit which we may become obligated to provide. We have utilized $20.0 million
of the line to provide other letters of credit.
The covenants in the Master Credit Facility could have important
consequences, including:
o restricting our ability to borrow for capital expenditures, debt
service requirements, execution of our growth strategy or other
purposes,
o limiting our ability to capitalize on business opportunities and to
react to competitive pressures and adverse changes in government
regulation, and
o increasing our vulnerability to general adverse economic and industry
conditions.
5
If we do not maintain an investment grade credit rating, we will have to
provide credit enhancement to many of our projects which could adversely
affect our financial condition and increase our borrowing costs.
Our senior debt securities currently have an investment grade credit rating
of "BBB" from Standard and Poor's and a rating of "Baa2" from Moody's Investor
Service. We were placed on negative credit watch by Standard and Poor's and
Moody's Investor Service in 1999. However, as of August 31, 2001, Standard and
Poor's removed us from credit watch and lowered our rating from "BBB+" to our
current rating of "BBB." Moody's Investor Service is still in the process of
reviewing our credit rating. We have agreements with some of our counterparties
to provide credit enhancement in the form of a pledge of cash collateral, a
letter of credit or other similar credit enhancement in the event that our
credit rating falls below investment grade. The Master Credit Facility provides
us with a credit line of approximately $146.0 million, of which $122.0 million
is dedicated to provide such letters of credit. Such letters of credit can be
issued upon the vote of at least eight banks holding 60% of the revolving
facilities held by the 32 banks in the group. If such letters of credit were
required and the banks would not consent to issue them, we would default on the
related agreements and the counterparty would have the right to cancel the
agreements and exercise other remedies.
A downgrade of our credit rating below investment grade would likely result
in:
o increased borrowing costs,
o more restrictive covenants, and
o reduced lines of credit from lenders, suppliers and counterparties.
Such results would adversely affect our financial condition and our ability
to raise capital to pursue our growth strategy. While we intend to maintain our
investment grade rating, we cannot assure you that we will be able to do so.
We have substantial exposure under letters of credit backing various
obligations which, if breached, could have a material adverse effect on our
financial condition.
We have issued letters of credit to support the performance and payment
obligations of some of our subsidiaries and our obligations in connection with
workers compensation insurance.
On September 30, 2001, the total exposure under such letters of credit was
approximately $650.0 million. If these letters of credit were drawn upon due to
a breach of such obligations, we would be required to reimburse the issuing
financial institutions. Such reimbursement obligations could have a material
adverse effect on our financial condition.
We will need to replace the Master Credit Facility upon its expiration.
As of September 30, 2001, $20.0 million of the revolving credit line under
the Master Credit Facility had been used to provide letters of credit and
approximately $630.0 million of previously issued letters of credit, now subject
to the Master Credit Facility, were outstanding. At September 30, 2001, $122.0
million of the $146.0 million revolving credit line is dedicated to provide
letters of credit that would potentially be required to be posted by us in the
event that our credit rating is downgraded below investment grade.
If we do not replace the Master Credit Facility when it expires in May
2002, we will have to cash collateralize the outstanding letters of credit and
we will lose our source for the letters of credit we are required to post if our
credit rating is downgraded. We cannot assure you that we will be able to
replace the Master Credit Facility when it expires on commercially reasonable
terms, or at all, which could have a material adverse effect on our financial
condition.
We have substantial indebtedness which could limit our operating
flexibility and our ability to grow.
As of June 30, 2001, we had total outstanding recourse debt, including
convertible subordinated debentures, of approximately $469.2 million. The
percentage of our total outstanding recourse debt to recourse debt and equity
6
was 65% as of June 30, 2001. The substantial amount of debt that we have
presents the risk that we might not generate sufficient cash:
o to service our indebtedness,
o to compete effectively,
o to operate successfully under adverse economic conditions, and
o to fully implement our strategy.
In addition, we may not be able to achieve sufficient credit capacity to
allow for borrowing to implement our strategy. Our project subsidiaries and
project affiliates also had total non-recourse debt of approximately $1.47
billion as of June 30, 2001.
Although we expect that the cash available from our operations will be
sufficient to service our currently outstanding corporate-level indebtedness, we
cannot assure you that these funds will be sufficient to make corporate-level
debt payments as and when due.
Because we own 50% or less of some of our project investments, we cannot
exercise complete control over their operations.
We beneficially own 50% or less in some project investments and joint
ventures. A portion of our future investments may also take the form of minority
interests. For the majority of our projects, we are the operator and are able to
control the projects' management and operation. At facilities where we do not
have operational responsibility, we typically require a seat on a management
committee and/or an operational committee and receive limited governance rights
such as rights to veto significant actions. If we are unable to obtain such
positions on a project in which we hold a minority interest, we will be
dependent on our co-venturers to construct and operate such projects. Our
co-venturers may not have the level of experience, technical expertise, human
resources management and other attributes necessary to construct and operate
these projects.
We have guaranteed performance obligations of some of our project
subsidiaries and affiliates which would be difficult for us to satisfy if
most or all of them came due simultaneously.
In some of our projects, we have executed performance guarantees at the
parent level to support a subsidiary's or affiliate's operating obligations
under the applicable service agreement or operating contract. Under those
guarantees, we may be obligated to pay substantial liquidated damages, measured
in part by the outstanding debt securities of the project. In the future, we may
be required to guarantee a portion of the obligations of some of our
subsidiaries. We may not be able to satisfy these guarantees and other
obligations if they were to come due at the same time, which would have a
material adverse effect on our financial condition.
Liabilities associated with our non-core businesses could have a material
adverse effect on our financial condition.
Contingent liabilities associated with our non-core businesses that we are
attempting to sell are not quantifiable at this time, except for $309.0 million
in letter of credit exposure as of September 30, 2001. Along with the City of
Anaheim, we are a party to a reimbursement agreement in connection with a letter
of credit in the amount of $119.0 million. Under the reimbursement agreement, we
are responsible for any draws under the letter of credit caused by our failure
to perform our duties under the management contract for the Arrowhead Pond Arena
in Anaheim, California. Our duties include our obligation to pay any shortfalls
if net revenues of the venue are insufficient to pay the underlying debt
service.
With respect to the Corel Centre in Ottawa, Canada, we have guaranteed $3.3
million of senior secured term debt and are potentially obligated to purchase
approximately (a) $47.6 million of secured and subordinated debt and $89.7
million of senior secured debt if such amounts are not repaid or refinanced by
December 23, 2002 and (b) $19.8 million of secured subordinated debt if such
amount is not repaid or refinanced by January 29, 2004.
7
In addition, we have indemnification obligations with respect to sold
businesses, most of which have a maximum amount of exposure. With respect to our
discontinued aviation fueling business which we have not yet fully divested, we
may be subject to liabilities and obligations relating to the release and
cleanup of petroleum products. The amount of such contingent liability and
indemnification payments could be substantial, and our financial condition could
be adversely affected if such payments were to become due at or about the same
time.
Our certificate of incorporation, bylaws and rights agreement could limit
another party's ability to acquire us and could deprive you of the
opportunity to obtain a takeover premium for your shares of common stock.
A number of provisions in our certificate of incorporation, bylaws and
rights agreement may make it difficult for another company to acquire us and for
you to receive any related takeover premium for your shares. These provisions
apply even if a proposed acquisition is considered beneficial by some of our
stockholders. If a change of control or change in management is delayed or
prevented, the price of the securities described in this prospectus could
decline.
Risks Relating To Our Operations
Construction, expansion, refurbishment and operation of our facilities
involve significant risks that cannot always be covered by insurance or
contractual protections.
The construction, expansion, refurbishment and operation of our facilities
involve many risks, including:
o supply interruptions,
o work stoppages,
o permitting and other regulatory issues,
o labor disputes,
o social unrest,
o weather interferences,
o unforeseen engineering, environmental and geological problems,
o unanticipated cost overruns,
o catastrophic events including fires, explosions, earthquakes and
droughts,
o changes in legal requirements,
o license revocation, and
o the exercise of the power of eminent domain.
The ongoing operation of these facilities involves all of the risks
described above as well as risks relating to the breakdown or failure of
equipment or processes and performance below expected levels of output or
efficiency.
New plants may employ recently developed and technologically complex
equipment, especially in the case of newer environmental emission control
technology.
To protect against the risks discussed above, we:
o maintain insurance,
o obtain warranties from vendors,
o obligate contractors to meet certain performance levels, and
o attempt where feasible to pass risks we cannot control to the service
recipient or output purchaser.
8
The proceeds of such insurance, warranties, performance guarantees or risk
sharing arrangements may not be adequate to cover lost revenues, increased
expenses or liquidated damages payments. In addition, our service agreements for
waste-to-energy facilities permit the municipality to terminate the agreement
for convenience. Although most of the agreements provide for the payment of a
penalty, some agreements do not require the municipality to pay significant
damages. Any of these risks could cause us to operate below expected levels,
which in turn could result in lost revenues, increased expenses, higher
maintenance costs and penalties for defaults under our service agreements and
operating contracts. As a result, a project may operate at less than expected
levels of profit or at a loss or be unable to fund principal and interest
payments under its project financing agreements, which may result in a default
under that project's indebtedness.
Most of our service agreements for waste-to-energy facilities provide for
limitations on damages and cross-indemnities among the parties for damages that
such parties may incur in connection with their performance under the contract.
Such contractual provisions:
o relate to environmental matters,
o excuse us from performance obligations affected by uncontrollable
circumstances, and
o provide for service fee adjustments in uncontrollable circumstances.
We cannot assure you that these provisions will prevent us from incurring
losses upon the occurrence of uncontrollable circumstances.
We often rely on single suppliers and single customers at our facilities,
exposing us to financial risks if any supplier or customer should fail to
perform its obligations.
We often rely on a single supplier to provide fuel, water and other
services required to operate a facility and on a single customer or a few
customers to purchase all or a significant portion of a facility's output. In
most cases, we have long-term agreements with such suppliers and customers which
support any project debt used to finance the facility. The financial performance
of these facilities depends on such customers and suppliers continuing to
perform their obligations under their long-term agreements. A facility's
financial results could be materially adversely affected if any one customer or
supplier fails to fulfill its contractual obligations and we are unable to find
other customers or suppliers to produce the same level of profitability. As a
result of the failure of a major customer or supplier to meet its contractual
obligations, we may be unable to repay obligations under our project debt.
Our operations outside the United States expose us to legal, tax, currency,
inflation, convertibility and repatriation risks, as well as potential
constraints on the development and operation of our potential business, any
of which can limit the benefits to us of a foreign project.
We have substantial operations outside the United States. Approximately 20%
of our projected cash distributions from existing facilities over the next five
years comes from facilities located in countries having sovereign ratings below
investment grade, including Bangladesh, the Philippines and Thailand. The
acquisition, financing, development and operation of projects outside the United
States can entail significant political and financial risks, which vary by
country, including:
o changes in laws or regulations,
o changes in electricity tariffs,
o changes in foreign tax laws and regulations,
o changes in United States, federal, state and local laws, including tax
laws, related to foreign operations,
o compliance with United States, federal, state and local foreign
corrupt practices laws,
o changes in government policies or personnel,
9
o changes in general economic conditions affecting each country,
including conditions in financial markets,
o difficulty in converting our earnings to U.S. dollars or moving funds
out of the country in which the funds were earned,
o fluctuations in currency exchange rates,
o changes in labor relations in operations outside the United States,
o political, economic or military instability and civil unrest, and
o expropriation and confiscation of assets and facilities.
In addition, the legal environment in foreign countries in which we
currently own assets or projects or may develop projects in the future could
make it more difficult for us to enforce our rights under agreements relating to
such projects.
We seek to participate in projects in jurisdictions where limitations on
the convertibility and expatriation of currency have been lifted by the host
country and where such local currency is freely exchangeable on the
international markets. In most cases, components of project costs incurred or
funded in the currency of the United States are recovered without risk of
currency fluctuation through negotiated contractual adjustments to the price
charged for electricity or service provided. This contractual structure may
cause the cost in local currency to the project's power purchaser or service
recipient to rise from time to time in excess of local inflation. As a result,
there is risk in such situations that such power purchaser or service recipient
will, at least in the near term, be less able or willing to pay for the
project's power or service.
We seek to mitigate these risks by obtaining political risk insurance and
negotiating contractual provisions to mitigate these risks. We cannot assure you
that such mitigation will be effective. The occurrence of any of these risks
could substantially delay or reduce the value of the project concerned. As a
result, these risks may have a material adverse effect on our business,
financial condition and results of operations.
Changes in the market prices and availability of fuel supplies to generate
electricity may increase our cost of producing power, which could adversely
impact our profitability and financial performance.
The market prices and availability of some of our facilities' fuel supplies
fluctuate, including those facilities fueled by wood waste, coal, oil and
natural gas. Although we believe that we have adequate and reliable fuel
supplies and that our suppliers have adequate production and transportation
systems to comply with their contractual requirements to supply our facilities,
any price increase, delivery disruption or reduction in the availability of such
supplies could affect our ability to operate our facilities and impair our cash
flow and profitability. We may be subject to further exposure if any of our
future acquisitions or developments are concentrated in facilities using fuel
types subject to fluctuating market prices and availability. We may not be
successful in our efforts to mitigate our exposure to supply and price swings.
Our hydroelectric plants require continuous water flow for operation.
Accordingly, we are subject to the risk that drought or other water flow
impairment may limit our ability to produce and market electricity from these
facilities.
Our waste-to-energy facilities depend on solid waste both for fuel and as a
source of revenue. For most of our facilities, the prices we charge for disposal
of solid waste are fixed under long-term contracts and the supply is guaranteed
by sponsoring municipalities. However, for some of our waste-to-energy
facilities, the availability of solid waste to us, as well as the tipping fee
that we must charge to attract solid waste to our facilities, depends upon
competition from a number of sources such as other waste-to-energy facilities,
landfills and transfer stations competing for waste in the market area. There
has been and may be further consolidation in the solid waste industry which
would reduce the number of solid waste collectors or haulers that are competing
for disposal facilities or enable such collectors or haulers to use wholesale
purchasing to negotiate favorable below-market disposal rates. The consolidation
in the solid waste industry has resulted in companies with vertically integrated
collection activities and disposal facilities. Such consolidation may result in
10
economies of scale for those companies as well as the use of disposal capacity
at facilities owned by such companies or by affiliated companies. Such
activities can affect both the availability of waste to us for disposal at some
of our waste-to-energy facilities and market pricing.
Our geothermal facilities depend upon adequate volumes of brine at
sufficient temperatures to meet our contractual electricity generation
obligations. Significant unanticipated interruptions of the brine volume or
cooling of the brine resource may limit our ability to generate electricity from
these facilities.
Our business is subject to substantial governmental regulation and
permitting requirements and may be adversely affected by any future
inability to comply with existing or future regulations or requirements.
Our business is subject to extensive energy, environmental and other laws
and regulations of federal, state and local authorities. We are generally
required to obtain and comply with a wide variety of licenses, permits and other
approvals in order to operate our facilities. We may incur significant
additional costs because of our compliance with these requirements. If we fail
to comply with these requirements, we could be subject to civil or criminal
liability and the imposition of liens or fines. In addition, existing
regulations may be revised or reinterpreted, new laws and regulations may be
adopted or become applicable to us or our facilities and future changes in laws
and regulations may have a detrimental effect on our business. Furthermore, with
the continuing trend toward stricter standards, greater regulation, more
extensive permitting requirements and an increase in the assets we operate, our
expenditures may be substantial in the future.
Environmental Regulation
Our business is subject to extensive environmental regulation by federal,
state and local authorities. We are required to comply with numerous
environmental laws and regulations and to obtain numerous governmental permits
in operating our facilities. We may incur significant additional costs to comply
with these requirements, in particular, emission regulations. Environmental
regulations may also limit our ability to operate our facilities at maximum
capacity or at all. If we fail to comply with these requirements, we could be
subject to civil or criminal liability and fines. Existing environmental
regulations could be revised or reinterpreted, new laws and regulations could be
adopted or become applicable to us or our facilities, and future changes in
environmental laws and regulations could occur. This may materially increase the
amount we must invest to bring our facilities into compliance. In addition,
recent lawsuits by the Environmental Protection Agency, commonly referred to as
the EPA, and various states highlight the environmental risks faced by
generating facilities in general and by coal-fired generating facilities in
particular. The current trend towards stricter environmental regulations could
materially affect our cash flow and profitability.
We may not be able to obtain or maintain, from time to time, all required
environmental regulatory approvals. If there is a delay in obtaining any
required environmental regulatory approvals or if we fail to obtain and comply
with them, the operation of our facilities could be jeopardized or become
subject to additional costs.
We are generally responsible for all on-site liabilities associated with
the environmental condition of our power generation facilities which we have
acquired and developed, regardless of when the liabilities arose and whether
they are known or unknown. These liabilities may be substantial.
Energy Regulation
The Public Utility Holding Company Act of 1935, or PUHCA, and the Federal
Power Act, or the FPA, regulate public utility holding companies and their
subsidiaries and place constraints on the conduct of their business. Under the
Public Utility Regulatory Policies Act of 1978, known as PURPA, many of our
facilities are qualified facilities (facilities meeting statutory size, fuel and
ownership requirements, or QFs), and are exempt from regulation under PUHCA,
most provisions of the FPA and state rate regulation. Under the Energy Policy
Act of 1992, our foreign and non-QF domestic projects are exempt from regulation
under PUHCA.
