UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: :
OGDEN NEW YORK SERVICES, INC., et al., : Chapter 11
: Case Nos. 02-40826 (CB), et al.
Debtors and Debtors in Possession.
Jointly Administered
:
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FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER UNDER
11 U.S.C. SECTION 1129 AND RULE 3020 OF THE FEDERAL RULES
OF BANKRUPTCY PROCEDURE CONFIRMING THE
DEBTORS' SECOND JOINT PLAN OF
REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Upon the Debtors' Second Joint Plan Of Reorganization Under Chapter 11
Of The Bankruptcy Code, dated as of March 2, 2004 (including all amendments and
modifications thereof and exhibits thereto and the Reorganization Plan
Supplement (Docket No. 3460) filed in connection therewith, the "Second
Reorganization Plan" or "Plan") (Docket No. 3558), filed with this Court by
Covanta Energy Corporation and those of its affiliates set forth on Exhibit A
annexed hereto, debtors and debtors in possession (collectively, the
"Reorganizing Debtors" and together with all the above captioned entities, the
"Debtors")1; and upon the Second Disclosure Statement With Respect To
Reorganizing Debtors' Second Joint Plan Of Reorganization And Liquidating
Debtors' Second Joint Plan Of Liquidation Under Chapter 11 Of The Bankruptcy
Code, dated as of January 14, 2004 (Docket No. 3313) (the "Second Disclosure
Statement"); and upon the Second Short-Form Disclosure Statement With Respect To
Reorganizing Debtors' Second Joint Plan Of Reorganization And Second Joint Plan
of Liquidation Under Chapter 11 Of The Bankruptcy Code (Docket No. 3316) (the
"Second Short-Form Disclosure Statement"); and upon the First Supplemental
Disclosure Statement With Respect To Reorganizing Debtors' Second Joint Plan Of
Reorganization Relating To Distributions Among Holders Of Subclass 3A Claims
(Docket No. 3398); and upon the Notice of Proposed Directors and Officers of
Reorganized Debtors (Docket No. 3448) (as amended, the "Directors and Officers
Disclosure"); and upon the Revised Designation of Debtors and Debtors in
Possession Under the Second Reorganization Plan and the Second Liquidation Plan
("Revised Designation of Debtors") (Docket No. 3459); and upon the Notice of
Removal of Debtors From the Second Joint Plan of Reorganization Under Chapter 11
of the Bankruptcy Code ("Notice of Removal of Debtors") (Docket No. 3475); and
upon the hearing before this Court on January 14, 2004 to consider approval of
the Second Disclosure Statement and the Second Short-Form Disclosure Statement
and the notice procedures with respect thereto; and upon the Order entered on
January 14, 2004 (Docket No. 3274) approving the Second Disclosure Statement,
the Second Short-Form Disclosure Statement, and approving the notice procedures,
the record date and voting, balloting and solicitation procedures with respect
thereto, among other things (the "Disclosure Materials and Balloting Procedures
Order"); and it appearing from the affidavits of mailing and publication filed
with this Court (Docket Nos. 3435 and 3519) that copies of the Second Disclosure
Statement (including the Second Reorganization Plan, annexed thereto as Exhibit
A), the Second Short-Form Disclosure Statement and Notice of the Confirmation
Hearing (the "Confirmation Hearing Notice") were transmitted to the holders of
Claims against and Equity Interests in the Reorganizing Debtors and other
parties in interest as required by the Disclosure Materials and Balloting
Procedures Order, and such transmissions at such time being due and adequate
notice under the circumstances, and that notice of the Confirmation Hearing was
published in the manner required by the Disclosure Materials and Balloting
Procedures Order and such notice being sufficient under the circumstances and no
further notice being required; and upon the Disclosure Materials and Balloting
Procedures Order fixing February 23, 2004 at 4:00 p.m. (Prevailing Eastern Time)
as the deadline for the filing of objections to confirmation of the Second
Reorganization Plan; and based upon (i) the Court's review of the Certification
of Dalmau Garcia With Respect to the Ballots Accepting or Rejecting the Debtors'
Second Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code and
the Affidavit of Bridget Gallerie of Bankruptcy Services LLC attached thereto as
Exhibit A (Docket No. 3534), filed on February 27, 2004 (the "Voting
Affidavit"), (ii) the Memorandum of Law in Support of Confirmation of
Reorganizing Debtors' Second Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code (Docket No. 3546), (iii) the Affidavits of Anthony J.
Orlando (Docket No. 3548) (the "Orlando Affidavit") and Matthew R. Rosenberg
(Docket No. 3547) (the "Rosenberg Affidavit") in support of confirmation of the
Second Reorganization Plan filed by the Debtors on March 1, 2004; and a hearing
to consider confirmation of the Second Reorganization Plan having been held
before this Court commencing on March 3, 2004 (the "Confirmation Hearing"); and
upon the objections and responses filed against the Second Reorganization Plan;
and upon the full and complete record of the Confirmation Hearing, including
without limitation the exhibits presented and the testimony, whether direct or
by proffer, accepted into evidence, and all matters and proceedings heretofore
part of the record in these cases; and for the reasons set forth on the record
by the Court; and after due deliberation and sufficient cause appearing
therefor;
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1 Unless otherwise defined herein or as otherwise indicated herein,
capitalized terms used herein shall have the meanings ascribed to such
terms in the Second Reorganization Plan, a copy of which is annexed hereto
as Exhibit "B." Any term used in the Second Reorganization Plan or this
Confirmation Order that is not defined in the Second Reorganization Plan or
this Confirmation Order, but that is used in the Bankruptcy Code or the
Bankruptcy Rules, shall have the meaning ascribed to that term in the
Bankruptcy Code or the Bankruptcy Rules.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IT IS HEREBY FOUND AND DETERMINED THAT:
A. Pursuant to Rule 7052 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules"), findings of fact shall be construed as
conclusions of law and conclusions of law shall be construed as findings of fact
when appropriate.
B. Paragraph headings or captions are inserted for convenience
of reference only and are not intended to be a part of or to affect the
interpretation of this Confirmation Order.
C. Jurisdiction and Venue. This Court has jurisdiction over
the chapter 11 cases of the Reorganizing Debtors (the "Reorganization Cases")
pursuant to 28 U.S.C. ss.ss. 157 and 1334. Venue is proper before this Court
pursuant to 28 U.S.C. ss.ss. 1408 and 1409. Confirmation of the Second
Reorganization Plan and approval of the Plan Documents is a core proceeding
under 28 U.S.C. ss. 157(b)(2), and this Court has exclusive jurisdiction to
determine whether the Second Reorganization Plan complies with the applicable
provisions of title 11 of the United States Code (the "Bankruptcy Code") and the
Bankruptcy Rules and should be confirmed.
D. Judicial Notice. This Court takes judicial notice of the
docket of the Reorganization Cases, which are jointly administered under Case
No. 02-40826 (CB), captioned as In re Ogden New York Services, Inc., et al., and
the dockets for each of the adversary proceedings that are related to the
Reorganization Cases, in each case maintained by the Clerk of the Court,
including, without limitation, all pleadings and other documents filed, all
orders entered, and all evidence and arguments made, proffered, adduced or
presented at, the hearings held before the Court during the pendency of the
Reorganization Cases, including the following:
(i) The above-captioned chapter 11 cases involve
proceedings with respect to 146 affiliated Debtors, 80 of which are the subject
of the Second Reorganization Plan. Each of the Reorganizing Debtors is an
eligible debtor under section 109 of the Bankruptcy Code and has operated its
business and managed its properties as a debtor in possession pursuant to
section 1108 of the Bankruptcy Code. No trustee or examiner has been appointed
pursuant to section 1104 of the Bankruptcy Code in connection with the
Reorganization Cases.
(ii) On December 2, 2003, the Debtors entered into
an agreement with Danielson Holding Corporation (the "Plan Sponsor") pursuant to
which the Plan Sponsor, subject to Court approval, agreed to purchase for
aggregate cash consideration of approximately $29.8 million 100% of the equity
in Reorganized Covanta in connection with the proposed Second Reorganization
Plan pursuant to the terms of the Investment and Purchase Agreement.
(iii) On December 17, 2003, the Court entered an
Order (Docket No. 3084) (the "DHC Transaction Order") authorizing the
Reorganizing Debtors to (i) reimburse the Plan Sponsor for certain expenses
incurred in connection with the due diligence, negotiation and formulation of
the Investment and Purchase Agreement and the Second Reorganization Plan, (ii)
pay the Plan Sponsor a termination fee in the event that the transactions
contemplated under the Investment and Purchase Agreement and the Second
Reorganization Plan are not consummated and the Investment and Purchase
Agreement is terminated, and (iii) provide protection to the Plan Sponsor in the
form of an exclusivity undertaking set forth in the Investment and Purchase
Agreement pursuant to which the Debtors agree not to solicit, initiate, engage
or participate in discussions or negotiations with any person or entity
regarding an alternative transaction or plan of reorganization, subject to
certain exceptions and in each case as more particularly described in the DHC
Transaction Order.
(iv) On December 18, 2003, the Reorganizing Debtors
filed the Second Reorganization Plan and Second Disclosure Statement with
respect to the Second Reorganization Plan that contemplates, among other things,
the sale of 100% of the equity of Reorganized Covanta to the Plan Sponsor
pursuant to the Investment and Purchase Agreement for aggregate cash
consideration of $29.8 million.
(v) Simultaneously with filing the Second
Reorganization Plan, on December 18, 2003, the Liquidating Debtors filed their
Second Joint Plan of Liquidation Under Chapter 11 Of The Bankruptcy Code (as
amended and revised, the "Second Liquidation Plan") that contemplates the
liquidation of 60 of the affiliated Debtors. This Court has entered a
confirmation order with respect to the Second Liquidation Plan dated as of the
date hereof.
(vi) On January 14, 2004, the Court entered the
Disclosure Materials and Balloting Procedures Order, thereby approving the
adequacy of the Second Disclosure Statement.
(vii) Pursuant to the Second Reorganization Plan,
the Reorganizing Debtors retained the right to designate additional Debtors as
Reorganizing Debtors or to remove certain Reorganizing Debtors from being
designated as such at any time prior to ten days prior to the Confirmation
Hearing. Consistent with the reservation of rights in the Second Reorganization
Plan, on February 18, 2004, the Debtors filed the Revised Designation of Debtors
and the Notice of Removal of Debtors modifying the designation of the
Reorganizing Debtors.
(viii) As of the Effective Date, the following six
(6) affiliated Debtors will remain debtors-in-possession under the jurisdiction
of this Court, subject to resolution of certain ongoing disputes: Covanta Lake
II, Inc. Covanta Warren Energy Resource Co., L.P., Covanta Equity of Stanislaus,
Inc., Covanta Equity of Alexandria/Arlington, Inc., Covanta Tampa Construction,
Inc. and Covanta Tampa Bay, Inc. (together, the "Continuing Debtors").
(ix) On June 27, 2002, the Court entered an Order
(Docket No. 607) (the "Chilmark Retention Order") authorizing the retention of
Chilmark Partners, LLC as Investment Bankers for the Debtors pursuant to the
terms of an agreement (the "Chilmark Agreement") providing, among other things,
for the payment of a Restructuring Fee (as such term is defined pursuant to the
Second Disclosure Statement) upon confirmation of a plan of reorganization for
the Debtors, subject to the terms and conditions of the Chilmark Retention
Order.
(x) On May 15, 2002, the Court entered an Order
(Docket No. 311) (the "DIP Order") authorizing the Debtors to provide adequate
protection to the Prepetition Secured Parties (as defined in the DIP Order) by
making payment, among other things, of reasonable fees to the financial advisor
retained by the Bondholders Committee. On March 27, 2003, the Court entered an
Order (Docket No. 1394) pursuant to which Jefferies & Company was substituted in
as financial advisor to the Bondholders Committee. By understanding between the
Bondholders Committee and the Reorganizing Debtors, the Reorganizing Debtors
have agreed to pay Jefferies a confirmation fee on the Effective Date in the
amount of $650,000 (the "Confirmation Fee") in connection with the Reorganizing
Debtors' obligations under the DIP Order.
(xi) On November 21, 2003, the Court entered an
Order (Docket No. 2809) (the "Heber Confirmation Order") confirming the Third
Amended Heber Reorganization Plan with respect to six (6) of the affiliated
Debtor entities, entry of which constitutes a condition precedent for
confirmation of the Second Reorganization Plan.
(xii) On March 3, 2004, the Court commenced the
Confirmation Hearing where the Court considered confirmation of the Second
Reorganization Plan.
E. Transmittal and Service of Notices. Notice of the
Confirmation Hearing and the relevant deadlines for submission of objections, as
prescribed by this Court in the Disclosure Materials and Balloting Procedures
Order, has been provided and is adequate and sufficient pursuant to section 1128
of the Bankruptcy Code, Bankruptcy Rules 2002(b) and 3020 and other applicable
law and rules. Additionally, the Second Disclosure Statement and Second
Reorganization Plan, which were transmitted and served as set forth in the
Affidavits of Mailing of Mariah Martin dated February 4, 2004 (Docket No. 3435)
and of Julia Bealler dated February 13, 2004 (Docket No. 3519), are hereby
deemed to have been transmitted and served in compliance with the Disclosure
Materials and Balloting Procedures Order and the Bankruptcy Rules. Such
transmittal and service was adequate and sufficient, and no other or further
notice of such materials shall be required. Publication of the Confirmation
Hearing Notice as set forth in the Notices of Filing of Certificate of
Publication, dated February 3, 2004 and February 4, 2004 (Docket Nos. 3369 and
3386), was adequate and sufficient and no other or further notice shall be
required.
F. Solicitation. Solicitation of votes on the Second
Reorganization Plan was conducted in good faith and in compliance with sections
1125 and 1126 of the Bankruptcy Code, Bankruptcy Rules 3017 and 3018, the Second
Disclosure Statement, the Disclosure Materials and Balloting Procedures Order,
all other applicable provisions of the Bankruptcy Code, and all other rules,
laws and regulations.
G. Ballots and Tabulation. All procedures used to distribute
solicitation materials to the applicable holders of Claims and to tabulate
ballots were fair and properly conducted in accordance with the Disclosure
Materials and Balloting Procedures Order, the Bankruptcy Code, the Bankruptcy
Rules, the local rules of the Bankruptcy Court for the Southern District of New
York, and all other applicable rules, laws and regulations. On February 27, 2004
the Debtors filed the Voting Affidavit, certifying the method and results of the
ballot tabulation for each of the voting Classes under the Second Reorganization
Plan.
H. Burden of Proof. The Reorganizing Debtors, as proponents of
the Second Reorganization Plan, have the burden of proving the elements of
section 1129 of the Bankruptcy Code by a preponderance of the evidence. The
Reorganizing Debtors have satisfied this burden.
I. Compliance with Section 1129(a)(1) of the Bankruptcy Code.
The Second Reorganization Plan complies with the applicable provisions of the
Bankruptcy Code, thereby satisfying section 1129(a)(1) of the Bankruptcy Code.
(i) Proper Classification. The classification scheme
of Claims and Equity Interests under the Second Reorganization Plan is
reasonable. Valid business, factual and legal reasons exist for separately
classifying the various Classes of Claims and Equity Interests created under the
Second Reorganization Plan. Claims or Equity Interests in each Class are
substantially similar to other Claims or Equity Interests in such Class, and the
Second Reorganization Plan therefore satisfies the requirements of section
1122(a) of the Bankruptcy Code.
(ii) Designation of Classes. The Second
Reorganization Plan properly designates Classes of Claims and Equity Interests
in accordance with the applicable provisions of the Bankruptcy Code, including
sections 1122 and 1123(a)(1) of the Bankruptcy Code.
(iii) Specified Unimpaired Classes. The Second
Reorganization Plan specifies that Classes 1, 2, 5, 11 and 12 are Unimpaired,
thereby satisfying the requirements of section 1123(a)(2) of the Bankruptcy
Code. Pursuant to section 1126(f) of the Bankruptcy Code, Classes 1, 2, 5, 11
and 12 are deemed to accept the Second Reorganization Plan.
(iv) Specified Impaired Classes. The Second
Reorganization Plan specifies that Classes 3, 4, 6, 7, 8, 9, 10 and 13 are
Impaired, thereby satisfying the requirements of section 1123(a)(3) of the
Bankruptcy Code. Pursuant to section 1126(g) of the Bankruptcy Code, Classes 7,
9, 10 and 13 are deemed to reject the Second Reorganization Plan by virtue of
receiving no distributions thereunder.
(v) No Discrimination. The Second Reorganization
Plan provides for the same treatment of each Claim or Equity Interest of a
particular Class or Subclass, thereby satisfying the requirements of section
1123(a)(4) of the Bankruptcy Code.
(vi) Classification of Certain Secured Claims.
Secured Claims in Subclass 3A (the Secured Bank Claims) and Subclass 3B (the
Secured 9.25% Debenture Claims) have been classified together for voting
purposes reflecting the fact that Claims in both of these Subclasses are secured
by the same prepetition collateral consisting of substantially all of the assets
of Covanta and all of its existing and future domestic subsidiaries, to the
extent permitted, and by a pledge of 100% of the shares of substantially all of
Covanta's existing and future domestic subsidiaries, and 65% of the shares of
substantially all of Covanta's foreign subsidiaries. While the Second
Reorganization Plan classifies Claims in Subclass 3A and Subclass 3B together
for voting purposes, the Claims are placed in separate Subclasses for
distribution purposes in order to properly implement redistributions and third
party settlements that differently impact the Claims within these separate
Subclasses, thereby further satisfying the requirements of section 1123(a)(4) of
the Bankruptcy Code.
(vii) Implementation of Plan. The Second
Reorganization Plan provides for adequate means for its implementation,
including but not limited to the (a) authorization for the Reorganized Debtors
to enter into the Investment and Purchase Agreement and to effect all the
transactions contemplated thereby, (b) authorization for the Reorganized Debtors
to enter into the Exit Financing Agreements and to effect all transactions
contemplated thereby, (c) authorization for the Reorganized Debtors to issue the
Reorganization Plan Notes in accordance with the provisions of the Second
Reorganization Plan, (d) cancellation of certain prepetition debt and the Equity
Interests in Covanta, and (e) revesting of the assets of the Reorganizing
Debtors in the Reorganized Debtors, subject to the Liens granted under the
applicable Exit Financing Agreements or as otherwise contemplated by the Plan
Documents. The Second Reorganization Plan therefore satisfies the requirements
of section 1123(a)(5) of the Bankruptcy Code.
(viii) Prohibition Against Issuance of Non-Voting
Equity Securities And Provisions For Voting Power Of Classes Of Securities.
Section 6.9 of the Second Reorganization Plan provides that the articles of
incorporation of the Reorganized Debtors will prohibit the issuance of nonvoting
equity securities to the extent required by section 1123(a)(6) of the Bankruptcy
Code. Such statutory provisions will be incorporated into the articles of
incorporation of the Reorganized Debtors.
(ix) Designation of Officers and Directors. The
Debtors have adequately disclosed or otherwise identified the procedures for
determining the identities and affiliations of all individuals or entities
proposed to serve on or after the Effective Date as officers or directors of
Reorganized Covanta and the other Reorganized Debtors. The appointment or
employment of such individuals or entities and their proposed compensation and
indemnification arrangements are consistent with the interests of creditors,
equity security holders and public policy in accordance with section 1123(a)(7)
of the Bankruptcy Code.
(x) Additional Plan Provisions. The Second
Reorganization Plan contains no provision that is inconsistent with the
applicable provisions of the Bankruptcy Code and therefore satisfies section
1123(b)(6) of the Bankruptcy Code.
(xi) Identity of Proponents. In accordance with
Bankruptcy Rule 3016(a), the Second Reorganization Plan is dated and identifies
the entities submitting it as proponents.
J. Compliance with Bankruptcy Code. The Reorganizing Debtors,
as proponents of the Second Reorganization Plan, have complied with each of the
applicable provisions of the Bankruptcy Code including, without limitation,
sections 1125 and 1126 of the Bankruptcy Code, and therefore have satisfied the
requirements of section 1129(a)(2) of the Bankruptcy Code, as follows: (a) the
Reorganizing Debtors are eligible debtors under section 109 of the Bankruptcy
Code and proper proponents of the Second Reorganization Plan under section
1121(a) of the Bankruptcy Code; (b) the Reorganizing Debtors have complied with
each of the applicable provisions of the Bankruptcy Code, as otherwise provided
or permitted by orders of the Court; and (c) the Reorganizing Debtors have
complied with each of the applicable provisions of the Bankruptcy Code, the
Bankruptcy Rules and the Disclosure Materials and Balloting Procedures Order in
transmitting notices and disclosure and solicitation materials with respect to
the Second Reorganization Plan.
K. Proposed in Good Faith. The Second Reorganization Plan has
been proposed in good faith and not by any means forbidden by law, thereby
satisfying the requirements of section 1129(a)(3) of the Bankruptcy Code. In
determining that the Second Reorganization Plan has been proposed in good faith,
the Court has examined the totality of the circumstances surrounding the filing
and prosecution of the Reorganization Cases and the formulation of the Second
Reorganization Plan. The Reorganization Cases were filed, and the Second
Reorganization Plan was proposed, with the proper purpose of maximizing the
value of the Reorganizing Debtors' estates by providing a means through which
the Reorganized Debtors may emerge from chapter 11 as viable, operating
enterprises and through which creditors may expeditiously receive Distributions
in respect of their Claims.
L. Plan Negotiation and Development. The Second Reorganization
Plan is the product of extensive, arms' length negotiations among the Debtors,
the Plan Sponsor, the Agent Banks, the Informal Committee of 9.25% Debenture
Holders (the "Bondholders Committee"), the Committee, and each of their
respective counsel and financial advisors, in an effort to obtain a resolution
of the issues in these Reorganization Cases and propose a plan of reorganization
that would provide the most value to the Debtors' creditors. The Second
Reorganization Plan reflects the results of these negotiations and serves the
interests of all the Reorganizing Debtors' Estates.
M. Incorporation of Terms of Settlement of 9.25% Adversary
Proceeding. On August 6, 2002, the Committee commenced an adversary proceeding
against the Indenture Trustee (the "9.25% Debentures Adversary Proceeding"),
challenging the secured status of the claim of the 9.25% Debenture Holders. As
requested by the Debtors and as ordered by the Court (Docket No. 41, Case No.
02-03004-cb), on May 7, 2003, the parties to the 9.25% Debentures Adversary
Proceeding commenced a mediation that resulted in an agreement in principle to
settle the 9.25% Debentures Adversary Proceeding. Based on the results of the
mediation, the Committee proposed a basis in principle to resolve the 9.25%
Debentures Adversary Proceeding (the "9.25% Settlement"), which is incorporated
into the Second Reorganization Plan. Under the Second Reorganization Plan, each
holder of a 9.25% Debenture Claim will be deemed to accept the terms of the
9.25% Settlement, thereby becoming an Accepting Bondholder and agreeing to
contribute such Accepting Bondholder's pro rata portion of the aggregate
Settlement Distribution for distribution to holders of Class 6 Unsecured Claims
as provided for under the Second Reorganization Plan, unless such holder of a
9.25% Debenture Claim specifically elects to opt out of participation in the
9.25% Settlement, thereby becoming a Rejecting Bondholder. The Second
Reorganization Plan further provides that in the event that holders of 9.25%
Debenture Claims with Claims in excess of $10 million opt out of the 9.25%
Settlement, the 9.25% Debentures Adversary Proceeding will continue but only
with respect to such Rejecting Bondholders. The terms of the 9.25% Settlement
are described in Exhibit 5 to the Second Reorganization Plan. As set forth in
the Voting Affidavit, the aggregate amount of Allowed Subclass 3B Claims held by
Accepting Bondholders is approximately $104,600,000 and the aggregate amount of
Allowed Subclass 3B Claims held by Rejecting Bondholders is approximately
$400,000. Therefore, the terms of the 9.25% Settlement are found to be fair and
reasonable under the circumstances and binding as between the Accepting
Bondholders and the Committee.