If we become subject to these regulations, the economics and operations of
our projects could be negatively affected. A project subsidiary or partnership
in which we have an interest owning or leasing a plant could become subject to
significant federal, state and local laws, including rate regulation. If an
11
alternative exemption from PUHCA was not available, we could be subject to
registration with the Securities and Exchange Commission and regulation as a
public utility holding company under PUHCA. In addition, depending on the power
purchase agreement, a loss of our exemptions could allow the power purchaser to
cease taking and paying for electricity or to seek refunds of past amounts paid.
Such results could cause the loss of some or all contract revenues or otherwise
impair the value of a project and could trigger defaults under provisions of the
applicable project contracts and financing agreements. Defaults under such
financing agreements could render the underlying debt immediately due and
payable. Under such circumstances, we cannot assure you that the costs incurred
in connection with the project could be recovered through sales to other
purchasers.
From time to time legislation has been introduced in Congress to repeal
PURPA and PUHCA. Any adverse effects to our business based on a repeal of these
acts would depend on the particulars of the repealing legislation. If PURPA were
repealed without a provision grandfathering our existing QF contracts, our QFs
might have to sell into a competitive wholesale market at market determined
rates which could be lower than contractual rates. Modification or termination
of our QF contracts, some of which provide for prices above current market
rates, could result in a reduction of our revenue. Repeal of PURPA would likely
result in our domestic facilities becoming subject to regulation under the FPA
with respect to rates, changes in control and other matters.
We are continually in the process of obtaining or renewing federal, state
and local approvals required to operate our facilities. We may not always be
able to obtain all required regulatory approvals, and we may not be able to
obtain any necessary modifications to existing regulatory approvals or maintain
all required regulatory approvals. If there is a delay in obtaining any required
regulatory approvals or if we fail to obtain and comply with any required
regulatory approvals, the operation of our facilities or the sale of electricity
to third parties could be prevented or subject to additional costs.
The revenue stream from our California projects is subject to change due to
uncertain conditions in the California energy markets.
We own, in whole or in part, 17 power projects in California with a total
gross generating capacity of approximately 260 MW. This represents about 10
percent of our total gross generating capacity. Our California facilities derive
revenues under long-term contracts with Sempra Corporation (formerly San Diego
Gas and Electric), Pacific Gas & Electric Corp., commonly referred to as PG&E,
and Southern California Edison Company, commonly referred to as SCE. The
problems in the California markets have been widely reported. The deregulation
plan implemented in 1996 by the California Public Utilities Commission, or the
CPUC, to restructure the wholesale and retail markets in California generally is
regarded as having failed to accomplish its goals. The financial position of the
California utilities has been adversely affected.
During several months in the beginning of 2001, PG&E and SCE suspended, in
whole or in part, payments to power generators, including our projects. The CPUC
in its March 26, 2001 orders raised retail rates, changed the components of the
short-run avoided cost calculation and directed the utilities to commence
payments to QFs going forward. SCE has made payments for energy delivered since
March 26, 2001. On April 6, 2001, PG&E filed for bankruptcy protection. Since
that time, PG&E has also been in compliance with the CPUC order and has been
making payments for current energy deliveries. The CPUC orders, however, did not
address the back payments which accrued during the suspension period, and we do
not know whether the increase will be sufficient to maintain the financial
health of the utilities which purchase power from us.
In an attempt to forestall an SCE bankruptcy, the California Department of
Water Resources and SCE in April 2001 signed a memorandum of understanding under
which the state would acquire SCE's transmission assets. In July 2001, the state
senate passed legislation approving a version of the memorandum of understanding
which authorized the sale of SCE's transmission lines to the state. However,
this legislation did not satisfy any of the parties involved and legislation
approving an amended version of the memorandum of understanding is now pending
before the state senate. On October 2, 2001, the CPUC and SCE settled litigation
on terms intended to permit SCE to discharge existing indebtedness. As a result,
the Governor of California cancelled a special session of the state legislature
called to complete the pending legislation.
In June 2001 and July 2001, we entered into agreements and amendments to
power purchase agreements for several of our projects with SCE. As provided in
these agreements, SCE immediately paid 10% of past due amounts plus interest.
Another 10% is expected to be paid when the legislation approving the amended
12
memorandum of understanding or other legislation or action which makes SCE a
creditworthy entity becomes effective. The remaining 80% will be paid when SCE
secures financing and funding. As of August 2001, interest on such past due
amounts is being paid monthly. In return, we agreed to a fixed price of $53.70
per megawatt hour for energy for a period of five years, beginning the month
after the legislation approving the amended memorandum of understanding becomes
effective. Until such legislation becomes effective, our projects in SCE's
territory continue to receive a price equal to the short-run avoided cost.
Additionally, we agreed to stay our pending litigation against SCE. In the event
of a bankruptcy, our contract payments from SCE may be at risk.
We believe that the settlement of the litigation between SCE and the CPUC
constitutes action which makes SCE a creditworthy entity and triggers SCE's
obligations under the 2001 agreements. However, at this time, SCE's position
regarding the 2001 agreements is unclear. We cannot assure you that we will
reach a resolution of this matter which is favorable to us.
In July 2001, we entered into agreements with PG&E containing terms similar
to those agreements with SCE. These agreements also provide for a fixed price of
$53.70 per megawatt hour for energy for a period of five years. However, this
pricing became effective immediately and most of our projects in PG&E's
territory have been receiving $53.70 per megawatt hour since mid-July 2001.
Unlike SCE, PG&E has not made any cash payments for past due amounts, but it has
agreed to accrue interest on the amount owed at a rate to be determined by the
bankruptcy court. PG&E agreed to assume our power purchase agreements and to
elevate the past due amounts to priority administrative claim status. The amount
of the claim and interest will be paid at the time PG&E's plan of reorganization
is consummated. The bankruptcy court approved the agreements, the power purchase
agreements and the assumption of the power purchase agreements on July 13, 2001.
We have established reserves for a portion of the amounts owed us by SCE
and PG&E.
The energy industry is rapidly becoming increasingly competitive, and we
might not be successful in responding to these changes.
We may not be able to respond in a timely or effective manner to the
changes resulting in increased competition in the energy industry in both
domestic and international markets. These changes may include deregulation of
the electric utility industry in some markets, privatization of the electric
utility industry in other markets and increasing competition in all markets. To
the extent U.S. competitive pressures increase and the pricing and sale of
electricity assumes more characteristics of a commodity business, the economics
of our business may come under increasing pressure. Additional significant
competitors could become active in our industry and we may not be able
profitably to acquire or develop new assets to pursue our growth strategy.
Regulatory initiatives in foreign countries where we have or will have
operations involve the same types of risks.
We cannot predict whether the federal government, state legislatures or
foreign governments will adopt legislation relating to the deregulation of the
energy industry. We cannot assure you that the introduction of new laws or other
future regulatory developments will not have a material adverse effect on our
business, financial condition or results of operations.
Risks Relating to Our Growth Strategy
Our project development and acquisition activities may not be successful,
which would impair our ability to execute our growth strategy.
We may not be able to identify attractive acquisition or development
opportunities or to complete acquisitions or development projects that we
undertake. If we are not able to identify and complete additional acquisitions
and development projects, we will not be able to successfully execute our growth
strategy. Factors that could cause our acquisition and development activities to
be unsuccessful include the following:
o a limited number of potential acquisitions,
13
o competition,
o inability to obtain additional capital on acceptable terms,
o the applicable regulatory environment,
o inability to obtain required governmental permits and approvals,
o cost-overruns or delays in development that make continuation of a
project impracticable,
o inability to negotiate acceptable acquisition, construction, fuel
supply or other material agreements, and
o inability to hire and retain qualified personnel.
We may be unable to obtain the financing we need to pursue our growth
strategy, and any future financing we receive may be less favorable to us
than our current arrangements. Any difficulty we experience in obtaining
favorable financing arrangements may adversely affect our ability to expand
our operations and, as a result, may adversely affect the value of the
securities described in this prospectus.
Each of our projects under development and those projects and businesses we
may seek to acquire or construct will require substantial capital investment.
Our continued access to capital with acceptable terms is necessary for the
success of our growth strategy. Our attempts to consummate future financings may
not be successful or on favorable terms.
We have generally been able to arrange for almost all of the financing of
each project or business on a basis that is substantially non-recourse to us.
Debt financing generally represents 70-80% of the cost of a project. We will
attempt to continue this practice where and when we determine it to be in our
best interest. We cannot assure you that market conditions and other factors
will permit future project and acquisition financings on terms similar to those
our subsidiaries have previously received. Our ability to arrange for financing
on a substantially non-recourse basis and the costs of such capital depends on
numerous factors, including:
o general economic and capital market conditions, including interest
rates,
o credit availability from banks,
o investor confidence, and
o the continued success of current projects and the continued existence
of tax and securities laws which are conducive to raising capital in
this manner.
If we are not able to obtain financing for our projects on a substantially
non-recourse basis, we may have to finance them using recourse capital which,
subject to the restrictions contained in the Master Credit Facility, could take
one or more of the following forms:
o issue additional debt at the corporate level,
o issue additional equity securities,
o make larger equity investments in our projects, and
o provide more financial support for our projects.
If we are not able to obtain financing for our projects on a substantially
non-recourse basis, we may decide not to build new plants or acquire facilities.
Any of these alternatives could have a material adverse effect on our growth
prospects and the price of the securities described in this prospectus.
We incur significant expenses in evaluating potential projects, some of
which are not ultimately acquired or completed.
In order to implement our growth strategy, we must continue to actively
pursue acquisition and development opportunities. Substantial expenses may be
incurred in investigating and evaluating any potential opportunity before
14
determining whether the opportunity is feasible or economically attractive. In
addition, we may participate in competitive bidding processes or negotiations
for power generation facilities that would require us to incur substantial
expenses without any assurance that our bids or proposals will be accepted. As a
result, in pursuing our growth strategy, our development expenses may increase
in the future with no assurance that we will be successful in acquiring or
completing additional new projects.
Our revenues may not be predictable because some of our power generation
facilities may operate, wholly or partially, without long-term power
purchase agreements.
Historically, power from our independent power generation facilities has
been sold under long-term power purchase agreements pursuant to which all energy
and capacity generally was sold to a single party at rates which are fixed for
many years. As these contracts expire, if we do not enter into new long term
contracts, we would be required to enter into other arrangements for the sale of
energy such as spot market sales or other short term agreements which would be
subject to market pricing. In addition, our growth strategy contemplates the
development or acquisition of projects which may sell electricity into the spot
market or other competitive markets or on a short-term contractual basis. In
such cases, without the benefit of long-term power purchase agreements, we
cannot assure you that we will be able to sell the power generated by our
facilities or that our facilities will be able to operate profitably.
Because wholesale power prices are subject to extreme volatility, the
revenues from our future projects are subject to significant fluctuations.
We intend to develop or acquire additional facilities that will sell a
portion of their energy, capacity and other products into wholesale power
markets. The prices of energy products in those markets are influenced by many
factors outside of our control, including:
o fuel prices,
o transmission constraints,
o supply and demand,
o weather,
o economic conditions, and
o the rules, regulations and actions of the system operators in those
markets.
In addition, unlike most other commodities, energy products cannot be
stored and, therefore, must be produced concurrently with their use. As a
result, the wholesale power markets are subject to significant price
fluctuations over relatively short periods of time and can be unpredictable.
Increasing competition in the wholesale power market may adversely affect
our ability to make future investments or acquisitions.
The wholesale power industry has numerous competitors, some of whom may
have greater financial resources, more operating experience, more acquisition
and development experience and/or larger staffs than we do. Like us, many of our
competitors are seeking attractive opportunities to acquire or develop power
generation facilities, both in the United States and abroad. This competition
may adversely affect our ability to make new investments or acquisitions.
While demand for electric energy services is generally increasing
throughout the United States, the rate of construction and development of new,
more efficient electric generation facilities may exceed increases in demand in
some regional electric markets. The commencement of commercial operation of new
facilities in the regional markets where we may develop facilities will likely
increase the competitiveness of the wholesale power market in those regions,
which could have a material adverse effect on our future business.
15
We will have to rely on power transmission facilities that we do not own or
control when we enter the wholesale market. If these facilities fail to
provide us with adequate transmission capacity, we may not be able to
deliver wholesale electric power products to our customers.
When we develop or acquire new merchant generating facilities, we will
depend on transmission and distribution facilities owned and operated by
utilities and other power companies to deliver the electricity we will sell from
our power generation facilities to our customers, who in turn deliver these
products to the ultimate consumers of the power. If transmission is disrupted or
transmission capacity is inadequate, our ability to sell and deliver our
products may be hindered.
Environmental regulations affecting generating facilities and water and
wastewater treatment plants would significantly increase the cost of
acquiring or developing such plants, adversely affecting our ability to
make future investments or acquisitions.
Environmental regulations may limit our ability to develop new generating
facilities and water and wastewater treatment plants. In particular, domestic
drinking water facilities to be developed in the future by us will be subject to
regulation of water quality by the EPA under the federal Safe Drinking Water Act
and by similar state laws. Existing environmental regulations could be revised
or reinterpreted, new laws and regulations could be adopted or become applicable
to us or our facilities, and future changes in environmental laws and
regulations could occur. Environmental laws are subject to change, which may
materially increase the amount we must invest in new facilities.
We may not, from time to time, be able to obtain or maintain all required
environmental regulatory approvals. If there is a delay in obtaining any
required environmental regulatory approvals or if we fail to obtain and comply
with them, the acquisition or development of new facilities could be prevented
or become subject to additional costs.
In some instances, we may be responsible for on-site liabilities associated
with the environmental condition of acquired facilities. These liabilities may
be substantial.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
these materials at the Securities and Exchange Commission's public reference
room located at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can also obtain copies of these materials at prescribed rates from the
Public Reference Room of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Rooms of the Securities and Exchange
Commission, including copying charges by calling (800) SEC-0330.
Our Securities and Exchange Commission filings are also available to the
public from the Securities and Exchange Commission's web site at
http://www.sec.gov.
You can also inspect our Securities and Exchange Commission filings at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005. For further information on obtaining copies of our Securities and
Exchange Commission filings at the New York Stock Exchange, you should call
(212) 656-5060.
This prospectus is part of a registration statement we and the Capital
Trusts have filed with the Securities and Exchange Commission relating to the
securities described in this prospectus. As permitted by Securities and Exchange
Commission rules, this prospectus does not contain all of the information set
forth in the registration statement. You should read the registration statement
for further information about us and the securities described in this
prospectus.
16
No separate financial statements of the Capital Trusts have been included
in this prospectus. We and the Capital Trusts do not consider such financial
statements to be material to holders of the preferred securities because
o all of the voting securities of the Capital Trusts will be owned,
directly or indirectly, by us, a reporting company under the
Securities Exchange Act of 1934,
o each Capital Trust is a newly-formed special purpose entity, has no
operating history or independent operations and is not engaged in and
does not propose to engage in any activity other than holding as trust
assets our corresponding subordinated debt securities and issuing the
trust securities, and
o our obligations described in this prospectus and in any accompanying
prospectus supplement, through the applicable guarantee, the
applicable trust agreement, the subordinated debt securities, the
subordinated indenture and any supplemental indentures thereto, taken
together, constitute a full, irrevocable and unconditional guarantee
by us of payments due on the preferred securities.
No single document standing alone or operating in conjunction with fewer
than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of each Capital Trust's obligations
under the preferred securities. See "Covanta Capital Trusts," "Description of
Preferred Securities," "Description of Debt Securities--Subordinated Debt
Securities - Subordination" and "Description of Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus that we file with them separately.
This means that we can disclose important information to you by referring you to
another document filed separately with the Securities and Exchange Commission.
The information incorporated by reference into this prospectus is considered to
be part of this prospectus, except for any information that is superseded by
information that is included directly in this prospectus or another document
that is incorporated by reference into this prospectus after the date of this
prospectus.
This prospectus incorporates by reference the documents listed below that
we have previously filed with the Securities and Exchange Commission and that
are not separately included in or delivered with this prospectus. They contain
important information about our company and its financial condition.
1. Our Annual Report on Form 10-K for the year ended December 31, 2000,
filed on April 2, 2001,
2. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001
filed on August 14, 2001,
3. Our Current Reports on Form 8-K dated August 21, 2001 and September
28, 2001,
4. The description of our common stock contained in our registration
statement filed in accordance with Section 12 of the Securities
Exchange Act of 1934, and any amendments or reports filed for the
purpose of updating this description, and
5. The description of our preferred stock purchase rights contained in
Amendment No. 1 to Form 8-A filed in accordance with Section 12 of the
Securities Exchange Act of 1934.
We incorporate by reference additional documents that we may file with the
Securities and Exchange Commission after the date of this prospectus until the
time that we sell all the securities described in this prospectus. These
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (other than
filings under Item 9), as well as proxy statements.
You can obtain a copy of these filings, at no cost, by writing or calling
us at the following address or telephone number: Covanta Energy Corporation, 40
Lane Road, Fairfield, New Jersey 07004, Attention: Investor Relations, (973)
882-9000.
17
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we will
use the net proceeds from the sale of the securities described in this
prospectus for general corporate purposes. General corporate purposes may
include repayments of our indebtedness and the indebtedness of our subsidiaries,
financing the development and construction of new facilities, additions to
working capital, financing of capital expenditures, funding acquisitions or for
any other purpose. We may invest funds not immediately required for such
purposes in short-term investment grade securities. The amount and timing of
sales of the securities described in this prospectus will depend on market
conditions and the availability to us of other funds. The use of proceeds may be
subject to restrictive covenants contained in the Master Credit Facility, as the
same may be amended, supplemented or replaced from time to time. See our Annual
Report on Form 10-K for the year ended December 31, 2000, which is incorporated
by reference.