N. Payments for Services or Costs and Expenses. To the extent
required by the Bankruptcy Code, the Bankruptcy Rules or the Orders of this
Court, any payments made by the Reorganizing Debtors or to be made by the
Reorganized Debtors for services or for costs and expenses in, or in connection
with, the Reorganization Cases or the Second Reorganization Plan, including,
without limitation, the expense reimbursements contemplated pursuant to the
Investment and Purchase Agreement, the Restructuring Fee pursuant to the
Chilmark Engagement Agreement and the Confirmation Fee payable to Jefferies upon
the Effective Date, have been approved by, or are subject to the approval of,
this Court as reasonable. Accordingly, the Second Reorganization Plan satisfies
the requirements of section 1129(a)(4) of the Bankruptcy Code.
O. Directors, Officers and Insiders. The Reorganizing Debtors
have adequately disclosed or otherwise identified the procedures for determining
the identities and affiliations of all individuals or entities proposed to serve
on or after the Effective Date as officers or directors of Reorganized Covanta
and the other Reorganized Debtors. Accordingly, the Second Reorganization Plan
complies with the requirements of section 1129(a)(5).
P. No Rate Changes. Section 1129(a)(6) of the Bankruptcy Code
is satisfied because the Second Reorganization Plan does not provide for any
change in rates over which a governmental regulatory commission has
jurisdiction.
Q. Best Interests of Creditors. The Second Reorganization Plan
satisfies section 1129(a)(7) of the Bankruptcy Code. With respect to each
Impaired Class of Claims or Equity Interests, each holder of a Claim against or
Equity Interest in the Reorganizing Debtors: (a) has accepted the Second
Reorganization Plan; or (b) will receive or retain under the Second
Reorganization Plan, on account of such Claim or Equity Interest, property of a
value, as of the Effective Date of the Second Reorganization Plan, that is not
less than the amount that such holder would so receive or retain if such
Reorganizing Debtors were to be liquidated under chapter 7 of the Bankruptcy
Code on such date. The liquidation analysis provided in the Second Disclosure
Statement and other evidence proffered, adduced or presented at the Confirmation
Hearing are persuasive and credible and have not been controverted by other
evidence.
R. Acceptance by Certain Classes. Classes 1, 2, 5, 11 and 12
are Unimpaired and are deemed to accept the Second Reorganization Plan under
section 1126(f) of the Bankruptcy Code. Classes 3, 4, 6, and 8 are Impaired and
designated as voting Classes under the Second Reorganization Plan (the "Impaired
Voting Classes"). The Impaired Voting Classes have all voted to accept the
Second Reorganization Plan and, to the best of the Reorganizing Debtors'
knowledge, do not include insiders of the Reorganized Debtors, thus satisfying
section 1129(a)(8) of the Bankruptcy Code. Classes 7, 9, 10 and 13
(collectively, the "Rejecting Classes") are Impaired and shall receive no
Distributions under the Second Reorganization Plan and therefore are deemed to
reject the Second Reorganization Plan under section 1126(g) of the Bankruptcy
Code. Although section 1129(a)(8) has not been satisfied with respect to the
Rejecting Classes, the Second Reorganization Plan nevertheless is confirmable
because it satisfies section 1129(b) of the Bankruptcy Code with respect to
those Classes.
S. Treatment of Administrative and Priority Claims. The
treatment of Allowed Administrative Expense Claims, Allowed Priority Tax Claims
and Allowed Priority Non-Tax Claims under Sections 2.2, 2.4 and 4.1,
respectively, of the Second Reorganization Plan satisfies the applicable
requirements of section 1129(a)(9) of the Bankruptcy Code.
T. Acceptance by Impaired Class. Classes 3, 4, 6, and 8 in the
Second Reorganization Plan are each Impaired Classes of Claims that have voted
to accept the Second Reorganization Plan and, to the best of the Reorganized
Debtors' knowledge, do not contain "insiders," thus satisfying section
1129(a)(10) of the Bankruptcy Code.
U. Feasibility. The Second Disclosure Statement and the
evidence proffered, adduced or presented at the Confirmation Hearing (i) are
persuasive and credible, (ii) have not been controverted by other evidence, and
(iii) establish that confirmation of the Second Reorganization Plan is not
likely to be followed by liquidation or the need for further financial
reorganization of the Reorganized Debtors, thus satisfying the requirements of
section 1129(a)(11) of the Bankruptcy Code.
V. Payment of Fees. The fees due and payable by the
Reorganized Debtors to the United States Trustee or the Clerk of this Court, as
provided under 28 U.S.C. ss. 1930(a)(6), have been paid or shall be paid by the
Reorganized Debtors pursuant to Section 13.4 of the Second Reorganization Plan.
Thus, the requirements of section 1129(a)(12) of the Bankruptcy Code are
satisfied.
W. Continuation of Retiree Benefits. As required by section
1129(a)(13) of the Bankruptcy Code, Section 6.11 of the Second Reorganization
Plan provides that, following the Effective Date, the payment of all retiree
benefits will continue at the currently existing levels, subject to the
Reorganizing Debtors or Reorganized Debtors' rights to amend, terminate or
modify such plans at any time as permitted by such plans or applicable
nonbankruptcy law.
X. Fair and Equitable; Confirmation of Plan Over Nonacceptance
by Rejecting Classes. Based upon the evidence proffered, adduced or presented by
the Reorganizing Debtors at the Confirmation Hearing, the Second Reorganization
Plan does not discriminate unfairly and is fair and equitable with respect to
the Rejecting Classes, as required by section 1129(b) of the Bankruptcy Code.
Thus, the Second Reorganization Plan may be confirmed under section 1129(b) of
the Bankruptcy Code even if Debtors fail to satisfy section 1129(a)(8) of the
Bankruptcy Code with respect to the Rejecting Classes because (i) all of the
requirements of section 1129(a) of the Bankruptcy Code, other than section
1129(a)(8) with respect to such Classes, have been met, and (ii) with respect to
the Rejecting Classes, no holders of Claims or Equity Interests junior to the
holders of such Classes will receive or retain any property under the Second
Reorganization Plan on account of such Claims or Equity Interests.
Y. Principal Purpose. No party in interest that is a
governmental unit has requested that the Court not confirm the Second
Reorganization Plan on the grounds that the principal purpose of the Second
Reorganization Plan is the avoidance of taxes or the avoidance of the
application of section 5 of the Securities Act of 1933, 15 U.S.C. ss. 77e, and
the principal purpose of the Second Reorganization Plan is not such avoidance.
Accordingly, the Second Reorganization Plan satisfies the requirements of
section 1129(d) of the Bankruptcy Code.
Z. Modifications to the Plan. To the extent the terms of this
Confirmation Order may be construed to constitute modifications to the Second
Reorganization Plan (the "Reorganization Plan Modifications"), such
Reorganization Plan Modifications do not materially or adversely affect or
change the treatment of any Claim against or Equity Interest in any Reorganizing
Debtor. Accordingly, pursuant to Bankruptcy Rule 3019, the Reorganization Plan
Modifications do not require additional disclosure under section 1125 of the
Bankruptcy Code or the solicitation of acceptances or rejections under section
1126 of the Bankruptcy Code. Disclosure of the Reorganization Plan Modifications
on the record at the Confirmation Hearing constitutes due and sufficient notice
thereof under the circumstances of these Reorganization Cases. All references to
the Second Reorganization Plan in this Confirmation Order shall be to the Second
Reorganization Plan as so modified.
AA. Good Faith Participation. Based upon the record before the
Court, the Reorganizing Debtors, the Debtors, the Plan Sponsor, the Agent Banks,
the Bondholders Committee, the Indenture Trustee, the Committee, and their
respective members, officers, directors, partners, employees, agents, counsel
and financial advisors have acted in good faith within the meaning of section
1125(e) of the Bankruptcy Code in compliance with the provisions of the
Bankruptcy Code and Bankruptcy Rules in connection with all their respective
activities relating to the Second Reorganization Plan, including, without
limitation, with respect to the offer, issuance, sale or purchase of securities
in connection with the Second Reorganization Plan and are entitled to the
protections afforded by section 1125(e) of the Bankruptcy Code and the
exculpatory and injunctive provisions set forth in Article XI of the Second
Reorganization Plan.
BB. Retention of Jurisdiction. The Court may properly retain
jurisdiction over the matters set forth in Section 12.1 of the Second
Reorganization Plan.
CC. Satisfaction of Conditions to Confirmation. Upon entry of
this Confirmation Order, each of the conditions to confirmation contained in
Section 10.1 of the Second Reorganization Plan shall have been satisfied.
DD. Satisfaction of Conditions to Consummation. Each of the
conditions to the Effective Date, as set forth in Sections 10.2 of the Second
Reorganization Plan, is reasonably likely to be satisfied. The conditions to the
Effective Date shall be subject to waiver by the Reorganizing Debtors, with the
prior written consent of the Plan Sponsor, without leave of or notice to the
Court and without any formal action other than proceeding with confirmation of
the Second Reorganization Plan.
EE. The Exit Financing Agreements. (i) The Exit Financing
Agreements are an essential element of the Second Reorganization Plan and entry
into the Exit Financing Agreements is in the best interests of the Reorganizing
Debtors, their estates and their creditors. The Reorganizing Debtors have
exercised reasonable business judgment in determining to enter into the Exit
Financing Agreements on the terms and in the form set forth in the
Reorganization Plan Supplement, or in a form substantially similar thereto. The
Reorganizing Debtors have provided sufficient and adequate notice of the Exit
Financing Agreements, including any material modifications thereto, to all
parties-in-interest, including, without limitation, the DIP Agents, the
Bondholders Committee, the Plan Sponsor and the Committee. All documents
necessary to implement the Second Reorganization Plan including, without
limitation, the Exit Financing Agreements, shall, upon execution, be valid,
binding, and enforceable agreements and not be in conflict with any federal or
state law. The Exit Financing Agreements have been negotiated at arms-length and
in good faith and without intent to hinder, delay or defraud the Debtors or any
creditor of the Debtors. Entering into the Exit Financing Agreements is in the
best interests of the Debtors and their creditors and is necessary for the
implementation of the Second Reorganization Plan.
(ii) The Second Reorganization Plan contemplates that the
Reorganizing Debtors will obtain letter of credit financing to support business
operations after the Effective Date pursuant to both the First Lien L/C Facility
and the Second Lien L/C Facility. Among other things, the Second Lien L/C
Facility will provide the Reorganized Debtors with the ability to issue letters
of credit as may be required with respect to various domestic WTE facilities,
including, without limitation, a letter of credit in favor of the Northeast
Maryland Waste Disposal Authority in connection with the facility operated by
Reorganizing Debtor Covanta Montgomery, Inc.
FF. Covanta Unsecured Subordinated Notes Indenture. The
Covanta Unsecured Notes Subordinated Indenture, and the issuance of the
Reorganization Plan Unsecured Notes thereunder, are an essential element of the
Second Reorganization Plan and are in the best interests of the Reorganizing
Debtors, their estates, and their creditors. All documents necessary to
implement these aspects of the Second Reorganization Plan shall, upon execution,
be valid, binding and enforceable agreements.
GG. The Investment and Purchase Agreement. The Investment and
Purchase Agreement is an essential element of the Second Reorganization Plan and
entry into the Investment and Purchase Agreement is in the best interests of the
Reorganizing Debtors, their estates and their creditors. The Reorganizing
Debtors have exercised reasonable business judgment in determining to enter into
the Investment and Purchase Agreement on the terms and in the form set forth as
Exhibit A to the Debtors' Motion For An Order Pursuant To 11 U.S.C. ss.ss. 363
and 503 Authorizing And Approving (i) Payment Of Certain Expense Reimbursements,
(ii) Payment Of Certain Termination Fee, And (iii) Certain Exclusivity Provision
With Respect To the Debtors, In Connection With Potential Alternative Plan Of
Reorganization, dated December 2, 2003 (Docket No. 2916). The Reorganizing
Debtors have provided sufficient and adequate notice of the Investment and
Purchase Agreement, including any material modifications thereto, to all
parties-in-interest, including, without limitation, the DIP Agents, the
Bondholders Committee and the Committee.
HH. Assumption, Assignment and Rejection of Contracts.
(i) The time period in which the Reorganizing
Debtors or their affiliated Debtors can assume any unexpired lease of
nonresidential real property to be assumed and/or assigned pursuant to section
365 of the Bankruptcy Code has not expired.
(ii) The Debtors have exercised reasonable business
judgment in determining whether to assume or reject each of their executory
contracts and unexpired leases as set forth in Article IX of the Second
Reorganization Plan. Each pre- or post-Confirmation assumption or rejection of
an executory contract or unexpired lease pursuant to Section 9.1 of the Second
Reorganization Plan shall be legal, valid and binding upon the applicable Debtor
or Reorganized Debtor and all non-Debtor parties to such executory contract or
unexpired lease, all to the same extent as if such assumption or rejection had
been effectuated pursuant to an appropriate authorizing order of the Court
entered prior to the Confirmation Date pursuant to Section 365 of the Bankruptcy
Code. All executory contracts and unexpired leases assumed pursuant to the
Second Reorganization Plan shall be referred to herein as the "Contracts."
(iii) The Reorganizing Debtors have caused the cure
of, or have provided adequate assurance of cure of, any default existing prior
to the date hereof, within the meaning of section 365(b)(1)(A) of the Bankruptcy
Code (the "Adequate Assurances"), under each of the Contracts and have provided
compensation, or have provided Adequate Assurance of compensation or future
performance, to all non-debtor parties to such Contracts for any of their actual
pecuniary losses resulting from any default arising prior to the date hereof
under any of such Contracts, within the meaning of section 365(b)(1)(B) of the
Bankruptcy Code. Prior to the Confirmation Hearing, the Reorganizing Debtors
distributed notices of cure (Docket Nos. 3190 and 3192) (as amended and
supplemented, "Notices of Cure") to non-debtor parties to the Contracts setting
forth the cure amounts with respect to each Contract (collectively, the "Cure
Amounts"). Certain of such parties have filed responses or objections to the
proposed Cure Amounts set forth in the Notices of Cure. To the extent a
non-debtor party did not timely respond to the Notices of Cure, the amount set
forth in the respective Notice of Cure with respect to such party shall be
conclusive.
(iv) As of the date hereof, each Contract is in full
force and effect and free from default (other than for specified Cure Amounts
that have not been paid as of the date hereof) and enforceable against the
non-debtor party thereto in accordance with its terms. Any provision of a
Contract that purports to give rise to a default or other breach of, or create
or constitute an event of termination or similar condition under, such Contract
by reason of the commencement of any of the Debtors' chapter 11 cases, the
insolvency or financial condition of any of the Debtors, or the consummation of
the Second Reorganization Plan and the transactions contemplated in connection
therewith shall be and is hereby void and unenforceable. To the extent that any
executory contract or unexpired lease contains a contractual provisions that
would require a Reorganized Debtor to satisfy any financial criteria or meet any
financial condition measured by reference to such Debtor's most recent annual
audited financial statements, then upon the assumption of any such executory
contract or unexpired lease the Reorganizing Debtors and Reorganized Debtors
shall be deemed to be and to remain in compliance with any such contractual
provision regarding financial criteria or financial condition (other than
contractual requirements to satisfy minimum ratings from ratings agencies) for
the period through one year after the Effective Date, and thereafter such
financial criteria or financial condition shall be measured by reference to the
applicable Debtor's most recent annual audited financial statements.
(v) All requirements of section 365(b) and (c) of
the Bankruptcy Code and any other applicable law relating to the Contracts have
been satisfied. The counterparties to the Contracts who did not object to the
Second Reorganization Plan or who have withdrawn their objections and who did
not timely respond to the Notices of Cure are deemed to have consented to the
assumption of the Contracts.
(vi) To the extent that any agreement, guarantee or
similar instrument identified as an executory contract or unexpired lease to be
assumed under Section 9.1 of the Second Reorganization Plan does not constitute
an executory contract or unexpired lease within the meaning of Section 365 of
the Bankruptcy Code, the Reorganizing Debtors shall nonetheless provide Adequate
Assurance with respect to such agreement, including the payment of any Cure
Amounts specified the Notices of Cure. As of the date hereof and upon the
Effective Date, such agreement or instrument shall remain in full force and
effect and free from default (other than for unpaid specified Cure Amounts) and
enforceable against the non-debtor party thereto in accordance with its terms.
Any provision of such agreement or instrument that purports to give rise to a
default or other breach of, or create or constitute an event of termination or
similar condition under, such agreement or instrument by reason of the
commencement of any of the Debtors' chapter 11 cases, the insolvency or
financial condition of any of the Debtors, or the consummation of the Second
Reorganization Plan and the transactions contemplated in connection therewith
shall be and is hereby void and unenforceable.
II. Deemed Consolidation for Certain Plan Purposes. Eighty
(80) Debtor entities are the subject of the Second Reorganization Plan. Pursuant
to the Second Reorganization Plan, the Reorganizing Debtors have been deemed
consolidated for the limited purposes of administration in order to preserve the
current corporate structure of the Reorganizing Debtors without requiring
Distributions to be made with respect to Equity Interests held in Subsidiary
Debtors, and in order to provide for classification of Claims against more than
one Reorganizing Debtor as part of a single Class or Subclass of Claims for
voting and distribution purposes. The deemed consolidation contemplated by the
Second Reorganization Plan, however, shall not affect: (i) the legal and
organizational structure of the Reorganized Debtors; (ii) the ownership interest
of any Reorganizing Debtor in any Subsidiary Debtor, Covanta Huntington, Covanta
Onondaga and DSS Environmental and (iii) pre and post-Petition Date guarantees,
Liens and security interests that are required to be maintained (a) in
connection with executory contracts or unexpired leases that were entered into
during the Chapter 11 Cases or that have been or will be assumed, or (b)
pursuant to the Second Reorganization Plan or the instruments and documents
issued in connection therewith (including, without limitation, the Exit
Financing Agreements).
JJ. Intercompany Claims. Any Intercompany Claim against a
Reorganizing Debtor held by another Reorganizing Debtor, Liquidating Debtor or
Heber Debtor constitutes the exclusive property of any such Reorganizing Debtor,
Liquidating Debtor or Heber Debtor, as the case may be, pursuant to section 541
of the Bankruptcy Code.
DECREES
NOW THEREFORE IT IS HEREBY ORDERED, ADJUDGED, DECREED AND
DETERMINED THAT:
1. Confirmation. The Second Reorganization Plan (as modified
by any modifications contained in this Confirmation Order) is confirmed under
section 1129 of the Bankruptcy Code.
2. Compliance with Applicable Provisions of Bankruptcy Code.
The Second Reorganization Plan complies with the requirements of sections 1122,
1123 and 1129 of the Bankruptcy Code.
3. Objections. To the extent that any objections have not been
withdrawn or resolved by stipulation prior to the entry of this Confirmation
Order or are not resolved by the relief granted herein or as stated on the
record of the Confirmation Hearing, all such objections are hereby overruled.
4. Plan Classification Controlling. The classification of
Claims and Equity Interests for purposes of the Distributions to be made under
the Second Reorganization Plan shall be governed solely by the terms of the
Second Reorganization Plan. The classifications set forth on the Ballots
tendered to or returned by the Debtors' creditors in connection with voting on
the Second Reorganization Plan (a) were set forth on the Ballots solely for
purposes of voting to accept or reject the Second Reorganization Plan, (b) do
not necessarily represent, and in no event shall be deemed to modify or
otherwise affect, the actual classification of such Claims or Equity Interests
under the Second Reorganization Plan for distribution purposes, (c) may not be
relied upon by any creditor or interest holder as representing the actual
classification of such Claims or Equity Interests under the Second
Reorganization Plan for distribution purposes, and (d) shall not be binding upon
the Reorganized Debtors or the Estates.
5. Certain Effects of Confirmation; Discharge; Injunction;
Exculpation; Releases. All of the provisions of Sections 11.3, 11.5, 11.6, 11.7,
11.8, 11.9 and 11.10, as amended, of the Second Reorganization Plan are
incorporated herein by reference as if set forth herein in extenso and are
hereby approved in their entirety.
6. Settlements. All settlements in these cases are hereby
approved as good faith compromises and settlements pursuant to Bankruptcy Rule
9019. Without limiting the generality of the foregoing:
(i) The terms of the 9.25% Settlement, to be implemented
pursuant to the terms of the Second Reorganization Plan, are approved in their
entirety. In return for payment by an Accepting Bondholder of such Accepting
Bondholder's pro rata share of the aggregate Settlement Distribution for
distribution to the holders of Class 6 Unsecured Claims, the 9.25% Debentures
Adversary Proceeding shall be (i) withdrawn with prejudice with respect to such
Accepting Bondholders and the Indenture Trustee, and (ii) provided that no
holder of a Class 6 Unsecured Claim, or representative thereof, shall file with
the Bankruptcy Court a motion for the entry of a scheduling order in connection
with the resumption of the 9.25% Debentures Adversary Proceeding within 120 days
after the Effective Date, withdrawn without prejudice with respect to the
rights, if any, of any holder of an Unsecured Claim to challenge the validity of
the Allowed Secured Claims of any such Rejecting Bondholders in their individual
capacities; provided, however, that in the event any holder of a Class 6
Unsecured Claim, or representative thereof, challenges the validity of the
Allowed Secured Claims of any such Rejecting Bondholders holding an aggregate
amount of Subclass 3B Claims of less than $10 million subsequent to the
Effective Date, either in the 9.25% Debentures Adversary Proceeding or
otherwise, the Reorganized Debtors shall not be obligated to reimburse counsel
for such holder of a Class 6 Unsecured Claim, or representative thereof, for any
fees or expenses incurred in connection with such challenge; and provided,
further, that neither the Bondholders Committee nor the Indenture Trustee shall
have an obligation to defend or otherwise intervene in any action against any
such Rejecting Bondholders (all such obligations of the Indenture Trustee, if
any did so exist, being terminated along with the 9.25% Indenture pursuant to
Section 6.5 of this Reorganization Plan), and provided that such termination
shall not prejudice the prosecution of the 9.25% Debentures Adversary Proceeding
against any such Rejecting Bondholders. In connection with any such resumption
of the 9.25% Debentures Adversary Proceeding by any holder or holders of Class 6
Unsecured Claims, as contemplated by the Second Reorganization Plan, such holder
or holders shall be deemed to be the successor in interest to the Committee in
all respects, acting on behalf of the Debtors for purposes of prosecuting such
9.25% Debentures Adversary Proceeding.
(ii) The Court hereby confirms the validity, priority,
nonavoidability, perfection and enforceability of the Liens and Claims of the
Agent Banks on behalf of the Prepetition Lenders under the Prepetition Credit
Agreement and the related collateral documents and guarantees. Subject to
payment of the Settlement Distribution to holders of Allowed Class 6 Claims by
the Accepting Bondholders, the Court hereby confirms the validity, priority,
nonavoidability, perfection and enforceability of the Liens and Claims of the
Accepting Bondholders under the 9.25% Indenture and the related collateral
documents.
(iii) Pursuant to Section 8.6(d) of the Second Reorganization
Plan, the Reorganizing Debtors shall promptly pay to counsel to the Committee
(a) 97 percent of the fees and 100 percent of the expenses incurred by such
counsel in connection with the 9.25% Debentures Adversary Proceeding and
previously approved by this Court in the Order Granting the Fourth Interim Fee
Application of Arnold & Porter Counsel to the Official Committee of Unsecured
Creditors, for Allowance of Compensation and Reimbursement of Expenses dated
December 31, 2003 (Docket No. 3152) (the "A&P Fourth Fee Application"), as
supplemented by the Order Awarding Allowance of Compensation with respect to A&P
as submitted to the Court at the Confirmation Hearing and (b) 90 percent of the
fees and 100 percent of the expenses incurred by such counsel in connection with
the 9.25% Debentures Adversary Proceeding and previously approved by this Court
in the Order Granting the Fifth Application of Arnold & Porter Counsel to the
Official Committee of Unsecured Creditors, for Allowance of Compensation and
Reimbursement of Expenses dated January 21, 2004 (Docket No. 3304) (the "A&P
Fifth Fee Application"), such payments to constitute an award of interim
compensation, with such amounts and the holdback amounts also previously
approved in the A&P Fourth Fee Application and the A&P Fifth Fee Application,
subject to final fee applications.