Each Capital Trust will use all proceeds from the sale of the trust
securities to purchase the corresponding subordinated debt securities.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
The following table sets forth the ratio of our earnings to our fixed
charges and the ratio of our earnings to combined fixed charges and preference
share dividends for the periods indicated:
SIX MONTHS
ENDED YEAR ENDED
JUNE 30 DECEMBER 31
---------- ------------------------------------------------------------------
2001 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Fixed
Charges(a).................... 1.62 .20(b) .74(b) 1.33 1.70 1.41
Ratio of Earnings to Combined
Fixed Charges and
Preference Share Dividends
(a)........................ 1.61 .20(b) .74(b) 1.33 1.69 1.41
----------------
(a) For purposes of computing the ratios, earnings consist of income from
continuing operations before income taxes and adjustment for minority
interests, plus fixed charges, amortization of capitalized interest and
distributed income of unconsolidated affiliates, less equity income in
unconsolidated affiliates, capitalized interest and minority interests in
pretax income of subsidiaries that have not incurred fixed charges. Fixed
charges consist of interest expense on indebtedness (including amortization
of deferred financing costs), capitalized interest and the portion of
operating lease rental expense that is representative of the interest
factor.
(b) For 2000 and 1999, the deficiency of earnings to fixed charges totaled
$131,386,000 and $39,984,000, respectively, and the deficiency of earnings
to combined fixed charges and preference share dividends totaled
$131,483,000 and $40,153,000, respectively. These deficiencies are due
mainly to losses from continuing operations incurred in 2000 and 1999, of
which pre-tax charges of $77,240,000 in 2000 relate to the write-down of
net assets held for sale.
The Capital Trusts had no operations during the periods set forth above.
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DESCRIPTION OF DEBT SECURITIES
The following description of our debt securities sets forth general terms
and provisions of the debt securities to which any prospectus supplement may
relate. Our senior debt securities are to be issued under a senior indenture
between us and Bankers Trust Company, as Trustee, the form of which is filed as
an exhibit to the registration statement of which this prospectus forms a part.
Our subordinated debt securities are to be issued under a subordinated indenture
between us and the Trustee the form of which is filed as an exhibit to the
registration statement of which this prospectus forms a part. The senior
indenture and the subordinated indenture are sometimes referred to collectively
as the "indentures" and each individually as an "indenture." The particular
terms of the debt securities offered by any prospectus supplement, and the
extent to which the general provisions described below may apply to the offered
debt securities, will be described in the prospectus supplement.
You should refer to the forms of the indentures and the debt securities for
complete information regarding the terms and provisions of the indentures and
the debt securities. The senior indenture and the subordinated indenture are
substantially identical, except for covenants related to the Capital Trusts and
provisions relating to subordination in the subordinated indenture.
GENERAL
The indentures do not limit the aggregate principal amount of the debt
securities which we may issue and provide that we may issue the debt securities
from time to time in one or more series. The indentures do not limit the amount
of other unsecured or secured debt or the debt securities which we or our
subsidiaries may issue.
Unless otherwise provided in a prospectus supplement, our senior debt
securities will be unsecured obligations of ours and will rank equally with all
of our other unsecured and unsubordinated indebtedness. The subordinated debt
securities will be unsecured obligations of ours, subordinated in right of
payment to the prior payment in full of all of our senior indebtedness (which
term includes the senior debt securities) as described below under "
Subordinated Debt Securities--Subordination" and in the applicable prospectus
supplement.
Because we are a holding company, our rights and the rights of our
creditors (including the holders of our debt securities) and shareholders to
participate in any distribution of assets of any of our subsidiaries upon that
subsidiary's liquidation or reorganization or otherwise would be subject to the
prior claims of that subsidiary's creditors, except to the extent that we may
ourselves be a creditor with recognized claims against that subsidiary.
The prospectus supplement relating to the particular debt securities
offered will describe the following terms of the offered debt securities:
o the title of the debt securities and the series in which such debt
securities will be included, which may include medium-term notes,
o the aggregate principal amount of the debt securities and any limit
upon such principal amount,
o the issuing price of the debt securities,
o information about any discount and its calculation,
o the date or dates, or any method by which such date or dates will be
determined, on which the principal of the debt securities will be
payable,
o the rate or rates at which the debt securities will bear interest, if
any, which rate may be zero in the case of debt securities issued at
an issue price representing a discount from the principal amount
payable at maturity, or the method by which such rate or rates will be
determined (including, if applicable, any remarketing option or
similar method), and the date or dates from which the interest, if
any, will accrue or the method by which the date or dates will be
determined,
o the date or dates on which interest, if any, on the debt securities
will be payable and any regular record dates applicable to the date or
dates on which interest will be so payable,
19
o the place or places where the principal of, or any premium or interest
on or any additional amounts with respect to the debt securities will
be payable, any of the debt securities that are issued in registered
form may be surrendered for registration of transfer or exchange, and
any of the debt securities may be surrendered for conversion or
exchange,
o whether any of the debt securities are to be redeemable at our option
and, if so, the date or dates on which, the period or periods within
which, the price or prices at which and the other terms and conditions
upon which the debt securities may be redeemed, in whole or in part,
at our option,
o whether we will be obligated to redeem or purchase any of the debt
securities under any sinking fund or analogous provision or at the
option of any holder and, if so, the date or dates on which, the
period or periods within which, the price or prices at which and the
other terms and conditions upon which the debt securities will be
redeemed or purchased, in whole or in part, according to the
obligation, and any provisions for the remarketing of the debt
securities so redeemed or purchased,
o if other than denominations of $1,000 and any integral multiple of
$1,000, the denominations in which any debt securities to be issued in
registered form will be issuable and, if other than a denomination of
$5,000, the denominations in which any debt securities to be issued in
bearer form will be issuable,
o whether the debt securities will be convertible into common shares
and/or exchangeable for other securities, whether or not issued by us,
and, if so, the terms and conditions upon which the debt securities
will be so convertible or exchangeable,
o if other than the principal amount, the portion of the principal
amount of the debt securities that will be payable upon declaration of
acceleration of the maturity of such principal amount or the method by
which such portion will be determined,
o if other than United States dollars, the currency of payment,
including composite currencies, of the principal of, any premium or
interest on or any additional amounts with respect to the debt
securities,
o whether the principal of, any premium or interest on or any additional
amounts with respect to the securities will be payable, at our
election or the election of a holder, in a currency other than that in
which the debt securities are stated to be payable and the date or
dates on which, the period or periods within which, and the other
terms and conditions upon which, such an election may be made,
o any index, formula or other method used to determine the amount of
payments of principal of, any premium or interest on or any additional
amounts with respect to the debt securities,
o whether such debt securities are to be issued in the form of one or
more global securities and, if so, the identity of the depositary for
the global security or securities,
o whether the debt securities are the senior debt securities or
subordinated debt securities and, if the subordinated debt securities,
the specific subordination provisions applicable thereto,
o in the case of the subordinated debt securities, the relative degree,
if any, to which the subordinated debt securities of the series will
be senior to or be subordinated to other series of the subordinated
debt securities or other indebtedness of ours in right of payment,
whether such other series of the subordinated debt securities or other
indebtedness are outstanding or not,
o any deletions from, modifications of or additions to the Events of
Default or covenants of ours with respect to the debt securities,
o whether the provisions described below under "Defeasance" will be
applicable to the debt securities,
o whether any of the debt securities are to be issued upon the exercise
of warrants, and the time, manner and place for the debt securities to
be authenticated and delivered,
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o whether any of the debt securities are to be issuable as registered
securities, bearer securities or both, whether debt securities are to
be issuable with or without coupons or both and, if issuable as bearer
securities, the date as of which the bearer securities will be dated
if other than the date of original issuance of the first debt security
of that series of like tenor and term to be issued,
o whether, and under what conditions, we will pay any additional amounts
with respect to the debt securities,
o provisions for electronic issuance of debt securities or issuance of
debt securities in uncertificated form,
o whether any debt securities will have guarantees,
o the nature of any material relationship between the trustee and us or
any of our affiliates; the percentage of the series of debt securities
necessary to require the trustee to take action and what
indemnification the trustee may require before taking action, and
o any other terms of such debt securities and any other deletions from
or modifications or additions to the applicable indenture in respect
of such debt securities.
Unless otherwise provided in the related prospectus supplement, the debt
securities will be issued only in fully registered form in minimum denominations
of $1,000 and any integral multiple of $1,000. The debt securities may be
represented in whole or in part by one or more global debt securities registered
in the name of a depositary or its nominee, which will be denominated in an
amount equal to all or a portion of the aggregate principal amount of such debt
securities.
We may issue debt securities as original issue discount securities.
Original issue discount securities bear no interest or bear interest at
below-market rates and are sold at a discount below their stated principal
amount. Special United States federal income tax and other considerations
applicable to original issue discount securities will be described in the
related prospectus supplement.
Unless otherwise described in a prospectus supplement relating to any debt
securities, the indentures do not contain any provisions that would limit our
ability to incur indebtedness or that would afford holders of the debt
securities protection in the event of a sudden and significant decline in our
credit quality or a takeover, recapitalization or highly leveraged or similar
transaction involving us. Accordingly, we could in the future enter into
transactions that could increase the amount of indebtedness outstanding at that
time or otherwise affect our capital structure or credit rating. You should
refer to the prospectus supplement relating to a particular series of the debt
securities for information regarding to any deletions from, modifications of or
additions to the Events of Defaults described below or our covenants contained
in the indentures, including any addition of a covenant or other provisions
providing event risk or similar protection.
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common shares, preference shares or other securities,
whether or not issued by us, property or cash, or a combination of any of the
foregoing, will be set forth in the related prospectus supplement. These terms
may include provisions for conversion or exchange, either mandatory, at the
option of the holder, or at our option, in which the securities, property or
cash to be received by the holders of the debt securities would be calculated
according to the factors and at such time as described in the related prospectus
supplement.
GLOBAL SECURITIES
We may issue all or some of the debt securities in book-entry form, which
means that global notes, not certificates, will represent the debt securities.
If we issue global notes representing any debt securities, then a depository
that we select will keep a record of the beneficial interests in the global
notes and record any transfers of beneficial interests.
21
We will describe any additional requirements as to the form and method of
exchange of debt securities in the prospectus supplement.
Modification of Indentures
Each indenture, our rights and obligations under such indenture and the
rights of the holders of one or more series of debt securities issued under such
indenture may be modified without the consent of the holders as to matters which
do not materially adversely affect the interests of the holders and, as to other
matters, with the consent of the holders of not less than a majority of the
aggregate principal amount of debt securities at the time outstanding of all
series affected by the modification voting as one class. Without the consent of
the holder of each debt security affected, however, no modification shall
change:
o the maturity date of any such debt security,
o reduce the principal amount or the amount of any premium payable,
o reduce the rate, extend the time of payment or change the method of
calculation of interest,
o reduce any amount payable on redemption, or
o reduce the percentage required for any such modification.
In addition, no modification of the senior indenture subordinating any
series of senior debt securities issued under such indenture to any of our other
indebtedness is effective against any holder of those senior debt securities
without his consent, and no modification of the subordinated indenture
subordinating any series of subordinated debt securities issued under such
indenture to any of our indebtedness other than senior indebtedness is effective
against any holder of those subordinated debt securities without his consent.
In the case of corresponding subordinated debt securities, so long as any
of the related preferred securities remain outstanding, without the prior
consent of not less than a majority of the aggregate liquidation amount of such
related preferred securities:
o no modification of the applicable subordinated indenture may be made
that adversely affects the holders of such preferred securities in any
material respect,
o no defeasance of the subordinated indenture may occur with respect to
such corresponding subordinated debt securities, and
o no waiver of any event of default with respect to such corresponding
subordinated debt securities or waiver of compliance with any covenant
under the subordinated indenture applicable to such corresponding
subordinated debt securities may be effective.
Where consent under the subordinated indenture is not effective against any
holder without his consent, no such consent shall be given by the Property
Trustee without the prior consent of each holder of related preferred
securities.
Events of Default
Each indenture provides that the following are events of default with
respect to any series of debt securities issued under such indenture:
o default in the payment of the principal of, or premium, if any, on any
debt security of such series when and as the same shall be due and
payable,
o default in making a sinking fund payment, if any, when and as the same
shall be due and payable by the terms of any debt security of such
series,
o default for 30 days in the payment of any installment of interest on
any debt security of such series and the time for payment has not been
extended or deferred,
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o default in the performance of any other covenant or agreement in
respect of the debt securities of such series contained in the
relevant indenture for 60 days after written notice from the Trustee
or from the holders of at least 25% in aggregate principal amount of
the debt securities then outstanding of all series affected,
o voluntary bankruptcy, insolvency or reorganization, or consent to any
related court appointment of a receiver, liquidator or trustee to us
or for any substantial part of our property, or
o involuntary bankruptcy, insolvency or reorganization, or any court
related court appointment of a receiver, liquidator or trustee to us
or for a substantial part of our property, which remains in effect for
a period of 60 consecutive days.
An event of default with respect to the debt securities of any series does
not necessarily constitute an event of default with respect to any other series
of debt securities issued under such indenture.
The Trustee is required to give notice of any uncured default known to it
with respect to a series of debt securities to the holders of debt securities of
such series within 90 days of the occurrence of the default, provided that such
Trustee may withhold notice to the holders of the debt securities of such series
of any default with respect to the debt securities of such series if it
considers such withholding to be in the interest of such holders, unless such
default is a default in the payment of principal, premium, if any, or interest.
In the case of an event of default relating to events of bankruptcy,
insolvency or reorganization, or any related court appointment of a receiver,
liquidator or trustee to us or for any substantial part of our property, all
outstanding debt securities plus interest accrued, if any, shall immediately
become due and payable without declaration, presentment, demand or notice of any
kind by the Trustee or any holder of a debt security. If any other event of
default with respect to the debt securities of such series shall have occurred
and be continuing, the following persons may declare the principal, or in the
case of discounted debt securities of such series, such portion as may be
described in the applicable prospectus supplement, of all the debt securities of
such series plus interest accrued, if any, to be due and payable immediately:
o the Trustee,
o the holders of not less than 25% in aggregate principal amount of the
outstanding debt securities then outstanding, or
o in the case of events of default that affect all series of debt
securities then outstanding, the holders of not less than 25% in the
aggregate principal amount of all the debt securities then outstanding
treated as one class.
Subject to the conditions set forth in the indebtedness, any acceleration
of the debt securities of any series may be rescinded and annulled by the
holders of not less than a majority in aggregate principal amount of the
outstanding debt securities of such series.
Within four months after the close of each year we must file with the
Trustee a certificate, signed by specified officers, stating whether or not such
officers have knowledge of any default relating to covenants, agreements and
obligations contained in the relevant indenture, and, if so, specifying each
such default and the nature of the default.
Subject to provisions relating to its duties during the continuance of any
event of default, the Trustee shall be under no obligation to exercise any of
its rights or powers under the relevant indenture at the request, order or
direction of any holders of debt securities, unless such holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for
indemnification and subject to the right of the Trustee to decline to follow any
holders' directions under specified circumstances, the holders of a majority in
aggregate principal amount of the outstanding debt securities of such series may
direct the time, method and place of conducting any proceeding or any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, with respect to the debt securities of such series.
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Consolidation, Merger or Sale
The indenture provides that we will not consolidate with, merge with or
into any other corporation, whether or not we are the surviving corporation, or
sell, assign, transfer or lease all or substantially all of our properties and
assets as an entirety or substantially as an entirety to any person or group of
affiliated persons, in one transaction or a series of related transactions,
unless:
o the successor corporation, if we are not the surviving corporation, is
a corporation organized under the laws of the United States or any
state or the District of Columbia and expressly assumes in writing all
of our obligations under the outstanding debt securities and the
indenture,
o immediately before and after giving effect to the transaction or
series of transactions, no event of default, and no default, shall
have occurred and be continuing, and
o we deliver to the trustee an officer's certificate and an opinion of
counsel stating that the transaction and the supplemental indenture
comply with the indenture.
Transfer
Debt securities may be registered for transfer or exchanged at the
corporate trust office of the Trustee under the applicable indenture or at any
other office or agency maintained by us for such purposes, subject to the
limitations in the applicable indenture, without the payment of any service
charge except for any tax or governmental charge incidental thereto. Provisions
with respect to the transfer and exchange of debt securities in global form will
be set forth in the applicable prospectus supplement.
We are not required to issue, exchange or register the transfer of any debt
securities during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption and ending at the close of business on the
day of such mailing, or to exchange or register the transfer of the debt
securities selected, called or being called for redemption except, in the case
of debt securities to be redeemed in part, the portion not to be redeemed.
Defeasance
Except as otherwise provided with respect to the debt securities of any
series, the indenture provides that we shall be discharged from our obligations
with respect to any series of debt securities issued at any time prior to the
maturity date or redemption when:
o we have irrevocably deposited with the Trustee, in trust,
- sufficient funds to pay the principal of and premium, if any, and
interest to, maturity date (or redemption) on, the series of debt
securities, or
- amount of direct obligations of, or obligations the principal of
and interest on which are fully guaranteed by, the United States
Government, and which are not subject to prepayment, redemption
or call, as will, together with the predetermined and certain
income to accrue without consideration of any reinvestment, be
sufficient to pay when due the principal of, and premium, if any,
and interest to maturity date or redemption on, the debt
securities of such series, and
o we have paid all other sums payable with respect to the debt
securities of such series.