7. Cancellation of Existing Securities and Agreements. (i)
Except for purposes of evidencing a right to receive a Distribution under the
Second Reorganization Plan or as otherwise provided thereunder, on the Effective
Date all the agreements and other documents (including, but not limited to, the
9.25% Indenture, the Prepetition Credit Agreement and the Intercreditor
Agreement) evidencing (a) any Claims or rights of any holder of a Claim or
equity Interests against the applicable Reorganizing Debtor, including all
indentures and notes evidencing such Claims, (b) any security interests, liens
or encumbrances against property of the Reorganizing Debtors with respect to
such Claims, and (c) any options or warrants to purchase Equity Interests,
obligating the applicable Reorganizing Debtor to issue, transfer or sell Equity
Interests or any other capital stock of the applicable Reorganizing Debtor,
shall be released and cancelled without the need for further action; provided,
however, that notwithstanding the foregoing, the Reorganized Debtors shall
remain obligated with respect to liens, security interests or encumbrances in
property of the Reorganized Debtors that have been granted pursuant to any
executory contracts that have been assumed in accordance with Article IX of the
Second Reorganization Plan, pursuant to the Exit Financing Agreements or
pursuant to that certain Order Authorizing Entry into Transactions and
Assignment of Agreement Related to Hennepin County, Minnesota Facility entered
by this Court on June 11, 2003 (Docket No. 1597). Notwithstanding anything to
the contrary in the Second Reorganization Plan, the indentures, notes and all
other documents or agreements with respect to Subclass 2A Claims shall not be
cancelled.
(ii) On the Effective Date, all security interests, liens and
any other encumbrance (including, but not limited to, any such security
interest, lien or encumbrance asserted in connection with the 9.25% Indenture,
the Prepetition Credit Agreement and the Intercreditor Agreement, whether
arising before or after commencement of these Chapter 11 Cases) against the
property of the Continuing Debtors and against the property of the non-Debtor
affiliates of the Reorganizing Debtors (the "Non-Debtor Affiliates") shall be
released and cancelled without the need for further action.
(iii) On the Effective Date, the Reorganizing Debtors shall
pay all funded amounts and additional amounts outstanding under the DIP
Financing Facility (other than amounts outstanding with respect to Tranche C
thereunder which is part of the Secured Bank Claims and shall be treated in
accordance therewith) and all commitments thereunder shall automatically and
irrevocably terminate; provided, however, that on the Effective Date, all
outstanding and unfunded letters of credit issued under Tranche A of the DIP
Financing Facility shall be replaced by letters of credit to be issued under the
Second Lien L/C Facility and, subject to acceptance by the requisite number of
Tranche B DIP Lenders in accordance with section 2.13 of the DIP Financing
Facility, all outstanding and unfunded letters of credit issued under Tranche B
of the DIP Financing Facility shall be replaced or otherwise continued by
letters of credit to be issued under the First Lien L/C Facility or the Second
Lien L/C Facility (as applicable) or otherwise cash collateralized in an amount
not less than one hundred and five percent (105%) of the face amount thereof
pursuant to documentation in form and substance satisfactory to the DIP Agents
and the issuing banks. Once all such payments have been received in Cash by the
DIP Lenders and all commitments thereunder have been terminated and such letters
of credit have been issued under the First Lien L/C Facility or the Second Lien
L/C Facility (as applicable), the DIP Financing Facility shall be terminated
with respect to the Reorganizing Debtors (subject in all respects to any
carve-out previously approved by this Court in the Final Order approving the DIP
Financing Facility and any other terms of the DIP Financing Facility and the
Final Order that by their express terms survive the termination of the DIP
Financing Facility), and the DIP Lenders shall take all necessary action to
confirm the removal of any liens on the properties of the applicable
Reorganizing Debtors securing the DIP Financing Facility at the sole cost of the
Reorganized Debtors. To the extent that Claims arising under Tranche B of the
DIP Financing Facility will not be paid in full in Cash as a result of
reinstatement and continuation of such letters of credit under the First Lien
L/C Facility or Second Lien L/C Facility (as applicable), acceptance of such
treatment in full satisfaction of their Allowed Administrative Expense Claim by
the requisite DIP Lenders as provided under section 2.13 of the DIP Financing
Facility shall be binding on all DIP Lenders. Contemporaneous with the
termination of the DIP Financing Facility pursuant to this Confirmation Order,
the DIP Lenders' commitments and obligations thereunder shall be terminated and
the Debtors shall be deemed to have unconditionally and irrevocably released the
DIP Lenders and DIP Agents from all obligations, claims and liabilities
whatsoever arising thereunder or relating thereto.
(iv) Nothing contained in the Second Reorganization Plan, this
Confirmation Order, or otherwise, will be deemed to change, modify or affect the
terms and provisions of the protections granted to GECC (as defined therein) in
paragraphs B, C, 5(c), 5(e) and 14 of that certain Agreed Final Order (I)
Authorizing Use of Cash Collateral of GECC Pursuant to 11 U.S.C. Section 363,
and (II) Granting Adequate Protection Pursuant to 11 U.S.C. Sections 363 and
364, dated as of May 13, 2002 (as it may have been amended) (Docket No. 287),
the provisions of which are incorporated herein.
8. Investment and Purchase Agreement. The terms and conditions
of the Investment and Purchase Agreement are approved, and the sale contemplated
therein in exchange for the Purchase Price is authorized under sections 105 and
1123(b)(4) of the Bankruptcy Code and this Confirmation Order. The Investment
and Purchase Agreement may be modified, amended, or supplemented by agreement of
the signatories thereto without further action of the Court, provided that any
such modification, amendment, or supplement is not material and substantially
conforms to and effectuates the Investment and Purchase Agreement, the Second
Reorganization Plan and this Confirmation Order.
(i) Payment of Purchase Price. On the Effective Date,
Reorganizing Covanta is
authorized, without any further action by its stockholders or board of
directors, to issue written instructions to the Escrow Agent so that the Deposit
shall be applied to payment of the Consideration in accordance with Section 3.2
of the Investment and Purchase Agreement.
(ii) Valid and Effective Transfer. On the Effective
Date, Reorganizing Covanta
shall be authorized, without any further action by its stockholders or board of
directors, to issue, sell and convey to the Plan Sponsor the Purchased Shares in
accordance with Section 3.1 of the Investment and Purchase Agreement. The sale
and transfer of the Purchased Shares by Reorganizing Covanta to the Plan Sponsor
pursuant to the Investment and Purchase Agreement and the Second Reorganization
Plan shall constitute a legal, valid and effective transfer of the Purchased
Shares, and shall vest the Plan Sponsor with all right, title and interest in
and to the Purchased Shares, free and clear of all Claims and Encumbrances of
any kind or nature whatsoever; provided, that immediately after giving effect to
such transfer the Purchased Shares shall be subject to the liens of the Exit
Financing Agreements in accordance with the terms thereof. As of the Effective
Date, this Confirmation Order shall be construed and shall constitute for any
and all purposes a full and complete general assignment, conveyance and transfer
of the Purchased Shares transferring good and marketable title in such Shares to
the Plan Sponsor.
(iii) The Reorganizing Debtors and Reorganized
Debtors are authorized and
empowered to execute and deliver all documents, agreements and instruments and
take all actions reasonably necessary to effectuate the consummation and
implementation of the Second Reorganization Plan, including, without limitation,
the execution, delivery and performance of the Investment and Purchase
Agreement, and each other document, instrument, and agreement to be executed in
connection therewith and the transactions contemplated thereby. All such action
taken or caused to be taken shall be deemed to have been authorized and approved
by this Court without further corporate act or action under applicable law and
without any requirement of further action by the stockholders or directors of
the Reorganizing Debtors or Reorganized Debtors.
9. Exit Financing Agreements. The Exit Financing Agreements,
including all exhibits, documents and agreements attached thereto, introduced
into evidence by the Debtors at the Confirmation Hearing, and the execution,
delivery, and performance of such exhibits, documents and agreements in
substantially the form submitted at the Confirmation Hearing by the Reorganizing
Debtors or Reorganized Debtors in accordance with their respective terms are
approved. Reorganizing Covanta, Reorganizing CPIH and, to the extent necessary,
the other Reorganizing Debtors or Reorganized Debtors are hereby authorized to
execute each of the Exit Financing Agreements, as they may be modified in
accordance with their terms, on or prior to the Effective Date, together with
such other documents as may be reasonably requested by the lenders in order to
effectuate the provisions thereof, without further approval by the board of
directors of Reorganizing Covanta, Reorganizing CPIH, any other Reorganizing
Debtor or Reorganized Debtor.
(i) The Reorganizing Debtors or Reorganized Debtors are hereby
authorized to grant to the lenders under the Exit Financing Agreements or other
appropriate party valid, binding, enforceable and perfected security interests
in and Liens upon all Collateral, as such term is defined in the Exit Financing
Agreements, to secure all of the obligations under or in connection with the
Exit Financing Agreements in accordance with the terms thereof; provided,
however, that the lenders under the Exit Financing Agreements or other
appropriate parties shall not be granted any security interests and/or Liens in
property of a Reorganized Debtor that would cause a material violation, breach
or default of a valid and enforceable contractual obligation or restriction
existing as of the date hereof (including but not limited to those arising under
that certain Limited Partnership Agreement dated October 7, 1991, as amended,
with respect to the Huntington Limited Partnership) on the granting of security
interests and/or Liens for which the required consents have not been obtained.
The Exit Financing Agreements and each document, instrument and agreement
executed in connection therewith (including, without limitation, each of the
intercreditor agreements) shall constitute legal, valid, binding and authorized
obligations of the respective parties thereto, enforceable in accordance with
their terms. The security interests and liens granted pursuant to, or in
connection with, the Exit Financing Agreements (and all documents, instruments
and agreements related thereto) shall constitute, as of the Effective Date,
legal, valid, and duly perfected liens and security interests in and to the
collateral specified therein, subject only, where applicable, to the
pre-existing liens and security interests specified or permitted in the Exit
Financing Agreements or the documents, instruments or agreements contemplated
thereby or as otherwise ordered by this Court. The relative priority of the
liens and security interests granted under the Exit Financing Agreements shall
be as set forth in the intercreditor agreements executed in connection
therewith. To the extent that the terms of the Exit Financing Agreements and the
terms of this Order are in any way inconsistent, the terms of this Order shall
govern.
(ii) On the Effective Date, all of the liens and security
interests to be created under, or in connection with, the Exit Financing
Agreements shall be deemed created and shall be valid and perfected without any
requirement of filing or recording of financing statements, mortgages or other
evidence of such liens and security interests and without any approvals or
consents from governmental entities or any other persons and regardless of
whether or not there are any errors, deficiencies or omissions in any property
descriptions attached to any filing and no further act shall be required for
perfection of the liens and security interests.
(iii) The Reorganizing Debtors or Reorganized Debtors are
hereby authorized to deliver letters of credit to various third parties as
contemplated pursuant to the First Lien L/C Facility and the Second Lien L/C
Facility and such third parties are directed to accept such letters of credit.
(iv) The Reorganizing Debtors or Reorganized Debtors are
hereby authorized to pay all fees and other amounts referred to in the Exit
Financing Agreements (and all documents, instruments and agreements related
thereto). The consummation of the Second Reorganization Plan and the execution,
delivery and performance of the Exit Financing Agreements shall not result in or
constitute a fraudulent transfer under applicable federal or state laws.
10. Unsecured Creditors Distributions. (i) The Covanta
Unsecured Subordinated Notes Indenture filed with the Court as part of the
Reorganization Plan Supplement and introduced into evidence at the Confirmation
Hearing, the Reorganization Plan Unsecured Notes to be issued under the Covanta
Unsecured Subordinated Notes Indenture and the Agency Agreement to be entered
into in connection with the Distribution to holders of Allowed Class 6 Claims,
all are hereby approved, and the Reorganized Debtors are hereby authorized to
execute them upon the Effective Date without further approval by the Board of
Directors of Reorganizing Covanta.
(ii) Pursuant to the terms of the Second Reorganization Plan,
upon the Effective Date the Reorganized Debtors shall implement the
distributions to Classes 4, 6 and 8 provided for under the Second Reorganization
Plan.