Upon such discharge, the holders of the debt securities of such series
shall no longer be entitled to the benefits of the applicable indenture, except
for the purposes of registration of transfer and exchange of the debt securities
of such series, and replacement of lost, stolen or mutilated debt securities of
such series.
24
Payment and Paying Agent
Unless otherwise indicated in the applicable prospectus supplement, payment
of the interest on a debt security on any interest payment date will be made to
the person in whose name such debt security or one or more predecessor debt
securities is registered at the close of business on the applicable record date
for the payment of such interest.
Principal of and any premium and interest on the debt securities of a
particular series will be payable at the office of such paying agent or paying
agents as we may designate with respect to the debt securities of such series
for such purpose from time to time. Unless otherwise indicated in the applicable
prospectus settlement, the corporate trust office of the Trustee in New York
City will be designated as our sole paying agent for payments with respect to
debt securities of each series. Any other paying agents initially designated by
us for the debt securities of a particular series will be named in the
applicable prospectus supplement. We will be required to maintain a paying agent
in each place of payment for the debt securities of a particular series.
All moneys paid by us to a paying agent for the payment of their principal
of or any premium or interest on any debt security which remains unclaimed at
the end of two years after such principal, premium or interest has become due
and payable will be repaid to us. The holder of such debt security may
afterwards look only to us for payment.
Senior Debt Securities-Senior Indebtedness
The senior debt securities will rank equally with all of our outstanding
unsecured debt that is not subordinated by its terms and will constitute part of
the Senior Indebtedness for purposes of the subordinated indenture.
The term "senior indebtedness" includes all of our indebtedness, unless the
instrument creating or evidencing the indebtedness or under which the
indebtedness is outstanding provides that such obligations are not superior in
right of payment to subordinated indebtedness or to our other indebtedness which
is equal or subordinated to our subordinated indebtedness.
The term "indebtedness" means with respect to a person:
o the principal of and premium, if any, and interest, if any, on, (A)
indebtedness of the person for money borrowed and (B) indebtedness
evidenced by securities, notes, debentures, bonds or other similar
instruments issued by the person,
o all capital lease obligations of the person,
o all obligations of the person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of the
person and all obligations of the person under any conditional sale or
title retention agreement, excluding trade accounts payable and
accrued liabilities in the ordinary course of business,
o all obligations, contingent or otherwise, of the person in respect of
any letters of credit, banker's acceptances, security purchase
facilities or similar credit transactions;
o all obligations in respect of interest rate swap, cap, floor, collar
or other agreements, interest rate future or option contracts,
currency swap agreements, currency or other future or option contracts
and other similar agreements, and
o all obligations of others of the type referred to above for the
payment of which the person is responsible or liable as obligor,
guarantor or otherwise.
The senior indenture does not limit the amount of senior indebtedness which
we may issue and does not place any limitation on the amount of indebtedness,
including without limitation, secured debt, that we may incur. In addition, the
senior indenture places no limitation on the obligations that may be incurred by
our subsidiaries.
25
Subordinated Debt Securities-Subordination
The subordinated debt securities will constitute part of our subordinated
indebtedness and will be subordinate and subject in right of payment to the
prior payment in full of all of our senior indebtedness, whether outstanding at
the date of the subordinated indenture or incurred after such date.
All senior indebtedness, including any interest accruing after the
commencement of any such proceedings shall first be paid in full before any
payment or distribution, whether in cash, securities or other property of the
principal of and the premium, if any, or interest on the subordinated debt
securities in the event of:
o any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to us
or our property,
o any proceeding for our liquidation, dissolution or other winding up,
voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings,
o any assignment by us for the benefit of creditors, or
o any other marshalling of our assets.
In such event, any payment or distribution on account of the principal of
or premium, if any, or interest on the subordinated debt securities, whether in
cash, securities or other property (other than our securities or securities of
any other corporation provided for by a plan of reorganization or readjustment
the payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the subordinated debt securities, to
the payment of all senior indebtedness at the time outstanding, and to any
securities issued under such a plan of reorganization or readjustment), which
would, but for the subordination provisions, be payable or deliverable in
respect of the subordinated debt securities and shall be paid or delivered
directly to the holders of senior indebtedness in accordance with the priorities
then existing among such holders until all senior indebtedness, including any
interest accruing after the commencement of any such proceedings, shall have
been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to senior indebtedness, the holders of subordinated debt
securities, together with the holders of any of our obligations ranking equally
with the subordinated debt securities, shall be entitled to be paid from our
remaining assets the amounts at any time due and owing on account of unpaid
principal of and premium, if any, and interest on the subordinated debt
securities and other obligations before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any of our
capital stock or obligations ranking junior to the subordinated debt securities
and such other obligations. If any payment or distribution on account of the
principal of or interest on the subordinated debt securities of any character or
any security, whether in cash, securities or other property (other than our
securities or securities of any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in the subordination provisions with respect to the
subordinated debt securities, to the payment of all senior indebtedness at the
time outstanding and to any securities issued under any such plan of
reorganization or readjustment) shall be received by any holder of any
subordinated debt securities in contravention of any of these terms and before
all the senior indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the senior
indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all senior
indebtedness remaining unpaid to the extent necessary to pay all such senior
indebtedness in full. By reason of such subordination, in the event of our
insolvency, holders of senior indebtedness may receive more, ratably, and
holders of the subordinated debt securities having a claim under the terms of
such securities may receive less, ratably, than our other creditors. Such
subordination will not prevent the occurrence of any event of default in respect
of the subordinated debt securities.
If we were to become insolvent, your claim as a holder of preferred
securities, which represents in effect an interest in the corresponding
subordinated debt securities, or as a holder of debt securities as part of a
Stock Purchase Unit, will be effectively junior to the claims of holders of any
indebtedness or preferred stock of our subsidiaries.
26
The subordinated indenture places no limitation on the amount of additional
senior indebtedness that may be incurred by us or on obligations that may be
incurred by our subsidiaries. We expect from time to time to incur additional
indebtedness constituting senior indebtedness.
The subordinated indenture provides that the foregoing subordination
provisions, as they relate to any particular series of subordinated debt
securities, may be changed prior to the issuance of such series. Any such change
would be described in the applicable prospectus supplement.
INFORMATION CONCERNING THE TRUSTEE
We may from time to time borrow from, maintain deposit accounts with and
conduct other banking transactions with the Trustee and its affiliates in the
ordinary course of business.
Under each indenture, the Trustee is required to transmit annual reports to
all holders regarding its eligibility and qualifications as trustee under the
applicable indenture and related matters.
CERTAIN PROVISIONS RELATING TO THE CORRESPONDING SUBORDINATED DEBT SECURITIES
General
The corresponding subordinated debt securities may be issued in one or more
series of subordinated debt securities under the subordinated indenture with
terms corresponding to the terms of a series of related preferred securities
issued by a Capital Trust. Concurrently with the issuance of a Capital Trust's
preferred securities, such Capital Trust will invest the proceeds and the
consideration paid by us for the common securities in a series of corresponding
subordinated debt securities issued by us to such Capital Trust. Each series of
corresponding subordinated debt securities will be in the principal amount equal
to the aggregate stated liquidation amount of the related preferred securities
and the common securities of such Capital Trust and will rank equally with all
other series of subordinated debt securities. Holders of the related preferred
securities for a series of corresponding subordinated debt securities will have
the rights in connection with modifications to the subordinated indenture or
upon occurrence of an event of default under the trust agreement relating to
corresponding subordinated debt securities described under "--Modification of
Indentures," and "--Events of Default," and under "--Certain Provisions Relating
to the Corresponding Debt Securities--Enforcement of Certain Rights by Holders
of Preferred Securities" below, unless provided otherwise in the prospectus
supplement for such related preferred securities.
We will covenant, as to each series of corresponding subordinated debt
securities:
o to maintain directly or indirectly 100% ownership of the common
securities of the Capital Trust to which the corresponding
subordinated debt securities have been issued, provided that
successors which are permitted under the subordinated indenture may
succeed to our ownership of the common securities,
o not to voluntarily dissolve, wind-up or liquidate any Capital Trust,
except (a) in connection with a distribution of corresponding
subordinated debt securities to the holders of the preferred
securities in liquidation of such Capital Trust or (b) in connection
with mergers, consolidations or amalgamations permitted by the related
trust agreement, and
o to use reasonable efforts, consistent with the terms and provisions of
the related trust agreement, to cause the Capital Trust to remain
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes.
For additional covenants relating to payment of expenses of the Capital
Trust, see "Description of Preferred Securities--Payment of Expenses."
27
Option To Extend Interest Payment Date
If provided in the applicable prospectus supplement, we will have the right
at any time and from time to time during the term of any series of corresponding
subordinated debt securities to defer payment of interest for such number of
consecutive interest payment periods as may be specified in the applicable
prospectus supplement subject to the terms, conditions and covenants, if any,
specified in such prospectus supplement, provided that such extension period may
not extend beyond the maturity date of such series of corresponding subordinated
debt securities. United States federal income tax consequences and special
considerations applicable to any such corresponding subordinated debt securities
will be described in the applicable prospectus supplement.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, we may,
at our option, redeem the corresponding subordinated debt securities of any
series in whole at any time or in part from time to time. corresponding
subordinated debt securities may be redeemed in the denominations as set forth
in the applicable prospectus supplement. Except as otherwise specified in the
applicable prospectus supplement, the redemption price for any corresponding
subordinated debt security so redeemed shall equal any accrued and unpaid
interest as of the redemption date, plus the principal amount. Unless otherwise
specified in the applicable prospectus supplement, we may not redeem a series of
corresponding subordinated debt securities in part unless all accrued and unpaid
interest has been paid in full on all outstanding corresponding subordinated
debt securities of such series for all interest periods terminating on or prior
to the date fixed for redemption.
We may, at our option, redeem the corresponding subordinated debt
securities held by a Capital Trust in whole but not in part at any time within
90 days after the occurrence of one of the following events:
o The Capital Trust receives an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, change or
any announced proposed change in, the laws or regulations of the
United States or any related political subdivision or taxing
authority, or as a result of any official administrative written
decision, pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision
is announced on or after the date of issuance of the applicable series
of corresponding subordinated debt securities, there is more than an
insubstantial risk that:
- the Capital Trust is, or will be within 90 days of the date of
such opinion, subject to United States federal income tax with
respect to income received or accrued on the corresponding series
of corresponding subordinated debt securities,
- interest payable by us on such series of corresponding
subordinated debt securities is not, or within 90 days of the
date of such opinion, will not be, deductible by us, in whole or
in part, for United States federal income tax purposes, or
- the Capital Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges,
o The Capital Trust receives an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of a change
in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency
or regulatory authority, the Capital Trust is or will be considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which change in the
Investment Company Act becomes effective on or after the date of
original issuance of the series of preferred securities issued by the
Capital Trust.
Unless otherwise specified in the applicable prospectus supplement, the
redemption price for any such corresponding subordinated debt securities shall
be equal to 100% of the principal amount of such corresponding subordinated debt
securities then outstanding plus accrued and unpaid interest to the date fixed
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for redemption. For so long as the applicable Capital Trust is the holder of all
such outstanding corresponding subordinated debt securities, the proceeds of any
such redemption will be used by the Capital Trust to redeem the corresponding
trust securities in accordance with their terms.
Restrictions On Certain Payments
We will, unless otherwise provided in the applicable prospectus supplement,
covenant, as to each series of corresponding subordinated debt securities, that
we will not:
o declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital stock, or
o make any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any of our debt securities (including
other corresponding subordinated debt securities) that rank equally
with or junior in interest to the corresponding subordinated debt
securities or make any guarantee payments with respect to any
guarantee by us of the debt securities of any of our subsidiaries if
such guarantee ranks equally with or junior in interest to the
corresponding subordinated debt securities (other than (a) dividends
or distributions in our common stock, (b) redemptions or purchases of
any rights under our rights agreement, or any successor to such rights
agreement, and the declaration of a dividend of such rights or the
issuance of stock under such plans in the future, (c) payments under
any guarantee, and (d) purchases of common stock related to the
issuance of common stock under any of our benefit plans for directors,
officers or employees) if at such time:
- there shall have occurred any event of which we had actual
knowledge (1) that with the giving of notice or the lapse of
time, or both, would constitute an event of default under the
subordinated indenture with respect to the corresponding
subordinated debt securities of such series and (2) in respect of
which we shall not have taken reasonable steps to cure,
- if such corresponding subordinated debt securities are held by a
Capital Trust which is the issuer of a series of related
preferred securities, we shall be in default with respect to its
payment of any obligations under the guarantee relating to such
preferred securities, or
- we shall have given notice of its selection of an extension
period as provided in the subordinated indenture with respect to
the corresponding subordinated debt securities of such series and
shall not have rescinded such notice, or such extension period,
or any extension, shall be continuing.
Enforcement Of Certain Rights By Holders Of Preferred Securities
If we fail to pay the principal of, the premium, if any, or the interest on
a series of corresponding subordinated debt securities on the date such
interest, premium or principal is due and payable within the applicable cure
period, a holder of related preferred securities may institute a legal
proceeding directly against us for enforcement of payment to such holder of the
principal of, premium, if any, or interest on such corresponding subordinated
debt securities. The principal amount of such corresponding subordinated debt
securities shall equal the aggregate liquidation amount of the related preferred
securities of such holder. The holder of at least a majority in aggregate
liquidation amount of preferred securities of the Capital Trust must consent to
any waiver of an event of default with respect to the series of subordinated
debt securities held by the Capital Trust and each such holder must consent to
any supplemental indenture that would adversely affect the interests of such
holders.
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DESCRIPTION OF CAPITAL STOCK
We may issue, from time to time, shares of one or more series or classes of
our common or preferred stock. The following summary description sets forth some
of the general terms and provisions of the stock. We will describe the specific
terms of any series of stock that we issue as part of this offering in an
applicable prospectus supplement. To the extent the description contained in the
prospectus supplement differs from this summary description, you should rely on
the information in the prospectus supplement. Because this is a summary
description, it does not contain all of the information that may be important to
you. For a more detailed description of the stock, you should refer to the
provisions of our certificate of incorporation, bylaws and the applicable
prospectus supplement before you purchase these securities.
In this description of capital stock, the words "Covanta," "our Company,"
"we," "us" or "our" refer only to Covanta Energy Corporation and not to any of
its subsidiaries, unless we expressly state otherwise or the context otherwise
requires.
GENERAL
Authorized, Issued and Outstanding Capital Stock. Our certificate of
incorporation authorizes 80,000,000 shares of common stock, par value $0.50 per
share, and 4,000,000 shares of preferred stock, par value $1.00 per share. Our
Board of Directors has authority to divide the preferred stock into one or more
series and has broad authority to fix and determine the relative rights and
preferences of the shares of each such series. The only issued and outstanding
series of authorized preferred stock is Series A preferred stock. As of April 9,
2001, there were 49,754,105 shares of common stock outstanding and 35,312 shares
of preferred stock outstanding.
Fully Paid. The issued and outstanding shares of common stock and preferred
stock are, and any shares of common stock issued as securities and any shares of
common stock issuable upon the exercise of warrants for common stock or upon
conversion or exchange of debentures or preferred stock that are convertible
into or exchangeable for common stock will be, duly authorized, validly issued,
fully paid and non-assessable.
COMMON STOCK
Listing. Our common stock is listed on the New York Stock Exchange under
the trading symbol "COV."
Dividends. After the requirements in respect of dividends upon any issued
and outstanding series of preferred stock have been met to the end of the then
current quarterly dividend period for any such series of preferred stock, the
holders of common stock are entitled to receive, out of any of our remaining net
profits or net assets available for dividends, such dividends as may from time
to time be declared by our Board of Directors. Holders of common stock are
entitled to share ratably in any dividends so declared to the exclusion of the
holders of the shares of any series of preferred stock, except as otherwise
expressly provided in the Certificate, as in the case of the Series A preferred
stock which, as described below, is entitled to participate with the common
stock as to dividends.
Rights Upon Liquidation, Dissolution or Winding Up. In the event of any
voluntary or involuntary liquidation, dissolution, or winding up of us, after
payment in full of any amounts payable upon any such liquidation, dissolution or
winding up, together with all dividends accrued or in arrears in respect of any
series of preferred stock, the holders of common stock are entitled, to the
exclusion of the holders of shares of any series of preferred stock, to share
ratably per share of common stock in all of our assets then remaining. The
Certificate does not allow us to purchase any shares of common stock unless we
have paid and set aside a sum sufficient to pay all past and current dividends
with respect to shares of Series A preferred stock then issued and outstanding.
We are not presently in arrears on the payment of dividends with respect to the
Series A preferred stock and are, therefore, not currently restricted by this
provision.
Voting Rights. The holders of common stock possess full voting power with
respect to the election of directors and all other purposes, except as limited
by the Delaware General Corporation Law and except as described below. Each
holder of common stock is entitled to one vote for each full share of common
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stock then issued and outstanding and held in such record holder's name. Holders
of common stock vote together with the holders of Series A preferred stock and
would vote together with the holders of any other series of preferred stock
which may be issued and entitled to vote in such manner, and not as a separate
class. The Certificate does not provide for either preemptive rights or
cumulative voting with respect to common stock or preferred stock.
Additional Rights. On September 20, 1990, our Board of Directors declared a
dividend distribution of one right for each outstanding share of common stock,
payable on October 2, 1990 to the stockholders of record as of the close of
business on such date. On September 28, 2000, our Board of Directors amended and
restated the rights Agreement governing the rights. Each of these rights, when
exercisable, entitles the registered holder to purchase from us one
one-hundredth of a share of our cumulative participating preferred stock, par
value $1.00 per share, at a price of $80.00 per one one-hundredth of a share,
subject to adjustments in accordance with the Rights Agreement. These rights
trade together with the common stock and cannot be exercised or traded
separately until a person becomes an Acquiring Person. The rights and the terms
of the agreement which governs them are described below under "--Certain
Provisions--Share Purchase Rights."
Registrar and Transfer Agent. The registrar and transfer agent for the
common stock is the Bank of New York.
PREFERRED STOCK
Listing. Our Series A preferred stock is listed on the New York Stock
Exchange under the trading symbol "COV."
Our Board of Directors can, without approval of the stockholders, authorize
series of preferred stock and fix and determine the terms, limitations and
relative rights and preferences of any shares of preferred stock that it issues.
These terms, limitations, rights and preferences will be set forth in the
applicable prospectus supplement. If shares of preferred stock are convertible
into shares of common stock in accordance with the terms of such preferred
stock, the specific terms pertaining to any such conversion right will also be
set forth in the applicable prospectus supplement.
Option to Convert to Common Stock. Each share of Series A preferred stock
is currently convertible at the option of the holder into 5.97626 fully paid and
nonassessable shares of common stock, subject to adjustment for dilutive events
as specified in the Certificate.
Dividends. The minimum dividend rate payable with respect to the Series A
preferred stock is $1.875 per share per annum. Subject to adjustments set forth
in the Certificate, the holders of Series A preferred stock are also entitled to
receive an additional amount per share equal to 150% of the amount, if any, by
which the dividend paid or any cash distribution made on the common stock in the
preceding quarter exceeded $0.0667 per share. Dividends payable with respect to
Series A preferred stock are cumulative, such that unless we have paid such
dividends or have declared and set aside a sum sufficient for the payment in
respect of all shares of Series A preferred stock then outstanding, then no
dividends (other than dividends payable in kind) may be declared or paid in
respect of shares of common stock.
Rights Upon Liquidation, Dissolution or Winding Up. In the event of our
liquidation, dissolution or winding up (whether voluntary or involuntary), the
holders of preferred stock are entitled to receive out of our assets available
for distribution such amounts as are specified for each particular series,
together with all dividends accrued or in arrears, before the holders of common
stock are entitled to any distributions out of the remaining assets. In the
event of a voluntary liquidation, dissolution or winding up, the holders of
Series A preferred stock are entitled to receive $50.00 per share together with
all dividends accrued or in arrears. In the event of any involuntary
liquidation, dissolution or winding up, the holders of Series A preferred stock
are entitled to receive $20.15 per share together with all dividends accrued or
in arrears.
Redemption by Covanta. We may redeem the outstanding shares of Series A
preferred stock at any time at a redemption price of $50.00 per share plus all
dividends accrued or in arrears.
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Voting Rights. The holders of Series A preferred stock are entitled to
one-half vote for each share of Series A preferred stock and except as described
below, vote together as a class with the holders of common stock. However, if at
any time dividends with respect to the Series A preferred stock have not been
paid in an amount equal to or exceeding the dividends payable in respect of six
quarterly periods, then the holders of Series A preferred stock, voting as a
separate class with each share of Series A preferred stock having one vote, are
entitled to elect two additional directors to the Board of Directors at the next
annual meeting of stockholders in lieu of voting together with the holders of
common stock in the election of directors, with such right continuing until all
dividends in default have been paid. In addition, the separate consent or
approval of at least two-thirds of the number of shares of any series of
preferred stock then outstanding is required before we can issue shares of
capital stock having preference or priority over such series or undertake other
extraordinary transactions, as specified in the Certificate, that may have the
effect of adversely affecting the rights of such series.
Additional Class. As described below under "--Certain Provisions-Share
Purchase Rights," an additional class of preferred stock has been authorized as
of the date of this prospectus, but no shares of this class is currently issued
or outstanding.
DESCRIPTION OF DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of preferred stock,
or "depositary shares", rather than full shares of preferred stock. In the
event, we will issue receipts for depositary shares, and each receipt will
represent a fraction of a share of a particular series of preferred stock as
described in the applicable prospectus supplement.
The shares of any series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between us and the depositary
named in the applicable prospectus supplement. Subject to terms of the deposit
agreement, each owner of a depositary share will be entitled, in proportion, to
all rights and preferences of the preferred stock, including dividend, voting,
redemption, subscription and liquidation rights. The term of any depositary
shares will be described in the applicable prospectus supplement and the
provisions of the deposit agreement, which will be filed with the SEC.
CERTAIN ANTI-TAKEOVER PROVISIONS OF OUR CHARTER AND BYLAWS
The provisions of our certificate of incorporation and by-laws and the
other arrangements summarized below may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in such stockholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by stockholders.
The description of the Rights Agreement in "--Share Purchase Rights" is
qualified in its entirety by reference to our Registration Statement on Form 8-A
dated September 28, 1990, incorporated by reference in this prospectus.
Board of Directors. The Board of Directors is divided into three classes
that are elected for staggered three year terms. This means that only one-third
of our directors are elected each year.
Issuance of Preferred Stock. The power of the Board of Directors to
establish one or more series of preferred stock with those rights, preferences,
privileges and limitations as the Board of Directors fixes, could have the
effect of impeding or discouraging the acquisition of control of us.
Business Combinations. Our Certificate contains supermajority voting
provisions relating to the approval of business combinations with any person who
is the beneficial owner of 10% or more of our voting stock, except for us, our
subsidiaries or certain employee benefits plans and their trustees, unless the
business combination been approved by the vote of a majority of the continuing
directors of our Board of Directors and satisfies other requirements set forth
in the Certificate. The required "supermajority vote" consists of the
affirmative vote of the holders of 80% or more of our voting stock voting
together as single class.
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Our "voting stock" is all our capital stock which by its terms may vote on
all matters submitted to our stockholders generally.
A "continuing director of Covanta" means any member of our Board of
Directors, who, while serving as a member of the Board of Directors is not an
affiliate, associate or representative of any affiliate or associate of us which
was the beneficial owner of 10% or more of our voting stock at any time in the
two years prior to the date in question and whose term as a member of the Board
of Directors satisfies certain duration requirements. A "continuing director"
may also be successors to such Board of Directors members.
Amendments to the Certificate of Incorporation. The Certificate provides
that the following provisions, including the provision that so provides, cannot
be repealed or amended in any respect, nor may any provision be adopted that is
inconsistent with the following provisions, without a supermajority vote of
stockholders:
o the prohibition on cumulative voting for directors,
o the minimum and maximum number of directors and the requirement of a
classified board,
o the requirement that holders of our common stock are entitled to one
vote per share, and
o the provision requiring an 80% supermajority vote and imposing related
requirements with respect to extraordinary corporate transactions.
The above supermajority voting requirements do not apply to any amendment,
repeal or adoption recommended by our Board of Directors if a majority of our
Board of Directors then in office consists of persons who would be eligible to
serve as continuing directors.
Provisions Relating to Meetings of Stockholders.
o Notice Requirement. Our stockholders can submit proposals for action
by the stockholders at an annual meeting, if the stockholders follow
advance notice procedures described in our Bylaws. These procedures
include delivering a timely written notice to our Secretary. To be
timely, a stockholder's notice must be received at our principal
executive offices, not less than 50 days nor more than 75 days prior
to the date of the annual meeting; provided that if less than 65 days'
notice or prior public disclosure of the date of such meeting has been
given or made to the stockholders, a stockholder's notice must be
received no later than the close of business on the 15th day following
the day on which such notice was mailed or such disclosure was made.
o No Action by Consent Without a Meeting. The Certificate stipulates
that no action can be taken except at an annual or special meeting.
o Special Meetings. The Bylaws only allow special meetings of the
stockholders if requested by the Chairman or Vice-Chairman of the
Board of Directors or by a majority of the Board of Directors.
Share Purchase Rights.
o General. On September 20, 1990, our Board of Directors declared a
dividend distribution of one right for each outstanding share of
common stock, payable on October 2, 1990 to the stockholders of record
as of the close of business on such date. On September 28, 2000, our
Board amended and restated the Rights Agreement governing the rights.
Each right, when exercisable, entitles the registered holder to
purchase from us one one-hundredth of a share of our cumulative
participating preferred stock, par value $1.00 per share at a price of
$80 per one one-hundredth of a share, subject to adjustments set forth
in the Rights Agreement. The rights are governed by an Amended and
Restated Rights Agreement, under which the rights will expire on
October 2, 2010, unless earlier redeemed by us as described below.
o Exercise of the Rights. The rights trade together with the common
stock. They cannot be exercised or traded separately until the close
of business on the "distribution date." The distribution date occurs
ten days after a person or group of affiliated or associated persons
has acquired, obtained the right to acquire or commenced a tender or
exchange offer, or filed a registration statement under the Securities
Act with respect to a contemplated exchange offer, to acquire
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beneficial ownership of 15% or more of the outstanding shares of
common stock (each, an "Acquiring Person"). As soon as practicable
following the distribution date, separate certificates evidencing the
rights will be mailed to holders of record of common stock as of the
close of business on the distribution date, and such separate
certificates alone will evidence the rights. The purchase price
payable, and the number of shares of common stock or other securities
or property issuable, upon exercise of the rights are subject to
adjustment from time to time to prevent dilution.
In the event that any person becomes an Acquiring Person, each holder
of a right, other than the Acquiring Person and its transferees, will
afterwards have the right to receive, upon exercise of a right, that
number of shares of our common stock having a market value of two
times the exercise price of the right. In the event that, at any time
after the rights become exercisable, we are acquired in a merger or
other business combination, each holder of a right, other than the
Acquiring Person and its transferees, shall afterwards have the right
to receive, upon the exercise at the then current exercise price of
the right, that number of shares of common stock of the surviving
company (or its parent company or other controlling entity) which at
the time of such transaction would have a market value of two times
the exercise price of the right.
At any time after the rights become exercisable and prior to the time
that any person or group becomes the beneficial owner of 50% or more
of the outstanding common stock, the Board of Directors may exchange
the rights, other than rights held by any Acquiring Person or its
transferees, for common stock at a ratio of one share of common stock
per right, subject to certain adjustments set forth in the Rights
Agreement.
At any time prior to the close of business on the date that rights
holders become entitled to purchase our common stock or the common
stock of the surviving entity if we are not the surviving entity, we
may redeem the rights in whole, at a price of $.01 per right, subject
to adjustments set forth in the Rights Agreement. Immediately upon the
action of the Board of Directors redeeming the rights, the right to
exercise the rights will terminate and the only right of the holders
of rights will be to receive the redemption price.
Until a right is exercised, the holder, as such, will have no rights
as a stockholder of us, including no right to vote or to receive
dividends.
At any time prior to the time that an Acquiring Person has become
such, we may amend the Amended and Restated Rights Agreement and the
terms of the rights in any manner we deem necessary or desirable.
Afterwards, the Amended and Restated Rights Agreement and the terms of
the rights may be amended by us only in a manner that does not
adversely affect the interests of the holders of the rights (other
than an Acquiring Person). Notwithstanding the foregoing, the Amended
and Restated rights Agreement may not be amended to reinstate a right
of redemption if the rights are not then redeemable or to decrease the
redemption price.
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o Terms of the Junior Preferred Stock. The junior preferred stock
purchasable upon exercise of the rights will not be redeemable. Each
share of junior preferred stock will be entitled to a minimum
preferential quarterly dividend payable of $1.00 but will be entitled
to an aggregate dividend of 100 times the dividend declared per share
of common stock. In the event of liquidation, the holders of the
junior preferred stock will be entitled to a minimum preferential
liquidation payment of $40 per share but will be entitled to an
aggregate payment of 100 times the payment made per share of common
stock. Each share of junior preferred stock will have 100 votes,
voting together with the common stock. In the event of any merger,
consolidation or other transaction in which shares of common stock are
exchanged, each share of junior preferred stock will be entitled to
receive 100 times the amount received per share of common stock. These
rights are protected by customary anti-dilution provisions. Because of
the nature of the junior preferred stock's dividend and liquidation
rights, the value of the one one-hundredth interest in a share of
junior preferred stock purchasable upon exercise of each right should
approximate the value of one share of common stock.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with our debt
securities, preferred stock or common stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants. A copy
of the warrant agreement will be filed with the Securities and Exchange
Commission in connection with the offering of warrants.
GENERAL TERMS OF ALL WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities, common stock or preferred stock will describe the terms
of those warrants, including the following:
o the title of the warrants,
o the offering price for the warrants, if any,
o the aggregate number of the warrants,
o the dates on which the right to exercise the warrants will commence
and expire,
o if applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time,
o the currency or currency units in which the offering price, if any,
and the exercise price are payable,
o if applicable, a discussion of material United States federal income
tax considerations,
o anti-dilution provisions of the warrants, if any,
o redemption or call provisions, if any, applicable to the warrants,
o any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants, and
o any other information we think is important about the warrants.
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ADDITIONAL TERMS OF DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the following additional terms:
o the designation and terms of the debt securities purchasable upon
exercise of the warrants,
o if applicable, the designation and terms of the debt securities with
which the warrants are issued with and the number of warrants issued
with each debt security,
o if applicable, the date from and after which the warrants and any debt
securities issued with them will be separately transferable,
o the principal amount of debt securities that may be purchased upon
exercise of a warrant and the price at which the debt securities may
be purchased upon exercise,
o whether the warrants represented by the warrant certificates or debt
securities that may be issued upon exercise of the warrants will be
issued in registered or bearer form, and
o information relating to book-entry procedures, if any.
ADDITIONAL TERMS OF STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue common stock or preferred stock will describe the following additional
terms:
o the designation and terms of the common stock or preferred stock that
may be purchased upon exercise of the warrants,
o if applicable, the designation and terms of the securities with which
the warrants are issued with and the number of warrants issued with
each security,
o if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable,
and
o the number of shares of common stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which the shares
may be purchased upon exercise.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
We may issue contracts obligating holders to purchase from us, and
obligating us to sell to the holders, a specified number of shares of common
stock or preferred stock at a future date or dates. These contracts are called
"stock purchase contracts." The price per share of common stock or preferred
stock and the number of shares of common stock or preferred stock may be fixed
at the time the stock purchase contracts are issued or may be determined by
reference to a specific formula set forth in the stock purchase contracts. The
stock purchase contracts may be issued separately or as part of units consisting
of a stock purchase contract and debt securities, trust preferred securities,
preferred stock or debt obligations of third parties, including U.S. treasury
securities, securing the holders' obligations to purchase the common stock or
preferred stock under the stock purchase contracts, which we refer to as "stock
purchase units." The stock purchase contracts may require us to make periodic
payments to the holders of the stock purchase units or vice versa, and such
payments may be unsecured or refunded on some basis. The stock purchase
contracts may require holders to secure their obligations in a specified manner.
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The applicable prospectus supplement will describe the terms of the stock
purchase contracts or stock purchase units. The description in the prospectus
supplement will not necessarily be complete, and reference will be made to the
stock purchase contracts, and, if applicable, collateral or depositary
arrangements, relating to the stock purchase contracts or stock purchase units.
Material United States federal income tax considerations applicable to the stock
purchase units and the stock purchase contracts will also be discussed in the
applicable prospectus supplement.
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth general terms and provisions of the
preferred securities to which any prospectus supplement may relate. The
particular terms of the preferred securities offered by any prospectus
supplement and the extent, if any, to which such general provisions may apply to
the preferred securities so offered will be described in the prospectus
supplement relating to such preferred securities. The prospectus supplement will
also set forth with respect to the particular preferred securities offered, the
specific designation;
o the number of securities,
o the liquidation amount per security,
o any listing on a securities exchange,
o the distribution rate or method of calculation,
o the dates on which distributions shall be payable and dates from which
distributions shall accrue,
o voting rights, if any,
o terms for any conversion or exchange into other securities,
o any redemption or sinking fund provisions,
o any other rights, preferences, privileges, limitations or restrictions
relating to the preferred securities, and
o the terms upon which the proceeds of the sale of the preferred
securities shall be used to purchase a specific series of our
corresponding subordinated debt securities.
Under the terms of the trust agreement for each Capital Trust, the
Administrative Trustees, on behalf of such Capital Trust, are authorized to
issue the preferred securities and the common securities. The preferred
securities of a particular issue will represent preferred beneficial ownership
interests in the assets of each Capital Trust, and the holders of the preferred
securities will be entitled to a preference in certain circumstances with
respect to distributions and amounts payable on redemption or liquidation over
the common securities of such Capital Trust, as well as other benefits as
described in the corresponding trust agreement. This summary of general
provisions of the preferred securities and the trust agreement, together with
the applicable prospectus supplement, will describe the material terms of the
preferred securities. You should refer to the provisions the applicable trust
agreement, including the definitions in the agreement, for complete information
regarding the terms and provisions of the trust agreement. Wherever particular
defined terms of a trust agreement (as amended or supplemented from time to
time) are referred to in this prospectus or in a prospectus supplement, such
defined terms are incorporated by reference. The form of the trust agreement has
been filed as an exhibit to the registration statement of which this prospectus
forms a part. Each Capital Trust is a legally separate entity and the assets of
one are not available to satisfy the obligations of any of the others.