11. Assumptions. The executory contract and unexpired lease
provisions of Article IX of the Second Reorganization Plan are approved in their
entirety. On the Effective Date, pursuant to section 365 of the Bankruptcy Code,
and except as otherwise provided in the Second Reorganization Plan, or in any
contract, instrument, release or other document entered into in connection with
the Second Reorganization Plan, the Reorganizing Debtors shall assume the
following executory contracts and unexpired leases: (i) as to each Reorganizing
Debtor listed on Exhibit 9.1A of the Second Reorganization Plan (collectively,
the "Rejecting Debtors"), each Rejecting Debtor shall assume each executory
contract or unexpired lease that is specifically designated on the Rejecting
Debtors' Schedule of Assumed Contracts and Leases, filed as Exhibit 9.1A(s) to
the Second Reorganization Plan, as may be amended at any time prior to the
Effective Date, and (ii) as to each Reorganizing Debtor listed on Exhibit 9.1B
of the Second Reorganization Plan (collectively, the "Assuming Debtors"), each
executory contract and unexpired lease to which each Assuming Debtor is a party
shall be deemed assumed, except for any executory contract or unexpired lease of
the Assuming Debtors that (A) has been previously assumed or rejected pursuant
to a Final Order of the Court, (B) is specifically designated as a contract or
lease on the Assuming Debtors' Schedule of Rejected Contracts and Leases, filed
as Exhibit 9.1B(s) to the Second Reorganization Plan, as may be amended at any
time prior to the Effective Date, or (C) is the subject of a separate motion to
assume or reject filed under section 365 of the Bankruptcy Code by the
Reorganizing Debtors prior to the Confirmation Hearing (collectively, the
"Assumed Contracts and Leases"). Each of the Assumed Contracts and Leases shall
be assumed only to the extent that it constitutes an executory contract or
unexpired lease. Listing a contract or lease on Exhibits 9.1A(s) or 9.1B(s) of
the Second Reorganization Plan shall not constitute an admission by a Debtor or
Reorganizing Debtor that such contract or lease is an executory contract or
unexpired lease or that a Debtor or Reorganizing Debtor has any liability
thereunder. This Confirmation Order shall constitute an order approving the
assumptions described in Section 9.1 of the Second Reorganization Plan, pursuant
to section 365 of the Bankruptcy Code, as of the Effective Date. On the
Effective Date, subject to the provisions of paragraphs 11 and 12 of this
Confirmation Order, the Reorganized Debtors shall be entitled to enjoy all the
rights and benefits under each of the Assumed Contracts and Leases without the
necessity of obtaining such counterparty's written consent to assumption or
retention of such rights and benefits, and all rights of such counterparty with
respect to each of the Assumed Contracts and Leases regarding events and
occurrences prior to the Effective Date shall be deemed satisfied and waived,
subject to the Reorganized Debtors' satisfaction of its cure obligations in
accordance with paragraphs 11 and 12 of this Confirmation Order. Notwithstanding
anything in the Second Reorganization Plan or this Confirmation Order to the
contrary, and the relevant language in the Second Reorganization Plan is hereby
deemed modified to be consistent herewith, the assumption of that certain
Service Agreement dated as of November 16, 1990, as supplemented and amended,
between Northeast Maryland Waste Disposal Authority (the "Authority") and
Covanta Montgomery, Inc. (the "Service Agreement") is expressly conditioned upon
Covanta Montgomery, Inc. providing the Authority with a Guarantor Security
Letter of Credit (as defined in the Service Agreement and as contemplated by
paragraph EE of this Confirmation Order) that meets the requirements of Section
7.3(f) of the Service Agreement and shall be maintained in accordance with the
requirements of the Service Agreement.
12. Notices of Cure Distributed After the Confirmation
Hearing. To the extent that they have not already done so prior to the
Confirmation Hearing, within thirty (30) days after the Confirmation Date, the
Reorganizing Debtors or Reorganized Debtors shall provide a Notice of Cure to
each party whose executory contract or unexpired lease is being assumed pursuant
to the Second Reorganization Plan of: (a) the executory contract or unexpired
lease being assumed; (b) the proposed cure amount ("Cure Amount Claim"), if any,
that the applicable Reorganizing Debtor or Reorganized Debtor believes it would
be obligated to pay in connection with such assumption; and (c) the procedures
for such party to object to the assumption of the applicable executory contract
or unexpired lease or the amount of the proposed Cure Amount Claim. In the event
a party fails to file and serve a timely objection to such Notice of Cure, the
Cure Amount stated in the Notice of Cure shall be conclusive and the Reorganized
Debtors may assume the executory contract or unexpired lease without further
order of the Court. If a timely objection is filed, the Court shall determine
the Cure Amount and the propriety of the assumption in accordance with the
Second Reorganization Plan at the next scheduled hearing, which hearing shall
occur no earlier than five (5) business days after the filing of the objection.
The Notice of Cure shall be in substantially the form of the Notices of Cure
filed and served by the Debtors prior to the Confirmation Hearing and shall be
served on each non-Debtor party to an executory contract or unexpired lease. In
the event the Court determines that the Cure Amount is higher than the amount
proposed by the Debtors, the Debtors may reject the executory contract or
unexpired lease notwithstanding the occurrence of the Effective Date.
13. Notices of Cure Distributed Prior to the Confirmation
Hearing. With respect to the parties who received a Notice of Cure prior to the
Confirmation Hearing but did not object or otherwise respond prior to the
Confirmation Hearing, the Cure Amount Claim shall be fixed as set forth in the
Notice of Cure. The payment of the Cure, if any, with respect thereto shall be
made in accordance with the terms of the Second Reorganization Plan and this
Confirmation Order and any such party shall be deemed to consent to such
assumption and, upon the Effective Date, the Reorganized Debtors shall be
entitled to enjoy all the rights and benefits under each such executory contract
or unexpired lease without the necessity of obtaining such counterparty's
written consent to assumption or retention of such rights and benefits. The Cure
Amount Claim with respect to parties who did object or otherwise respond to the
Notices of Cure prior to the Confirmation Hearing shall be established by the
Court in accordance with the procedures for resolving such disputes set forth in
the Second Reorganization Plan and this Confirmation Order. In the event the
Court determines that the Cure Amount is higher than that amount proposed by the
Debtors, the Reorganizing Debtors or Reorganized Debtors may reject the
executory contract or unexpired lease notwithstanding the passage of the
Effective Date.
14. Rejection. Except as otherwise provided in the Second
Reorganization Plan, or in any contract, instrument, release or other document
entered into in connection with the Second Reorganization Plan, on the Effective
Date, or as otherwise set forth in the Second Reorganization Plan, pursuant to
section 365 of the Bankruptcy Code, the Reorganizing Debtors shall reject the
following executory contracts and unexpired leases: (i) as to each Rejecting
Debtor, all executory contracts and unexpired leases to which each such
Rejecting Debtor is a party shall be deemed rejected, except for any executory
contract or unexpired lease of the Rejecting Debtors that (A) has been
previously assumed or rejected pursuant to a Final Order of the Court, (B) is
specifically designated as a contract or lease on the Rejecting Debtors'
Schedule of Assumed Contracts and Leases, filed as Exhibit 9.1A(s) to the Second
Reorganization Plan, as may be amended at any time prior to the Effective Date,
(C) is the subject of a separate motion to assume or reject filed under section
365 of the Bankruptcy Code by the Reorganizing Debtors prior to the Confirmation
Hearing, or (D) is an executory contract or unexpired lease to which any other
Reorganizing Debtor or non-debtor affiliate is counterparty, and (ii) as to each
Assuming Debtor, all executory contracts and unexpired leases that are
specifically designated as a contract or lease on the Assuming Debtors' Schedule
of Rejected Contracts and Leases, filed as Exhibit 9.1B(s) to the Second
Reorganization Plan, as may be amended at any time prior to the Effective Date,
shall be rejected (collectively, the "Rejected Contracts and Leases"). Each of
the Rejected Contracts and Leases shall be rejected only to the extent that any
such contract or lease constitutes an executory contract or unexpired lease.
Listing a contract on Exhibits 9.1A(s) or 9.1B(s) of the Second Reorganization
Plan shall not constitute an admission by a Debtor or Reorganizing Debtor that
such contract or lease is an executory contract or unexpired lease or that a
Debtor or Reorganizing Debtor has any liability thereunder. This Confirmation
Order shall constitute an order approving such rejections, pursuant to section
365 of the Bankruptcy Code, as of the Effective Date.
15. Bar Date for Rejection Damage Claims. Claims arising out
of the rejection of an executory contract or unexpired lease pursuant to
Sections 9.1 of the Second Reorganization Plan must be filed with the Court no
later than the later of (i) twenty (20) days after the Effective Date, and (ii)
thirty (30) days after entry of the order rejecting such contract or lease. Any
Claims not filed within such time period will be forever barred from assertion
against any of the Debtors, the Reorganizing Debtors or the Reorganized Debtors.
16. F. Browne Gregg Agreements. The status of the assumption
or rejection of each of the Guaranty, dated November 10,1988, by Covanta Energy
Corporation for the benefit of F. Browne Gregg ("Gregg"), and all agreements
between Covanta Systems, Inc. ("Covanta Systems") and Gregg, including but not
limited to, the Agreement, dated October 17, 1988, as amended, between Covanta
Systems and Gregg; First Amendment Agreement, dated November 10, 1988, between
Covanta Systems and Gregg, and First Amendment to Agreement, dated January 4,
2000, each between Covanta Systems and Gregg (collectively, the "Gregg
Agreements"), is contingent on, inter alia, the resolution of the Reorganizing
Debtors' pending objection to the proofs of claim filed by Gregg and proceedings
between Covanta Lake II, Inc., and Lake County, Florida, currently pending in
this Court, and the Reorganizing Debtors' time to decide whether to assume or
reject the Gregg Agreements is extended pending further order of the Court.
17. Treatment of Intercompany Claims. The treatment of
Intercompany Claims provided in Section 4.9 of the Second Reorganization Plan is
approved in its entirety, including, without limitation, the following
provisions:
(i) Each of the Liquidating Debtors' Intercompany
Claims against the Reorganizing Debtors and any of the other persons or entities
identified as beneficiaries of the release provided pursuant to Section 11.10 of
the Second Reorganization Plan (together, the "Released Parties") will be fully
settled and released as of the Effective Date.
(ii) Each of the Heber Debtors' Intercompany Claims
against (A) the Reorganizing Debtors and any of their respective present or
former officers, directors, employees, attorneys, accountants, financial
advisors, investment bankers or agents and (B) the other Released Parties will
be fully settled and released as of the Effective Date.
(iii) Each of the Reorganizing Debtors' Intercompany
Claims against (A) the other Reorganizing Debtors and any of their respective
present or former officers, directors, employees, attorneys, accountants,
financial advisors, investment bankers or agents and (B) the other Released
Parties, to the extent and only for the periods provided for pursuant to section
11.10 of the Second Reorganization Plan, will be fully settled and released or,
with respect to Claims against the Reorganizing Debtors, treated in accordance
with section 4.9(b)(II) of the Second Reorganization Plan.
(iv) On the Effective Date, consistent with the
provisions of the Second Reorganization Plan, the Reorganizing Debtors or
Reorganized Debtors are authorized to issue notes with respect to Intercompany
Claims in order to facilitate implementation of the Second Reorganization Plan.
Specifically, Reorganized CPIH is authorized to issue a promissory note ("Note")
in the amount of $90 million to Covanta Projects, Inc. ("CPI") in payment of
certain existing intercompany payables equaling $90 million. CPI is authorized
to endorse the Note to Reorganized Covanta, also in payment of certain existing
intercompany payables. Reorganized CPIH is also authorized to issue a
supplemental promissory note ("Supplemental Note") of up to $5 million to CPI,
which in turn will endorse the Supplemental Note to Reorganized Covanta in the
same manner. Furthermore, Reorganized Covanta is authorized to endorse the Note
and the Supplemental Note to the Agent on behalf of the holders of Allowed
Subclass 3A and Subclass 3B Claims, who will in turn endorse the Note and the
Supplemental Note back to Reorganized CPIH in exchange for Reorganized CPIH
entering into an agreement with respect to the New CPIH Funded Debt in an amount
up to $95 million.
(v) To the extent that any Intercompany Claim
remains unsettled and unreleased following the Effective Date pursuant to
Section 4.9(b)(II) of the Second Reorganization Plan, the Reorganized Debtors
shall have the right to take any necessary action to resolve and settle such
Claims after the Effective Date, with the amount of such Claims being determined
as of the close of business on the Effective Date.