GENERAL
The preferred securities of a Capital Trust will rank equally, and payments
will be made ratably, with the common securities of such Capital Trust except as
described under "--Subordination of Common Securities." Legal title to the
corresponding subordinated debt securities will be held in the name of such
Capital Trust in trust for the benefit of the holders of the related preferred
securities and common securities. The guarantee agreement executed by us for the
benefit of the holders of a Capital Trust's preferred securities will be a
guarantee on a subordinated basis with respect to the related preferred
securities but will not guarantee payment of distributions or amounts payable on
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redemption or liquidation of the preferred securities when the related Capital
Trust does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Distributions on the preferred securities will be cumulative and will
accumulate whether or not there are funds of the applicable Capital Trust for
the payment of distributions. Distributions will accrue from and will be payable
on such dates as are specified in the applicable prospectus supplement. Except
as specified in the applicable prospectus supplement, in the event that any date
on which distributions are payable on the preferred securities is not a business
day, payment of the distribution payable on such date will be made on the next
succeeding day that is a business day without any interest or other payment in
respect to any such delay, except that, if such next succeeding business day is
in the next succeeding calendar year, payment of such distribution shall be made
on the immediately preceding business day, in each case with the same force and
effect as if made on such date. Except as specified in the applicable prospectus
supplement, a "business day" shall mean any day other than a Saturday or a
Sunday, or a day on which banking institutions in New York City are authorized
or required by law to remain closed or a day on which the corporate trust office
of the Property Trustee or the Trustee under the subordinated indenture is
closed for business.
Distributions on each preferred security will be payable at a rate
specified in the prospectus supplement for such preferred securities. The amount
of distributions payable will be computed on the basis of a 360-day year of
twelve 30-day months and the actual days elapsed in a partial month in a period
unless otherwise specified in the applicable prospectus supplement.
Distributions to which holders of preferred securities are entitled will
accumulate additional distributions at the rate per annum if and as specified in
the applicable prospectus supplement. The term "distributions" includes any such
additional distributions unless otherwise stated.
If provided in the applicable prospectus supplement, we will have the right
at any time and from time to time during the term of any series of corresponding
subordinated debt securities to defer payment of interest for such number of
consecutive interest payment periods as may be specified in the applicable
prospectus supplement, subject to the terms, conditions and covenants, if any,
specified in such prospectus supplement, provided that such extension period may
not extend beyond the maturity date of such series of corresponding subordinated
debt securities. United States federal income tax consequences and special
considerations applicable to any such corresponding subordinated debt securities
will be described in the applicable prospectus supplement. As a consequence of
any such extension, during any such extension period, distributions on the
corresponding preferred securities would also be deferred by the applicable
Capital Trust. During any such extension period, quarterly distributions will
continue to accumulate, compounded on a quarterly basis, to the extent permitted
by applicable law.
If we give notice of its election of an extension period with respect to
the corresponding subordinated debt securities of a series and shall not have
rescinded such notice, or such extension period, or any extension of such
period, shall be continuing, we may not make the payments described in
"Description of the Debt Securities--Certain Provisions Relating to
Corresponding Subordinated Debt Securities--Restrictions on Certain Payments."
The revenue of each Capital Trust available for distribution to holders of
its preferred securities will be limited to payments under the corresponding
subordinated debt securities in which the Capital Trust will invest the proceeds
from the issuance and sale of its trust securities. If we do not make interest
payments on such corresponding subordinated debt securities, the Property
Trustee will not have funds available to pay distributions on the related
preferred securities. If and to the extent the Capital Trust has funds legally
available for the payment of such distributions and cash sufficient to make such
payments, the payment of distributions is guaranteed by us on a limited basis as
described in "Description of Guarantees."
Distributions on the preferred securities will be payable to the holders as
they appear on the register of such Capital Trust on the relevant record dates,
which, as long as the preferred securities remain in book-entry form, will be
one business day prior to the relevant distribution date. In the event any
preferred securities are not in book-entry form, the relevant record date for
such preferred securities shall be the date 15 days prior to the relevant
distribution date.
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PAYMENT OF EXPENSES
We, as the borrower, have agreed under the subordinated indenture to pay
all debts and obligations (other than with respect to the trust securities) and
all costs and expenses of the applicable Capital Trust, including, but not
limited to, all costs and expenses relating to the organization of the
applicable Capital Trust, the fees and expenses of the Property Trustee, the
Delaware Trustee and the Administrative Trustees and all costs and expenses
relating to the operation of the applicable Capital Trust (other than with
respect to the trust securities). We have also agreed to pay any and all taxes,
duties, assessments or other governmental charges of whatever nature (other than
United States withholding taxes) imposed by the United States or any other
taxing authority, so that the net amounts received and retained by the
applicable Capital Trust after paying such fees, expenses, debts and obligations
will be equal to the amounts the applicable Capital Trust would have received
and retained had no such fees, expenses, debts and obligations been incurred by
or imposed on the applicable Capital Trust. Our foregoing obligations are for
the benefit of, and shall be enforceable by, any person to whom such fees,
expenses, debts and obligations are owed, whether or not such creditor has
received notice of the obligation. Any such creditor may enforce our obligations
directly against us, and we have agreed to irrevocably waive any right or remedy
to require that any such creditor take any action against the applicable Capital
Trust or any other person before proceeding against us. We shall execute
additional agreements as may be necessary to give these provisions full effect.
REDEMPTION OR EXCHANGE
Upon the repayment or redemption, in whole or in part, of any corresponding
subordinated debt securities, whether at maturity or upon earlier redemption,
the proceeds from such repayment or redemption shall be applied by the Property
Trustee to redeem a like amount of the trust securities, upon not less than 30
nor more than 60 days notice, at a redemption price equal to the aggregate
liquidation amount of such trust securities plus accumulated but unpaid
distributions to the date fixed for redemption and the related amount of the
premium, if any, paid by us upon the concurrent redemption of such corresponding
subordinated debt securities. If fewer than all of any series of corresponding
subordinated debt securities are to be repaid or redeemed on a redemption date,
then the proceeds from such repayment or redemption shall be ratably allocated
to the redemption (based on liquidation amounts) of the related common
securities and preferred securities. The particular preferred securities to be
redeemed shall be selected by the Property Trustee from outstanding preferred
securities not previously called for redemption, by means that the Property
Trustee deems fair and appropriate.
We will have the right to redeem any series of corresponding subordinated
debt securities on such terms as may be specified in the applicable prospectus
supplement.
"Like amount" means (i) with respect to a redemption of any series of trust
securities, trust securities of such series having a liquidation amount equal to
the principal amount of corresponding subordinated debt securities to be
contemporaneously redeemed in accordance with the subordinated indenture,
allocated to the common securities and the preferred securities based upon the
relative liquidation amounts of such classes and the proceeds of which will be
used to pay the redemption price of such trust securities, and (ii) with respect
to a distribution of corresponding subordinated debt securities to holders of
any series of trust securities in connection with a dissolution or liquidation
of the related Capital Trust, corresponding subordinated debt securities having
a principal amount equal to the liquidation amount of the trust securities of
the holder to whom such corresponding subordinated debt securities are
distributed.
"Liquidation amount" means the stated amount per trust security specified
in the applicable prospectus supplement.
REDEMPTION AND EXCHANGE PROCEDURES
Preferred securities redeemed on each redemption date shall be redeemed at
the redemption price with the applicable proceeds from the contemporaneous
redemption of the corresponding subordinated debt securities. Redemptions of the
preferred securities shall be made and the redemption price shall be payable on
each redemption date only to the extent that the related Capital Trust has funds
on hand available for the payment of such redemption price. See "--Subordination
of Common Securities."
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If a Capital Trust gives a notice of redemption in respect of its preferred
securities, then, by 12:00 noon, New York City time, on the redemption date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with the Deposit Trust Company ("DTC") funds sufficient to pay the applicable
redemption price and will give DTC irrevocable instructions and authority to pay
the redemption price to the holders of such preferred securities. If such
preferred securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such preferred securities funds sufficient to pay the applicable redemption
price and will give such paying agent irrevocable instructions and authority to
pay the redemption price to the holders upon surrender of their certificates
evidencing such preferred securities. Notwithstanding the foregoing,
distributions payable on or prior to the redemption date for any preferred
securities called for redemption shall be payable to the holders of such
preferred securities on the relevant record dates for the related Distribution
Dates.
If notice of redemption shall have been given and funds deposited as
required, then immediately prior to the close of business (New York City time)
on the date of such deposit, all rights of the holders of such preferred
securities so called for redemption will cease, except the right of the holders
of such preferred securities to receive the redemption price and any unpaid
distribution payable on or prior to the redemption date, in each case without
interest, and such preferred securities will cease to be outstanding. Except as
specified in the applicable prospectus supplement, in the event that any
redemption date is not a business day, then payment of the redemption price
payable on such date will be made on the next succeeding day which is a business
day except that, if such succeeding business day falls in the next calendar
year, such payment will be paid on the immediately preceding business day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the redemption price in respect of preferred securities called
for redemption is improperly withheld or refused and not paid either by the
Capital Trust or by us under the guarantee as described under "Description of
Guarantees," distributions on such preferred securities will continue to accrue
at the then applicable rate, from the redemption date originally established by
the Capital Trust for such preferred securities to the date such redemption
price is actually deposited with DTC or the paying agent, as applicable, in
which case such date will be the date fixed for redemption for purposes of
calculating the redemption price; provided that if the redemption price is not
deposited by 12:00 noon on such date, the next succeeding business day shall be
the date fixed for redemption for purposes of calculating the redemption price.
Subject to applicable law including, without limitation, United States
federal securities law, we or our subsidiaries may at any time and from time to
time purchase outstanding preferred securities by tender, in the open market or
by private agreement.
Payment of the redemption price on the preferred securities and any
distribution of corresponding subordinated debt securities to holders of
preferred securities shall be made to the applicable recordholders as they
appear on the register for such preferred securities on the relevant record
date, which shall be one business day prior to the relevant redemption date or
liquidation date, as applicable; provided, however, that in the event that any
preferred securities are not in book-entry form, the relevant record date for
such preferred securities shall be a date at least 15 days prior to the
redemption date or liquidation date, as applicable, as specified in the
applicable prospectus supplement.
If fewer than all of the preferred securities and common securities issued
by a Capital Trust are to be redeemed on a redemption date, then the aggregate
liquidation amount of such preferred securities and common securities to be
redeemed shall be allocated to the preferred securities and the common
securities based upon the relative liquidation amounts of such classes. The
particular preferred securities to be redeemed shall be selected not more than
60 days prior to the redemption date by the Property Trustee from the
outstanding preferred securities not previously called for redemption, by such
method as the Property Trustee shall deem fair and appropriate. This method may
provide for the selection for redemption of portions of the aggregate
liquidation amount of preferred securities of a denomination larger than the
liquidation amount equal to the liquidation amount or an integral multiple of
the excess liquidation amount. The Property Trustee shall promptly notify the
trust registrar in writing of the preferred securities selected for redemption
and, in the case of any preferred securities selected for partial redemption,
the liquidation amount to be redeemed. For all purposes of each trust agreement,
unless the context otherwise requires, all provisions relating to the redemption
of preferred securities shall relate, in the case of any preferred securities
redeemed or to be redeemed only in part, to the portion of the aggregate
liquidation amount of preferred securities which has been or is to be redeemed.
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SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, each Capital
Trust's preferred securities and common securities, as applicable, shall be made
ratably based on the liquidation amount of such preferred securities and common
securities; provided, however, that if on any distribution date or redemption
date an event of default with respect to any subordinated debt security shall
have occurred and be continuing, no payment of any distribution on, or
redemption price of, any of such Capital Trust's common securities, and no other
payment on account of the redemption, liquidation or other acquisition of such
common securities, shall be made unless payment in full in cash of all
accumulated and unpaid distributions on all of the Capital Trust's outstanding
preferred securities for all distribution periods terminating on or before such
period, or in the case of payment of the redemption price the full amount of
such redemption price on all of the Capital Trust's outstanding preferred
securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all distributions on, or redemption price of, the
Capital Trust's preferred securities then due and payable.
In the case of any event of default with respect to any subordinated debt
security, we, as holder of such Capital Trust's common securities, will be
deemed to have waived any right to act with respect to any such event of default
under the applicable trust agreement until the effect of all such events of
default with respect to such preferred securities has been cured, waived or
otherwise eliminated. Until any such events of default under the applicable
trust agreement with respect to the preferred securities have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the holders of such preferred securities and not on our behalf as holder of
the Capital Trust's common securities, and only the holders of such preferred
securities will have the right to direct the Property Trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Unless otherwise specified in the applicable prospectus supplement, we have
the right at any time to terminate any Capital Trust and, after satisfaction of
the liabilities of the creditors of such Capital Trust as provided by applicable
law, cause such corresponding subordinated debt securities in respect of the
preferred securities and common securities issued by such Capital Trust to be
distributed to the holders of such preferred securities and common securities in
liquidation of such Capital Trust.
Under each trust agreement, each Capital Trust shall automatically dissolve
upon expiration of its term and shall dissolve on the first to occur of:
o bankruptcy, dissolution or our liquidation,
o the distribution of a like amount of the corresponding subordinated
debt securities to the holders of its trust securities, if we, as
sponsor, have given written direction to the Property Trustee to
dissolve such Capital Trust (which direction is optional and wholly
within our discretion, as sponsor),
o redemption of all of the Capital Trust's preferred securities as
described under "Description of Preferred Securities-Redemption or
Exchange", and
o the entry of an order for the dissolution of such Capital Trust by a
court of competent jurisdiction.
If an early dissolution occurs as described in the first second and third
point above, the Capital Trust shall be liquidated by the Issuer Trustee as
expeditiously as the Issuer Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of such Capital Trust as provided
by applicable law, to the holders of such trust securities a like amount of the
corresponding subordinated debt securities, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of such Capital Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of such Capital Trust as provided by applicable law, an amount equal
to, in the case of holders of preferred securities, the aggregate of the
liquidation amount plus accrued and unpaid distributions to the date of payment.
If such liquidation distribution can be paid only in part because such Capital
Trust has insufficient assets available to pay in full the total liquidation
distribution, then the amounts payable directly by such Capital Trust on its
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preferred securities shall be paid. The holder of such Capital Trust's common
securities will be entitled to receive distributions upon any such liquidation
ratably with the holders of its preferred securities, except that if a
subordinated debt security event of default has occurred and is continuing, the
preferred securities shall have a priority over the common securities. A
supplement to the subordinated indenture may provide that if an early
dissolution occurs as described in clause (iv) above, the corresponding
subordinated debt securities may be subject to optional redemption in whole but
not in part.
After the date fixed for any distribution of corresponding subordinated
debt securities for any series of preferred securities (i) such series of
preferred securities will no longer be deemed to be outstanding, (ii)
certificates representing the corresponding subordinated debt securities to be
delivered upon such distribution will be issued to the holders of the
certificates for the trust securities upon surrender of such certificates for
exchange, (iii) we shall use our reasonable efforts to have the subordinated
debt securities listed on the exchange, interdealer quotation system or
self-regulatory system as the preferred securities are then listed and (iv) any
certificates representing such series of preferred securities not so exchanged
will be deemed to represent the corresponding subordinated debt securities
having a principal amount equal to the stated liquidation amount of such series
of preferred securities, and accruing interest at the rate provided for in the
debt securities until such certificates are presented to the Administrative
Trustees or his agent for transfer or reissuance.
There can be no assurance as to the market prices for the preferred
securities or the corresponding subordinated debt securities that may be
distributed in exchange for preferred securities if a dissolution and
liquidation of a Capital Trust were to occur. Accordingly, the preferred
securities that an investor may purchase, or the corresponding subordinated debt
securities that an investor may receive on dissolution and liquidation of a
Capital Trust, may trade at a discount to the price that the investor paid to
purchase the preferred securities.
EVENT OF DEFAULT; NOTICE
Unless otherwise specified in the applicable prospectus supplement, the
occurrence of an event of default with respect to a corresponding subordinated
debt security under the subordinated indenture constitutes an "event of default"
under each trust agreement with respect to the preferred securities issued under
such agreement regardless of the reason for such event of default and whether it
shall be voluntary or involuntary or be effected by operation of law or as a
result of any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body. See "Description of the
Debt Securities-Events of Default."
Within five business days after the occurrence of an event of default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such event of default to the holders of such Capital Trust's preferred
securities, the Administrative Trustees and us, as sponsor, unless such event of
default shall have been cured or waived. In our role as sponsor, we, along with
the Administrative Trustees, are required to file annually with the Property
Trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to them under each trust agreement.
If an event of default with respect to a corresponding subordinated debt
security has occurred and is continuing, the preferred securities shall have a
preference over the common securities upon termination of each Capital Trust as
described above. See "--Liquidation Distribution Upon Dissolution." The
existence of an event of default under the applicable trust agreement does not
entitle the holders of preferred securities to accelerate the maturity of any
obligations under the trust agreement.