18. Allowed Subclass 3A and Subclass 3B Secured Claim Amounts.
(i) The aggregate amount of the Allowed Subclass 3A Secured Claim Amount
consists of a liquidated portion of the Secured Bank Claims in the amount of
$410,122,539 and a contingent portion of the Secured Bank Claims in the amount
of $2,097,775. The contingent portion of the Allowed Subclass 3A Secured Claim
Amount is with respect to (a) a still outstanding letter of credit issued in
favor of the City of Kanata under the Prepetition Credit Agreement, and (b) a
working capital adjustment to be undertaken in connection with the Anaheim Arena
Termination Agreement, in accordance with the Order Authorizing and Approving
Entry into the Anaheim Arena Termination Agreement and Related Transactions,
entered December 8, 2003 (Docket No. 2951). For purposes of the Initial
Distribution made pursuant to section 4.3(c)(I) of the Second Reorganization
Plan, the Allowed Subclass 3A Secured Claim Amount will include both the
liquidated and the contingent portion of the Secured Bank Claims and be in the
aggregate amount of $412,220,314; provided, however, that the Reorganized
Debtors shall hold in escrow (or similar arrangement) any Distribution with
respect to the contingent portion of the Allowed Subclass 3A Secured Claim
Amount until such time as those Secured Bank Claims become liquidated; and
further, provided that in the event it shall be determined, either before or
after the Effective Date, that all or part of the contingent Allowed Subclass 3A
Secured Claim Amount shall be Disallowed, a pro rata portion of the Distribution
held or intended to be held in escrow (or pursuant to such similar or other
arrangements) shall be released by the Reorganized Debtors for Distribution on a
pro rata basis between the Allowed Secured Bank Claims (excluding that portion
referred to as contingent pursuant to this paragraph 18 of this Confirmation
Order) and Allowed 9.25% Debenture Claims.
(ii) The aggregate amount of the Allowed Subclass 3B Secured
Claim Amount is in the amount of $105,395,833. With respect to holders of 9.25%
Debenture Claims, the Distribution Record Date is January 12, 2004.
19. Reinstatement of Parent and Holding Company Guarantees.
Pursuant to the Second Reorganization Plan, on the Effective Date the
Reorganized Debtors shall be deemed to have reinstated the obligations of
Reorganized Covanta or any Intermediate Holding Company Debtor based on a
guarantee of an obligation of any other Reorganizing Debtor or any direct or
indirect international subsidiary of a Reorganizing Debtor that will continue
operating following the Effective Date, including, without limitation,
performance guarantees; provided however, that the Parent and Holding Company
Guarantee Claims that are reinstated pursuant to the Second Reorganization Plan
shall not include the guarantee or indemnity Claims of any insurers or issuers
of surety bonds, unless this Court specifically determines that any such claim
shall be entitled to reinstatement; and further, provided that notwithstanding
the reinstatement of any such obligation, (i) no contractual provisions or
applicable law that would entitle the beneficiary of such a guarantee to demand
or receive payment with respect to any such obligation prior to the stated
maturity thereof, terminate any contractual relationship or take such other
enforcement action (as may be applicable) from and after the occurrence of a
default that occurred prior to the Effective Date shall be enforceable against
the Reorganized Debtors, and (ii) for the period through one year after the
Effective Date: (a) no contractual provisions or applicable law that would
require a Reorganizing Debtor or Reorganized Debtor to satisfy any financial
criteria or meet any financial condition measured by reference to such Debtor's
most recent annual audited financial statements with respect to any such
reinstated guarantee obligation during the pendency of these Chapter 11 Cases
shall be enforceable against such Reorganizing Debtor or Reorganized Debtor, and
(b) the Reorganizing Debtors and Reorganized Debtors shall be deemed to be and
to remain in compliance with any such contractual provision or applicable law
regarding financial criteria or financial condition (other than contractual
requirements to satisfy minimum ratings from ratings agencies). After such year,
such financial criteria or financial condition shall be measured by reference to
the applicable Debtor's then most recent annual audited financial statements. On
or after the Effective Date, the Reorganizing Debtors or Reorganized Debtors
shall provide notice of reinstatement to the beneficiary of any such guarantee.
20. Termination of Guarantees of Continuing Debtor
Obligations. Except as to those guarantees expressly assumed under Exhibit
9.1B(s) of the Second Reorganization Plan, all obligations arising under any
guarantees of the performance of Covanta Warren Energy Resource Co., L.P.,
Covanta Tampa Construction, Inc., Covanta Tampa Bay, Inc. or Covanta Lake II,
Inc. (including those of its predecessor, Covanta Lake, Inc.) under any existing
agreements are terminated as of the date hereof, provided, however, that in the
event such Continuing Debtors assume any of the underlying agreements to which
guarantee obligations relate, the underlying agreements shall only be assumed if
a substantially similar replacement guarantee is provided, and further provided
that nothing herein shall be deemed a rejection of such underlying agreements by
the Continuing Debtors or give rise to a right to terminate any underlying
unassumed agreement, and further provided that nothing herein shall be deemed a
rejection or modification of the terms of any contract previously assumed
pursuant to sections 363 and 365 of the Bankruptcy Code by the Debtors or
Continuing Debtors.
21. Retained Professional Claims and Final Fee Applications.
All final requests for payment by all (i) Retained Professionals and (ii) other
Persons employed by the Debtors or serving as independent contractors to the
Debtors in connection with their reorganization efforts that are seeking an
award by the Court of compensation for services rendered or reimbursement of
expenses incurred through and including the Effective Date under subsections
503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code shall file
and serve on counsel for the Debtors and as otherwise required by the Court and
Bankruptcy Code their respective final applications for allowance of
compensation for services rendered and reimbursement of expenses incurred on or
before the date that is forty-five (45) days after the Effective Date. The
Reorganized Debtors shall pay in full upon a determination of allowance such
Claims in such amounts as are Allowed by the Court, after notice and hearing, or
upon such other less favorable terms as may be mutually agreed upon between the
holder of such an Allowed Administrative Expense Claim and the Reorganizing
Debtors or, on and after the Effective Date, the Reorganized Debtors and, in
each such case, approved by the Court after notice and hearing. Except for
payments to professionals specifically provided for by the Second Reorganization
Plan, which are hereby approved, any request for payment of an Administrative
Expense Claim by a Retained Professional or other Person specified in this
paragraph, which is not filed by the applicable deadline set forth above, shall
be barred. Upon the Effective Date, any requirement that Retained Professionals
or Key Ordinary Course Professionals comply with sections 327 through 331 of the
Bankruptcy Code in seeking retention or compensation for such services rendered
after such date will terminate, and the Reorganized Debtors will employ and pay
Retained Professionals and Key Ordinary Course Professionals in the ordinary
course of business. Notwithstanding the foregoing, (i) Retained Professionals
employed by the Debtors shall not be required to file final applications for
allowance of compensation and reimbursement of expenses with respect to services
rendered to the Continuing Debtors, (ii) after the Effective Date, the
Reorganized Debtors may continue to pay the fees and expenses of Retained
Professionals providing services to the Continuing Debtors (all in accordance
with, and subject to, the provisions of this Court's prior orders establishing
procedures for interim compensation and reimbursement of expenses), and such
Retained Professionals are authorized to accept payment on account of such
services directly from the Reorganized Debtors.
22. Substantial Contribution Compensation and Expenses Bar
Date. Any Person who requests compensation or expense reimbursement for a
Substantial Contribution Claim in the Chapter 11 Cases must file an application
with the clerk of the Court, on or before thirty (30) days after the Effective
Date, and serve such application on counsel for the Reorganized Debtors and as
otherwise required by the Court and the Bankruptcy Code on or before such date,
or be forever barred from seeking compensation or expense reimbursement for such
Substantial Contribution Claim.
23. Other Administrative Claims. Any other requests for
payment of an Administrative Expense Claim (other than as set forth in
paragraphs 21 or 22 above) that are subject to the Administrative Expense Claim
Bar Date under the Second Reorganization Plan must be filed with the Court and
served on counsel for the Reorganizing Debtors and as otherwise required by the
Court and Bankruptcy Code on or before thirty (30) days after the Effective
Date. Unless the Reorganizing Debtors, Reorganized Debtors, or any other party
in interest in the Chapter 11 Cases objects to an Administrative Expense Claim
by the Claims Objection Deadline, such Administrative Expense Claim shall be
deemed Allowed in the amount filed. In the event that the Reorganizing Debtors,
Reorganized Debtors, or any other party in interest in the Chapter 11 Cases
objects to an Administrative Expense Claim, the Court shall determine the
Allowed amount of such Administrative Expense Claim. Notwithstanding the
foregoing, no request for payment of an Administrative Expense Claim need be
filed with respect to an Administrative Expense Claim incurred and payable by
the Reorganizing Debtors or Reorganized Debtors in the ordinary course of
business.
24. Resolution of Unsecured Claims. Except as otherwise
ordered by the Court, any Claim that is not an Allowed Claim shall be
determined, resolved or adjudicated in accordance with the terms of the Second
Reorganization Plan. The Reorganizing Debtors or Reorganized Debtors, as the
case may be, shall have the exclusive right to make and file objections to
Claims (other than Administrative Expense Claims) and shall serve a copy of each
objection upon the holder of the Claim to which the objection is made as soon as
practicable, but in no event later than one hundred and twenty (120) days after
the Effective Date; provided, however, that such one hundred and twenty (120)
day period may be automatically extended by the Reorganized Debtors, without any
further application to, or approval by, the Court, subject to filing a notice
with the Court of such extension, for up to an additional thirty (30) days. The
foregoing deadlines for filing objections to Claims shall not apply to Claims
for tort damages and, accordingly no such deadline shall be imposed by the
Second Reorganization Plan or this Confirmation Order.
25. General Authorizations. The Debtors, the Reorganizing
Debtors and the Reorganized Debtors, and their respective officers, employees,
agents or attorneys, as applicable, are authorized and empowered pursuant to
sections 105 and 1142(b) of the Bankruptcy Code and any applicable state law to
take any and all actions reasonably necessary or appropriate to implement,
effectuate and consummate any and all of the documents or transactions
contemplated by the Second Reorganization Plan or this Confirmation Order,
without further order of the Court, further corporate action or further action
by (or vote of) directors, partners or stockholders of Covanta, the Debtors,
Reorganizing Debtors or Reorganized Debtors, including, without limitation, the
(i) consummation of the sale of the equity to the Plan Sponsor pursuant to and
in accordance with the terms and conditions of the Investment and Purchase
Agreement or the related transactions in connection therewith; (ii) negotiation,
execution and delivery of the Exit Financing Agreements and the Covanta
Unsecured Subordinated Notes Indenture and such other and further documents as
may be necessary or appropriate in connection therewith; (iii) issue for
distribution or reserve for issuance in accordance with the terms of the Second
Reorganization Plan the Reorganization Plan Notes, (iv) performance of their
respective obligations and all further actions for ensuring their performance
under the Investment and Purchase Agreement, the Exit Financing Agreements, the
Covanta Unsecured Subordinated Notes Indenture, the Second Reorganization Plan
or this Confirmation Order; (v) issuance, execution, delivery, filing or
recording, as appropriate, the documents evidencing and consummating the
Investment and Purchase Agreement, the Exit Financing Agreements, the Covanta
Unsecured Subordinated Notes Indenture or the Second Reorganization Plan; (vi)
issuance, execution, delivery, filing or recording, as appropriate, such other
contracts, instruments, releases, indentures, mortgages, deeds, bills of sale,
assignments, leases, or other agreements or documents in connection with the
Investment and Purchase Agreement, the Exit Financing Agreements, the Covanta
Unsecured Subordinated Notes Indenture or the Second Reorganization Plan; (vii)
retention of professionals for purposes of consummating the Second
Reorganization Plan and the transactions contemplated therein and hereby; (viii)
cancellation of the Equity Interests in Covanta; and (ix) performance of such
other acts and execution and delivery of such other documents, as are consistent
with, and necessary or appropriate to implement, effectuate and consummate the
intent of the parties in entering into the Investment and Purchase Agreement,
the Exit Financing Agreements, the Covanta Unsecured Subordinated Notes
Indenture, the related agreements and Second Reorganization Plan, including
making any non-material modifications, amendments or corrections of those
agreements that may be required so that they more fully reflect such intent. The
secretary of each of the Debtors, Reorganizing Debtors or Reorganized Debtors
shall be, and hereby is, authorized to certify or attest to any of the foregoing
actions (but no such certification or attestation shall be required to make any
such action valid, binding, and enforceable). Without limiting the generality of
the foregoing, this Confirmation Order shall constitute all approvals and
consents, if any, required by the applicable state corporation laws, and all
other applicable business corporation, trust, and other laws of the applicable
governmental units with respect to the implementation and consummation of the
Investment and Purchase Agreement, the Second Reorganization Plan and this
Confirmation Order and the transactions contemplated thereby and hereby. Such
actions are approved in all respects and shall be deemed to have occurred and be
effective on the Effective Date. Following the Effective Date, each of the
contracts, instruments, releases, indentures, mortgages, deeds, bills of sale,
assignments, leases, or other agreements or documents entered into by the
Reorganizing Debtors or Reorganized Debtors in connection with the Second
Reorganization Plan shall be legal, valid and binding obligations of the
applicable Reorganized Debtor and enforceable against such Reorganized Debtor in
accordance with its terms.