REMOVAL OF ISSUER TRUSTEE
Unless an event of default with respect to a corresponding subordinated
debt security has occurred and is continuing, any Issuer Trustee may be removed
at any time by the holder of the common securities. If an event of default
resulting from an event of default with respect to a corresponding subordinated
debt security has occurred and is continuing, the Property Trustee and the
Delaware Trustee may be removed at such time by the holders of a majority in
liquidation amount of the outstanding preferred securities. In no event will the
holders of the preferred securities have the right to vote to appoint, remove or
replace any Administrative Trustee, which voting rights are vested exclusively
in us as the holder of the common securities. No resignation or removal of an
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Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the applicable trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default under the applicable trust agreement shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of a Capital Trust's property may at the time be located, we, as the
holder of the common securities, and the Administrative Trustees shall have
power to appoint one or more persons either to act as a co-trustee, jointly with
the Property Trustee, of all or any part of such property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable trust agreement. In case an event of
default with respect to a subordinated debt security has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment.
MERGER OR CONSOLIDATION OF PROPERTY, DELAWARE TRUSTEE
Any corporation into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such trustee
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such trustee, shall be the successor of such trustee
under each trust agreement, provided such corporation shall be otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, CONVERSIONS, AMALGAMATIONS
OR REPLACEMENTS OF THE CAPITAL TRUST
A Capital Trust may not merge with or into, consolidate, convert into,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other Person, except
as described below, as described in "-- Liquidation Distribution Upon
Dissolution" or as described in the prospectus supplement with respect to the
preferred securities. A Capital Trust may, at our request, with the consent of
the Administrative Trustees and without the consent of the holders of the
preferred securities, merge with or into, consolidate, convert into, amalgamate,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that:
o such successor entity either (a) expressly assumes all of the
obligations of such Capital Trust with respect to the preferred
securities or (b) substitutes for the preferred securities other
securities having substantially the same terms as the preferred
securities so long as such successor securities rank the same as the
preferred securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise,
o we expressly appoint a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the
corresponding subordinated debt securities,
o the successor securities are listed or traded, or any successor
securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the
preferred securities are then listed or traded, if any,
o such merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not cause the preferred securities
(including any successor securities) to be downgraded by any
nationally recognized statistical rating organization,
o such merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities
(including any successor securities) in any material respect,
o such successor entity has a purpose substantially similar to that of
the Capital Trust,
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o prior to such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, we have received an
opinion of counsel to the effect that (a) such merger, consolidation,
conversion, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of
the holders of the preferred securities (including any successor
securities) in any material respect, and (b) following such merger,
consolidation, conversion, amalgamation, replacement, conveyance,
transfer or lease, neither the Capital Trust nor such successor entity
will be required to register as an investment company under the
Investment Company Act, and
o we or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of
such successor entity under the successor securities at least to the
extent provided by the guarantee.
Notwithstanding the foregoing, a Capital Trust shall not, except with the
consent of holders of 100% in liquidation amount of the preferred securities,
merge with or into, consolidate, convert into, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other person or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease would cause such
Capital Trust or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantees-Amendments
and Assignment" and as otherwise required by law and the applicable trust
agreement, the holders of the preferred securities will have no voting rights.
Each trust agreement may be amended from time to time by us, the Property
Trustee and the Administrative Trustees, without the consent of the holders of
the preferred securities (i) to cure any ambiguity, correct or supplement any
provisions in such trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under such trust agreement, which shall not be inconsistent with the
other provisions of such trust agreement or (ii) to modify, eliminate or add to
any provisions of such trust agreement to such extent as shall be necessary to
ensure that the Capital Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any trust securities
are outstanding or to ensure that the Capital Trust will not be required to
register as an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any holder of trust securities, and any
such amendments of such trust agreement shall become effective when notice of
the amendment is given to the holders of trust securities.
Each trust agreement may be amended by the Issuer Trustees and us with (i)
the consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding trust securities and (ii) receipt by the
Issuer Trustees of an opinion of counsel to the effect that such amendment or
the exercise of any power granted to the Issuer Trustees under such amendment
will not affect the Capital Trust's status as a grantor trust for United States
federal income tax purposes or the Capital Trust's exemption from status as an
"investment company" under the Investment Company Act; provided that without the
consent of each affected holder of trust securities, such trust agreement may
not be amended to (i) change the amount or timing of any distribution on the
trust securities or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust securities as of a specified date or
(ii) restrict the right of a holder of trust securities to institute suit for
the enforcement of any such payment on or after such date.
So long as any corresponding subordinated debt securities are held by the
Property Trustee, the Issuer Trustees shall not
o direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee under the subordinated indenture, or
executing any trust or power conferred on the Trustee with respect to
such corresponding subordinated debt securities,
o waive any past default that is waivable under the subordinated
indenture,
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o exercise any right to rescind or annul a declaration that the
principal of all the corresponding subordinated debt securities shall
be due and payable, or
o consent to any amendment, modification or termination of the
subordinated indenture or such corresponding subordinated debt
securities, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of at
least a majority in aggregate liquidation amount of all outstanding preferred
securities; provided, however, that where a consent under the subordinated
indenture would require the consent of each holder of corresponding subordinated
debt securities affected, no such consent shall be given by the Property Trustee
without the prior consent of each holder of the related preferred securities.
The Issuer Trustee shall not revoke any action previously authorized or
approved by a vote of the holders of the preferred securities except by
subsequent vote of the holders of the preferred securities. The Property Trustee
shall notify all holders of preferred securities of any notice of default
received from the Trustee with respect to the corresponding subordinated debt
securities. In addition to obtaining the foregoing approvals of the holders of
the preferred securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the Capital Trust will not be classified as an association
taxable as a corporation for United States federal income tax purposes on
account of such action.
Any required approval of holders of preferred securities may be given
at a meeting of holders of preferred securities convened for such purpose or by
written consent. The Property Trustee will cause a notice of any meeting at
which holders of preferred securities are entitled to vote to be given to each
holder of record of preferred securities in the manner set forth in each trust
agreement.
No vote or consent of the holders of preferred securities will be required
for a Capital Trust to redeem and cancel its preferred securities in accordance
with the applicable trust agreement.
Notwithstanding that holders of preferred securities are entitled to vote
or consent under any of the circumstances described above, any of the preferred
securities that are owned by us, the Issuer Trustees or any affiliate of ours or
any Issuer Trustee, shall, for purposes of such vote or consent, be treated as
if they were not outstanding.
GLOBAL PREFERRED SECURITIES
Unless otherwise provided in the prospectus supplement relating to an
offering of preferred securities and any corresponding subordinated debt
securities, the preferred securities and the corresponding subordinated debt
securities will be issued only as fully-registered global securities registered
in the name of the depository identified in the applicable prospectus
supplement. One or more fully-registered global securities will be issued for
the preferred securities of each Capital Trust and the corresponding
subordinated debt securities, representing in the aggregate the total number of
such Capital Trust's preferred securities or aggregate principal balance of
corresponding subordinated debt securities, respectively, and will be deposited
with the depository.
Any additional or alternative terms of the depository arrangements with
respect to a series of preferred securities and any corresponding subordinated
debt securities and the rights of and limitations on owners of beneficial
interests in book-entry securities representing all or a portion of a series of
preferred securities and any corresponding subordinated debt securities may be
described in the prospectus supplement relating to such series.
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities shall be made to the
depository, which shall credit the relevant accounts at the depository on the
applicable distribution dates or, if the Capital Trust's preferred securities
are not held by the depository, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable prospectus supplement,
the paying agent shall initially be the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustee and
to us. The paying agent shall be permitted to resign as paying agent upon 30
45
days' written notice to the Administrative Trustee, the Property Trustee and to
us. In the event that the Property Trustee shall no longer be the paying agent,
the Administrative Trustee shall appoint a successor bank or trust company
acceptable to the Property Trustee and to us to act as paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
Property Trustee will act as registrar and transfer agent for the preferred
securities.
Registration of transfers of preferred securities will be effected without
charge by or on behalf of each Capital Trust, but upon payment of any tax or
governmental charges that may be imposed in connection with any transfer or
exchange. The Capital Trusts will not be required to register or cause to be
registered the transfer of their preferred securities after such preferred
securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an event of default, undertakes to perform only such duties as are specifically
set forth in each trust agreement and, after such event of default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the rights or powers
vested in it by the applicable trust agreement at the request or direction of
any holder of preferred securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities potentially incurred. If in
performing its duties under the trust agreement, the Property Trustee is
required to decide between alternative courses of action, construe ambiguous
provisions in the applicable trust agreement or is unsure of the application of
any provision of the applicable trust agreement, and the matter is not one on
which holders of preferred securities are entitled under the applicable trust
agreement to vote, then the Property Trustee shall take such action as we direct
and if not so directed, shall take such action as it deems advisable and in the
best interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate each Capital Trust so that no Capital Trust will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or taxed as a corporation for United States federal
income tax purposes and so that the corresponding subordinated debt securities
will be treated as our indebtedness for United States federal income tax
purposes. In this connection, we, along with the Administrative Trustees, are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of each Capital Trust or each trust agreement, that we and
the Administrative Trustees determine in our discretion to be necessary or
desirable for such purposes, as long as such action does not adversely affect in
any material respect the interests of the holders of the related preferred
securities.
Holders of the preferred securities have no preemptive or similar rights.
No Capital Trust may borrow money or issue debt or mortgage or pledge any
of its assets.
DESCRIPTION OF GUARANTEES
A guarantee will be executed and delivered by us concurrently with the
issuance by each Capital Trust of its preferred securities for the benefit of
the holders from time to time of such Preferred securities. Unless otherwise
specified in the applicable prospectus supplement, Bankers Trust Company will
act as indenture trustee under each guarantee for the purposes of compliance
with the Trust Indenture Act, and each guarantee will be qualified as an
indenture under the Trust Indenture Act. The following description of the
guarantee set forth certain general terms and provisions of the guarantees to
which any prospectus summary may relate. You should refer to the provisions of
each guarantee agreement, including the definitions, for complete information
regarding the terms and provisions of each guarantee. The form of the guarantee
has been filed as an exhibit to the registration statement of which this
prospectus forms a part. Reference in this summary to preferred securities means
46
that the Capital Trust's preferred securities to which the guarantee relates.
The Guarantee Trustee will hold each guarantee for the benefit of the holders of
the related Capital Trust's preferred securities.
In this description of guarantees, the words "Covanta," "our company,"
"we," "us" or "our" refer only to Covanta Energy Corporation and not to any of
its subsidiaries, unless we expressly state otherwise or the context otherwise
requires.
GENERAL
Unless otherwise specified in the applicable prospectus supplement, we will
irrevocably and unconditionally agree to pay in full on a subordinated basis, to
the extent set forth in this prospectus, the guarantee payments (as defined
below) to the holders of the preferred securities, as and when due, regardless
of any defense, right of set-off or counterclaim that such Capital Trust may
have or assert other than the defense of payment. The following payments or
distributions, without duplication with respect to the preferred securities, to
the extent not paid by or on behalf of the related Capital Trust, will be
subject to the guarantee:
o any accumulated and unpaid distributions required to be paid on such
preferred securities, to the extent that such Capital Trust has funds
on hand available at such time,
o the redemption price with respect to any preferred securities called
for redemption by the Capital Trust to the extent that such Capital
Trust has funds on hand available at such time, and
o unless the corresponding subordinated debt securities are distributed
to holders of such preferred securities, the lesser of (a) the
liquidation amount per preferred security plus accumulated and unpaid
distributions and (b) the amount of assets of such Capital Trust
remaining available for distribution to holders of preferred
securities.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of the applicable preferred
securities or by causing the Capital Trust to pay such amounts to such holders.
Each guarantee will be an irrevocable guarantee on a subordinated basis of
the related Capital Trust's obligations under the preferred securities, but will
apply only to the extent that such related Capital Trust has funds sufficient to
make such payments and is not a guarantee of collection.
If we do not make interest payments on the corresponding subordinated debt
securities held by the Capital Trust, the Capital Trust will not be able to pay
distributions on the preferred securities and will not have funds legally
available therefor. Each guarantee will rank subordinate and junior in right of
payment to all of our indebtedness. See "--Status of the Guarantee." The
majority of our operating assets and of our consolidated subsidiaries are owned
by such subsidiaries. We rely primarily on dividends from such subsidiaries to
meet our obligations for payment of principal and interest on our outstanding
debt obligations and corporate expenses. Accordingly, our obligations under
guarantees will be effectively subordinated to all existing and future
liabilities of our subsidiaries, and claimants should look only to our assets
for payment. Except as otherwise provided in the applicable prospectus
supplement, the guarantees do not limit us from incurring or issuing other
secured or unsecured debt, whether under the indentures, any other indenture
that we may enter into in the future or otherwise. See the prospectus supplement
relating to any offering of preferred securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of the related preferred securities in any material respect (in which
case no vote will be required), no guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate liquidation
amount of such outstanding preferred securities. The manner of obtaining any
such approval will be as set forth under "Description of Preferred
Securities--Voting Rights; Amendment of The Trust Agreement." All guarantees and
agreements contained in each guarantee shall bind the successors, assigns,
receivers, trustees and our representatives and shall inure to the benefit of
the holders of the related preferred securities then outstanding.
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EVENTS OF DEFAULT
An event of default under each guarantee will occur if we fail to perform
any of our payment or other obligations under such guarantee, provided that
except for a payment default, we have received notice and have not cured such
default within 60 days. The holders of not less than a majority in aggregate
liquidation amount of the related preferred securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of such guarantee or to direct the exercise
of any trust or power conferred upon the Guarantee Trustee under such guarantee.
If the Guarantee Trustee fails to enforce a guarantee, any holder of the
preferred securities may institute a legal proceeding directly against us to
enforce its rights under such Guarantee without first instituting a legal
proceeding against the Capital Trust, or any other person or entity. If we have
failed to make a guarantee payment under a guarantee, a record holder of
preferred securities to which the guarantee relates may directly institute a
proceeding against us for enforcement of such guarantee for such payment. We
have waived any right or remedy to require that any action be brought first
against the applicable Capital Trust or any other person or entity before
proceeding directly against us. The record holder in the case of the issuance of
one or more global preferred securities certificates will be DTC acting at the
direction of the beneficial owners of the preferred securities.
We are required, as guarantor to file annually with the Guarantee Trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to it under the guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by us in performance of the guarantee, undertakes to perform only such
duties as are specifically set forth in each guarantee and, after default with
respect to any guarantee, must exercise the same degree of care and skill as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. Subject to this provision, the Guarantee Trustee is
under no obligation to exercise any of the powers vested in it by any guarantee
at the request of any holder of any preferred securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities potentially
incurred.
TERMINATION OF THE GUARANTEE
Each guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the related preferred securities, upon
full payment of the amounts payable upon liquidation of the related Capital
Trust or upon distribution of corresponding subordinated debt securities to the
holders of the related preferred securities. Each guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the related preferred securities must repay any sums paid under such
preferred securities or such guarantee.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
To the extent the Capital Trust has funds available for the payment of such
distributions are irrevocably guaranteed by us as and to the extent set forth
under "Description of Guarantees." Taken together, our obligations under each
series of corresponding subordinated debt securities, the subordinated
indenture, the related trust agreement and the related guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the related series of preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes the guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Capital Trust's obligations under
the preferred securities. If and to the extent that we do not make payments on
any series of corresponding subordinated debt securities, such Capital Trust
48
will not pay distributions or other amounts due on its preferred securities. The
guarantees do not cover payment of distributions when the related Capital Trust
does not have sufficient funds to pay such distributions. In such event, the
remedy of a holder of a series of preferred securities is to institute a legal
proceeding directly against us for enforcement of payment of such distributions
to such holder. Our obligations under each guarantee are subordinate and junior
in right of payment to all senior indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of corresponding subordinated debt securities, such payments will be
sufficient to cover distributions and other payments due on the related
preferred securities, primarily because:
o the aggregate principal amount of each series of corresponding
subordinated debt securities will be equal to the sum of the aggregate
stated liquidation amount of the related preferred securities and
related common securities,
o the interest rate and interest and other payment dates on each series
of corresponding subordinated debt securities will match the
distribution rate and distribution and other payment dates for the
related preferred securities,
o we shall pay for all and any costs, expenses and liabilities of such
Capital Trust except the Capital Trust's obligations to holders of its
preferred securities under such preferred securities, and
o each trust agreement further provides that the Capital Trust will not
engage in any activity that is inconsistent with the limited purposes
of such Capital Trust.
Notwithstanding anything to the contrary in the subordinated indenture, we
have the right to set-off any payment we are otherwise required to make under
the subordinated indenture with and to the extent we have made, or are
concurrently on the date of such payment making, a payment under the related
guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any preferred security may institute a legal proceeding
directly against us to enforce its rights under the related guarantee without
first instituting a legal proceeding against the related Capital Trust or any
other person or entity.
A default or event of default under any of our senior indebtedness would
not necessarily constitute a default under the subordinated indenture or any
trust agreement. However, in the event of payment defaults under, or
acceleration of, our senior indebtedness, the subordination provisions of the
subordinated indenture provide that no payments may be made in respect of the
corresponding subordinated debt securities until such senior indebtedness has
been paid in full or any payment default has been cured or waived. Failure to
make required payments on any series of corresponding subordinated debt
securities would constitute an event of default under each trust agreement.
LIMITED PURPOSE OF THE CAPITAL TRUST
Each Capital Trust's preferred securities evidence undivided beneficial
ownership interests in the assets of such Capital Trust, and each Capital Trust
exists for the sole purpose of issuing its preferred securities and common
securities, investing the proceeds in corresponding subordinated debt securities
and engaging in only other necessary, convenient or incidental activities. A
principal difference between the rights of a holder of a preferred security and
a holder of a corresponding subordinated debt security is that a holder of a
corresponding subordinated debt security is entitled to receive from us the
principal amount of and interest accrued on corresponding subordinated debt
securities held, while a holder of preferred securities is entitled to receive
distributions from such Capital Trust or from us under the applicable guarantee,
if and to the extent such Capital Trust has funds available for the payment of
such distributions.
49
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of any Capital Trust
involving the liquidation of the corresponding subordinated debt securities, the
holders of the related preferred securities will be entitled to receive, out of
assets held by such Capital Trust and, after satisfaction of creditors of such
Capital Trust as provided by applicable law, the liquidation distribution in
cash. See "Description of Preferred Securities--Liquidation Distribution Upon
Dissolution." Upon any voluntary or involuntary liquidation or our bankruptcy,
the Property Trustee, as holder of the corresponding subordinated debt
securities, would be our subordinated creditor, subordinated in right of payment
to all senior indebtedness, but entitled to receive payment in full of principal
and interest, before any of our stockholders receive payments or distributions.
Since we are the guarantor under each Guarantee and we have agreed to pay for
all costs, expenses and liabilities of each Capital Trust (other than the
Capital Trust's obligations to the holders of its preferred securities), the
positions of a holder of such preferred securities and a holder of such
corresponding subordinated debt securities relative to other creditors and to
our stockholders in the event of liquidation or our bankruptcy are expected to
be substantially the same.
PLAN OF DISTRIBUTION
We and the Capital Trusts may offer, sell or exchange the securities
described in this prospectus:
o through agents,
o through one or more underwriters,
o through one or more dealers,
o directly to one or more purchasers through a specific bidding or
auction process or otherwise,
o through a combination of any such methods of sale, or
o at a fixed exchange ratio in return for other of our securities.
The distribution of the securities described in this prospectus may be
effected from time to time in one or more transactions either:
o at a fixed price or prices, which may be changed,
o at market prices prevailing at the time of sale,
o at prices relating to such prevailing market prices, or
o at negotiated prices.
Distribution By Agents
The securities may be sold on a continuing basis through agents. The agents
will agree to use their reasonable efforts to solicit purchases for the period
of their appointment under the terms of an agency agreement between the agents
and us.
We and the Capital Trusts will receive all proceeds from the sale of the
securities, after paying the agents a commission. In addition, we will agree to
reimburse any agents for their expenses in connection with the sale of the
securities.
The agents will sell the securities on the New York Stock Exchange, or on
any other exchange on which the securities are listed, at prevailing market
prices through ordinary brokers' transactions or in block transactions. In block
transactions, the agents may purchase all or a portion of the securities as
principal for their own account and resell them.
The agents may also sell the securities in a fixed price offering. If this
happens, we will sell securities to the agents for their own account at a
negotiated price, which is related to the prevailing market price, and the
agents may form a group of dealers to participate with them in reselling the
securities to you.
50
The agents may also sell the securities by conducting a special offering or
exchange distribution in accordance with the rules of the stock exchange on
which the securities are listed.
The agents will not be obligated to make a market in the securities. We
cannot predict the amount of trading or liquidity of the securities.
Distribution By Underwriters
If underwriters are used in the sale, the securities may be acquired by the
underwriters for their own account. The underwriters may resell the securities
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale which
may be changed. The obligations of the underwriters to purchase the securities
will be subject to conditions to be described in a prospectus supplement. The
underwriters will be obligated to purchase all the securities of the specific
series offered if any of such securities are purchased. Any initial public
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time. We may also grant underwriters an
option to buy additional securities to cover overallotments in the sales of the
securities they may acquire from us.
Distribution Direct Sales
We and the Capital Trusts may sell the securities directly. In this case,
no underwriters or agents would be involved.
General Information
Dealers, agents and underwriters that participate in the distribution of
the securities may be underwriters as defined in the Securities Act of 1933, and
any discounts or commissions received by them from us and any profit on the
resale of the securities by them may be treated as underwriting discounts and
commissions under the 1933 Act.
We and the Capital Trusts may have agreements with the agents, dealers and
underwriters to indemnify them for civil liabilities, including liabilities
under the 1933 Act or to contribute with respect to payments which the agents,
dealers or underwriters may be required to make.
In connection with any fixed price offering, exchange distribution or
special offering, the selling group, which would include dealers who enter into
an underwriting agreement with us, may engage in transactions which stabilize,
maintain or otherwise affect the market price of the securities. Specifically,
the selling group may overallot in connection with the offering, creating a
short position. In addition, they may bid for, and purchase, the securities in
the open market to cover shorts or to stabilize the price of the common stock.
Finally, the selling group may reclaim selling concessions allowed for
distributing the securities in the offering, if the selling group repurchases
previously distributed securities in the market to cover overallotments or to
stabilize the price of the securities. Any of these activities may stabilize or
maintain the market price of the securities above independent market levels. The
selling group is not required to engage in any of these activities, and may stop
any of the activities at any time.
Dealers, agents and underwriters that participate in the distribution of
the securities may engage in transactions with, or perform services for, us or
our subsidiaries in the ordinary course of their business.
51
LEGAL MATTERS
LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability partnership
including professional corporations, will issue an opinion to us relating to the
legality of the securities other than the trust securities being offered by this
prospectus. Morris, James, Hitchens & Williams LLP will issue an opinion to us
relating to the legality of the trust securities being offered by this
prospectus. Legal matters in conjunction with the offering of the securities
will be passed upon for any underwriters, brokers or agents by Cleary, Gottlieb,
Steen & Hamilton. Joseph A. Tato, Esq., a member of the law firm of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., is a director of Covanta. Cleary, Gottlieb, Steen
& Hamilton has, from time to time, acted as counsel for Covanta and its
affiliates and may do so in the future.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from Covanta Energy Corporation's
(formerly Ogden Corporation) Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated in this prospectus by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee............................................. $ 87,500
Printing and engraving expenses*................................. 250,000
Legal fees and expenses*......................................... 350,000
Accounting fees and expenses*.................................... 150,000
Rating agency fees*.............................................. 100,000
Trustee fees and expenses*....................................... 20,000
Transfer agent and registrar fees*............................... 10,000
Blue sky*........................................................ 12,000
Miscellaneous*................................................... 45,000
-----------
Total............................................................ $ 1,025,000
===========
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 (a) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no cause to believe his
or her conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted under similar standards to
those set forth above, except that no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsection (a) and (b) of Section 145 or in the
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses actually and reasonably incurred by him or her in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation may purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
such officer or director and incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liabilities under Section
145.
As authorized by Section 145 of the DGCL, each director and officer of
Covanta may be indemnified by Covanta against expenses (including attorney's
fees, judgments, fines and amounts paid in settlement) actually and reasonably
53
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceedings in which he is involved by reason of the fact
that he is or was a director or officer of Covanta if he acted in good faith and
in a manner that he reasonably believed to be in or not opposed to the best
interest of Covanta and, with respect to any criminal action or proceeding, if
he had no reasonable cause to believe that his conduct was unlawful. However, if
the legal proceeding is by or in the right of Covanta, the director or officer
may not be indemnified in respect of any claim, issue or matter as to which he
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to Covanta unless a court determines otherwise.
In addition, Section 16-A of Covanta's By-Laws provides that Covanta shall
indemnify any person who was or is made or is a party to or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation where the person has been adjudged liable
to Covanta) by reason of the fact that he is or was a director, officer,
employee or agent of Covanta, or is or was serving at the request of Covanta as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
1.1* Form of Underwriting Agreement
4.1 Form of Senior Indenture. The form or forms of Senior Debt Securities
with respect to each particular offering will be filed as an exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
(Previously filed as an exhibit to this Registration Statement No.
333-65290 upon initial filing and incorporated by reference into this
document)
4.2 Form of Subordinated Debt Indenture. The form or forms of Subordinated
Debt Securities with respect to each particular offering will be filed
as an exhibit to a Current Report on Form 8-K and incorporated herein
by reference. (Previously filed as an exhibit to this Registration
Statement No. 333-65290 upon initial filing and incorporated by
reference into this document)
4.3 Restated Certificate of Incorporation as amended (filed as Exhibit
3.1(a) to the Form 10-K for fiscal year ended December 31, 1988, and
incorporated herein by reference)
4.4 By-Laws, as amended through April 8, 1998 (filed as Exhibit 3.2 to the
Form 10-Q for quarterly period ended March 3, 1998, and incorporated
herein by reference)
4.5 Amended and Restated Rights Agreement between Covanta Energy
Corporation and the Bank of New York, dated as of September
28,2000 (filed as Exhibit 1 to Amendment No. 1 to the Form 8-A
filed September 29,2000, and incorporated herein by reference)
4.6* Form of Certificate of Designation relating to each series of Preferred
Stock
4.7* Form of Deposit Agreement
4.8* Form of Warrant Agreement, including form of Warrant Certificate
54
4.9* Form of Stock Purchase Contract
4.10 Certificate of Trust of Covanta Capital Trust I (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.11 Trust Agreement of Covanta Capital Trust I (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.12 Certificate of Trust of Covanta Capital Trust II (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.13 Trust Agreement of Covanta Capital Trust II (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.14 Certificate of Trust of Covanta Capital Trust III (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.15 Trust Agreement of Covanta Capital Trust III (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.16 Form of Amended and Restated Trust Agreement for Covanta
Capital Trust I, II and III (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing
and incorporated by reference into this document)
4.17 Form of Preferred Security Certificate for Covanta Capital Trust I, II
and III (included as Exhibit D of Exhibit 4.16)
4.18 Form of Guarantee Agreement for Covanta Capital Trust I, II and III
(Previously filed as an exhibit to this Registration Statement No.
333-65290 upon initial filing and incorporated by reference into this
document)
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
5.2 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust, I
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
5.3 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust II
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
5.4 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust III
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit
5.1)
23.2 Consent of Morris, James, Hitchens & Williams LLP (included in Exhibits
5.2, 5.3 and 5.4)
23.3 Consent of Deloitte & Touche LLP (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing and
incorporated by reference into this document)
24.1 Powers of Attorney (Previously filed as an exhibit to this
Registration Statement No. 333-65290 upon initial filing and
incorporated by reference into this document)
55
25.1 Form T-1 Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 of Bankers Trust Company, as (i) Trustee
under the Senior Indenture; (ii) Trustee under the
Subordinated Indenture; (iii) Property Trustee under the
Amended and Restated Trust Agreement of Covanta Capital Trust
I, II and II; and (iv) Trustee under the Guarantee for the
benefit of the holders of Preferred Securities of Covanta
Capital Trust I, II and III (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing
and incorporated by reference into this document)
26.1* Form of Invitation for Competitive Bids
--------
*To be filed by amendment or as an exhibit to a document to be incorporated by
reference herein.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts of events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the
changes in volume and price present no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and where applicable each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
56
(5) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act of 1939 in accordance with the rules and regulations prescribed by the
Commission under Section 305 (b) (2) of the Trust Indenture Act of 1939.
(6) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424 (b) (1) or (4)
or 497 (h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(7) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(8) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 of this
registration statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on this 5th day of October, 2001.
COVANTA ENERGY CORPORATION
*
By --------------------------
Scott G. Mackin
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the date indicated.
DATE SIGNATURE TITLE
*
------------------------- President, Chief October 5, 2001
SCOTT G. MACKIN Executive Officer
and Director
*
------------------------- Executive Vice October 5, 2001
EDWARD W. MONEYPENNY President and Chief
Financial Officer
/s/ William J. Metzger Vice President and October 5, 2001
------------------------- Chief Accounting
WILLIAM J. METZGER Officer
*
------------------------- Director October 5, 2001
ANTHONY J. BOLLAND
*
------------------------- Director October 5, 2001
NORMAN G. EINSPRUCH
*
------------------------- Director October 5, 2001
GEORGE L. FARR
*
------------------------- Director October 5, 2001
JEFFREY P. FRIEDMAN
*
------------------------- Director October 5, 2001
VERONICA M. HAGEN
*
------------------------- Director October 5, 2001
CRAIG G. MATTHEWS
*
------------------------- Director October 5, 2001
HOMER A. NEAL
*
------------------------- Director October 5, 2001
ROBERT E. SMITH
58
*
------------------------- Director October 5, 2001
JOSEPH A. TATO
*
------------------------- Director October 5, 2001
HELMUT F.O. VOLCKER
*
------------------------- Director October 5, 2001
ROBERT R. WOMACK
* William J. Metzger, by signing his name hereto, does hereby execute this
amendment to the registration statement on behalf of the directors and officers
of Covanta Energy Corporation indicated above by asterisks, pursuant to powers
of attorney duly executed by such directors and officers and filed as Exhibit
24.1 to the registration statement.
By /s/ William J. Metzger
--------------------------------
William J. Metzger
Attorney-in-Fact
59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on this 5th day of October, 2001.
COVANTA CAPITAL TRUST I
By: Covanta Energy Corporation, as sponsor
By: /s/ Louis M. Walters
-------------------------------
Louis M. Walters
Vice President and Treasurer
COVANTA CAPITAL TRUST II
By: Covanta Energy Corporation, as sponsor
By: /s/ Louis M. Walters
-------------------------------
Louis M. Walters
Vice President and Treasurer
COVANTA CAPITAL TRUST III
By: Covanta Energy Corporation, as sponsor
By: /s/ Louis M. Walters
-------------------------------
Louis M. Walters
Vice President and Treasurer
60
EXHIBIT INDEX
The following exhibits are filed herewith or incorporated by reference:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
1.1* Form of Underwriting Agreement
4.1 Form of Senior Indenture. The form or forms of Senior Debt Securities
with respect to each particular offering will be filed as an exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
(Previously filed as an exhibit to this Registration Statement No.
333-65290 upon initial filing and incorporated by reference into this
document)
4.2 Form of Subordinated Debt Indenture. The form or forms of Subordinated
Debt Securities with respect to each particular offering will be filed
as an exhibit to a Current Report on Form 8-K and incorporated herein
by reference. (Previously filed as an exhibit to this Registration
Statement No. 333-65290 upon initial filing and incorporated by
reference into this document)
4.3 Restated Certificate of Incorporation as amended (filed as Exhibit
3.1(a) to the Form 10-K for fiscal year ended December 31, 1988, and
incorporated herein by reference)
4.4 By-Laws, as amended through April 8, 1998 (filed as Exhibit 3.2 to the
Form 10-Q for quarterly period ended March 3, 1998, and incorporated
herein by reference)
4.5 Amended and Restated Rights Agreement between Covanta Energy
Corporation and the Bank of New York, dated as of September
28,2000 (filed as Exhibit 1 to Amendment No. 1 to the Form 8-A
filed September 29,2000, and incorporated herein by reference)
4.6* Form of Certificate of Designation relating to each series of Preferred
Stock
4.7* Form of Deposit Agreement
4.8* Form of Warrant Agreement, including form of Warrant Certificate
4.9* Form of Stock Purchase Contract
4.10 Certificate of Trust of Covanta Capital Trust I (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.11 Trust Agreement of Covanta Capital Trust I (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.12 Certificate of Trust of Covanta Capital Trust II (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.13 Trust Agreement of Covanta Capital Trust II (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.14 Certificate of Trust of Covanta Capital Trust III (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.15 Trust Agreement of Covanta Capital Trust III (Previously filed as an
exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
4.16 Form of Amended and Restated Trust Agreement for Covanta
Capital Trust I, II and III (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing
and incorporated by reference into this document)
61
4.17 Form of Preferred Security Certificate for Covanta Capital Trust I, II
and III (included as Exhibit D of Exhibit 4.16)
4.18 Form of Guarantee Agreement for Covanta Capital Trust I, II and III
(Previously filed as an exhibit to this Registration Statement No.
333-65290 upon initial filing and incorporated by reference into this
document)
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (Previously filed as
an exhibit to this Registration Statement No. 333-65290 upon initial
filing and incorporated by reference into this document)
5.2 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust, I
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
5.3 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust II
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
5.4 Opinion of Morris, James, Hitchens & Williams LLP with respect
to Preferred Securities of Covanta Capital Trust III
(Previously filed as an exhibit to this Registration Statement
No. 333-65290 upon initial filing and incorporated by
reference into this document)
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit
5.1)
23.2 Consent of Morris, James, Hitchens & Williams LLP (included in Exhibits
5.2, 5.3 and 5.4)
23.3 Consent of Deloitte & Touche LLP (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing and
incorporated by reference into this document)
24.1 Powers of Attorney (Previously filed as an exhibit to this
Registration Statement No. 333-65290 upon initial filing and
incorporated by reference into this document)
25.1 Form T-1 Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 of Bankers Trust Company, as (i) Trustee
under the Senior Indenture; (ii) Trustee under the
Subordinated Indenture; (iii) Property Trustee under the
Amended and Restated Trust Agreement of Covanta Capital Trust
I, II and II; and (iv) Trustee under the Guarantee for the
benefit of the holders of Preferred Securities of Covanta
Capital Trust I, II and III (Previously filed as an exhibit to
this Registration Statement No. 333-65290 upon initial filing
and incorporated by reference into this document)
26.1* Form of Invitation for Competitive Bids
--------
*To be filed by amendment or as an exhibit to a document to be incorporated by
reference herein.
62