26. Directors and Officers of Reorganized Debtors. The Court
approves the appointment of the initial directors of Reorganized Covanta and
Reorganized CPIH, as disclosed prior to the Confirmation Hearing in the
Directors and Officers Disclosure, as of and immediately following the Effective
Date. The existing members of the boards of directors of each of the other
Reorganizing Debtors shall continue to serve in their current capacities after
the Effective Date. The persons identified to serve as directors or officers
shall be deemed elected or appointed, as the case may be, and such elections or
appointments, as the case may be, shall be effective on or after the Effective
Date, without any requirement of further action by stockholders, other owners or
directors of the Reorganized Debtors.
27. Approval of Employment, Retirement, Indemnification, And
Other Related Agreements and Incentive Compensation Programs. Pursuant to
section 1142(b) of the Bankruptcy Code, without further action by the Court or
the stockholders or board of directors of Reorganized Covanta, and without
limiting the power of authority of the Reorganized Debtors following the
Effective Date to take any and all such actions as may be permitted or required
by applicable nonbankruptcy law, the Reorganized Debtors are authorized, as of
the Effective Date, to (a) maintain, amend, or revise existing employment
retirement, indemnification and other agreements with their respective active
directors, officers, and employees who will continue in such capacities (or
similar capacities) after the Effective Date, or retirement income plans,
welfare benefit plans, and other plans for such Persons, subject to the terms
and conditions of any such agreements, and subject to Section 6.11 of the Second
Reorganization Plan; (b) maintain the indemnification agreements with respect to
Specified Personnel in accordance with Section 9.7 of the Second Reorganization
Plan; and (c) enter into new employment, retirement, indemnification, and other
agreements for active directors, officers, and employees, and retirement income
plans, welfare benefits plans, and other plans for active and retired directors,
officers, and employees.
28. Surrender of Instruments. As a condition to receiving any
Distribution under the Second Reorganization Plan, each holder of an Allowed
Claim represented by a certificated instrument or note (other than holders of
Claims in Subclass 3A under the Second Reorganization Plan) must surrender such
instrument or note held by it to the applicable Reorganizing Debtor or its
designee, unless such certificated instrument or note is being reinstated or
being left unimpaired under the Second Reorganization Plan. Any entity that is
so required to surrender such instrument or note that fails to (i) surrender
such instrument or note or (ii) execute and deliver an affidavit of loss and/or
indemnity reasonably satisfactory to the applicable Reorganized Debtor or
furnish a bond in form, substance and amount reasonably satisfactory to the
applicable Reorganized Debtor before the first anniversary of the Effective
Date, and which upon demand by Reorganized Debtors fails to comply with (i) or
(ii) hereof, shall be deemed to have forfeited all rights and Claims and may not
participate in any Distribution under the Second Reorganization Plan in respect
of such Claim. Any other holder of an Allowed Claim who fails to take such
action as reasonably required by the Reorganized Debtors or their designee to
receive its Distribution hereunder before the first anniversary of the Effective
Date, or such earlier time as otherwise provided for in the Second
Reorganization Plan, may not participate in any Distribution under the Second
Reorganization Plan in respect of such Claim. Any Distribution forfeited
hereunder shall become property of the Reorganized Debtors.
29. Documentation and Disbursing Agent. Prior to the Effective
Date, the Reorganizing Debtors shall consult with the Agent Banks, the Committee
and the Bondholders Committee concerning (i) finalization of Plan related
documents and (ii) appropriate procedures to effectuate disbursements to
creditors pursuant to the Plan, including those disbursements made with respect
to the Exit Financing Agreements, and agreements with third party disbursing
agents, if any. Reorganized Covanta shall be authorized to act as Disbursing
Agent with respect to the Second Reorganization Plan or to retain any such other
Persons to assist it in such capacity in accordance with the provisions of
Section 7.3 of the Second Reorganization Plan. The Court hereby approves and
authorizes Reorganized Covanta to use and retain U.S. Bank, National Association
as Disbursing Agent with respect to distributions to holders of Allowed Class 6
Claims. Reorganized Covanta in its capacity as Disbursing Agent, or any Person
it may retain as Disbursing Agent to assist in such capacity, shall be empowered
and authorized (i) to effect all actions and execute all agreements, instruments
and other documents necessary to perform its duties under the Second
Reorganization Plan, (ii) to hold Distributions prior to the applicable
Distribution Date with respect thereto and to hold such Distributions in
accordance with the terms of any applicable agreement with respect thereto,
(iii) to make all Distributions contemplated pursuant to the Second
Reorganization Plan and in accordance with the terms thereof, (iv) to employ
professionals to represent it with respect to its responsibilities, and (v) to
exercise such other powers as may be vesting in the Disbursing Agent by order of
this Court, pursuant to the Second Reorganization Plan or pursuant to any other
agreement as may be entered into in connection with the implementation and
consummation of the Second Reorganization Plan or as deemed by the Disbursing
Agent to be necessary and proper to implement the provisions thereof.
30. Binding Effect. Except as otherwise provided in section
1141(d)(3) of the Bankruptcy Code, on and after the Confirmation Date, and
subject to the Effective Date, the provisions of the Second Reorganization Plan
shall bind all present and former holders of a Claim against, or Equity Interest
in, the applicable Reorganizing Debtor and its respective successors, affiliates
and assigns, whether or not the Claim or Equity Interest of such holder is
Impaired under the Second Reorganization Plan and whether or not such holder has
filed a Proof of Claim or Equity Interest or accepted the Second Reorganization
Plan. The holders of Liens satisfied, discharged and released under the Second
Reorganization Plan shall execute any and all documentation reasonably requested
by the Debtors or the Reorganized Debtors evidencing the satisfaction, discharge
and release of such Liens and such Liens shall be deemed satisfied, discharged
and released by operation of this Confirmation Order.
31. Filing and Recording. This Confirmation Order (a) is and
shall be effective as a determination that, on the Effective Date, all Claims
and Equity Interests existing prior to such date have been unconditionally
released, discharged and terminated in accordance with paragraph 7 of this
Confirmation Order, (b) is and shall be effective as evidence of the release and
cancellation of the security interests, liens and encumbrances in property of
the Reorganizing Debtors in accordance with paragraph 7 of this Confirmation
Order, and (c) is and shall be binding upon and shall govern the acts of all
entities including, without limitation, all filing agents, filing officers,
title agents, title companies, recorders of mortgages, recorders of deeds,
registrars of deeds, administrative agencies, governmental departments,
secretaries of state, federal, state and local officials, and all other persons
and entities who may be required, by operation of law, the duties of their
office, or contract, to accept, file, register or otherwise record or release
any document or instruments, or who may be required to report or insure any
title or state of title in or with respect to the property of the Reorganizing
Debtors or Reorganized Debtors with respect to the Exit Financing Agreements or
the Investment and Purchase Agreement. Each and every federal, state and local
government agency is hereby directed to accept any and all documents and
instruments necessary, useful or appropriate (including Uniform Commercial Code
financing statements) to effectuate, implement and consummate the transactions
contemplated by the Reorganization Plan and this Confirmation Order without
payment of any recording tax, stamp tax, transfer tax or similar tax imposed by
state or local law.
32. Corporate Existence and Revesting of Assets. Each of the
Reorganizing Debtors shall, as a Reorganized Debtor, continue to exist after the
Effective Date as a separate legal entity, with all powers of a corporation,
limited liability company or general or limited partnership, as the case may be,
under the laws of their respective states of incorporation or organization and
without prejudice to any right to alter or terminate such existence (whether by
merger or otherwise) under such applicable state law. The Reorganized Debtors
shall be revested with their assets as provided in the Second Reorganization
Plan, subject to the Liens and Security Interests established pursuant to the
Exit Financing Agreements and otherwise as permitted thereunder. Each
Reorganized Debtor may operate its business and may use, acquire and dispose of
property free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules
and in all respects as if there were no pending cases under any chapter or
provision of the Bankruptcy Code, except as provided herein.
33. No Post-Confirmation Amendment or Filing of Claims. A
Claim may not be filed or amended after the Confirmation Date without the prior
authorization of the Court and, even with such Court authorization may be
amended by the holder of such Claim solely to decrease, but not to increase, the
amount or priority of the Claim. Except as otherwise permitted herein or in the
Second Reorganization Plan, a Claim filed or amended after the Confirmation Date
shall be deemed disallowed in full and expunged without any action by the
Debtors, Reorganizing Debtors or the Reorganized Debtors.
34. Injunction. Except as otherwise specifically provided in
the Second Reorganization Plan and except as may be necessary to enforce or
remedy a breach of the Plan, the Debtors, and all Persons who have held, hold or
may hold Claims or Equity Interests and any successors, assigns or
representatives of the foregoing shall be precluded and permanently enjoined on
and after the Effective Date from: (a) commencing or continuing in any manner
any Claim, action or other proceeding of any kind with respect to any Claim,
Equity Interest or any other right or Claim against any Reorganized Debtor,
which they possessed or may possess prior to the Effective Date, (b) the
enforcement, attachment, collection or recovery by any manner or means of any
judgment, award, decree or order with respect to any Claim, Equity Interest or
any other right or Claim against any Reorganized Debtor, which they possessed or
may possess prior to the Effective Date, (c) creating, perfecting or enforcing
any encumbrance of any kind with respect to any Claim, Equity Interest or any
other right or Claim against any Reorganized Debtor, which they possessed or may
possess prior to the Effective Date, and (d) asserting any Claims against any
Reorganized Debtors that are hereby released.
35. Exculpation. (a) Notwithstanding anything herein or the
Second Reorganization Plan to the contrary, as of the Effective Date, none of
(i) the Reorganizing Debtors, Reorganized Debtors, the Non-Debtor Affiliates or
their respective officers, directors and employees, (ii) the Specified
Personnel, (iii) the Committee and any subcommittee thereof, (iv) the Agent
Banks, the DIP Agents, the steering committee for the holders of the Secured
Bank Claims, the Bondholders Committee and the Indenture Trustee, (v) the
accountants, financial advisors, investment bankers, and attorneys for the
Reorganizing Debtors or Reorganized Debtors, (vi) the Plan Sponsor, (vii) the
Investors and (viii) the directors, officers, employees, partners, members,
agents, representatives, accountants, financial advisors, investment bankers,
attorneys or affiliates for any of the persons or entities described in (i),
(iii), (iv), (v), (vi) or (vii) of this paragraph 35 of this Confirmation Order
shall have or incur any liability to any holder of a Claim or an Equity
Interest, or any other party in interest, or any of their respective agents,
employees, representatives, financial advisors, attorneys, or affiliates, or any
of their successors or assigns, for any act or omission in connection with,
relating to, or arising out of the commencement or conduct of the Chapter 11
Cases; the liquidations of the Liquidating Debtors; formulating, negotiating or
implementing the Second Reorganization Plan and the Heber Reorganization Plan;
formulating, negotiating, consummating or implementing the Investment and
Purchase Agreement (except, with respect to the Plan Sponsor and the Investors,
as explicitly provided pursuant to the Investment and Purchase Agreement);
formulating, negotiating, consummating or implementing the Geothermal Sale under
the Heber Reorganization Plan; the solicitation of acceptances of the Second
Reorganization Plan and the Heber Reorganization Plan; the pursuit of
confirmation of the Second Reorganization Plan and the Heber Reorganization
Plan; the confirmation, consummation or administration of the Second
Reorganization Plan and the Heber Reorganization Plan or the property to be
distributed under the Second Reorganization Plan and the Heber Reorganization
Plan, except for their gross negligence or willful misconduct, and in all
respects shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under the Second Reorganization Plan. Nothing
in this paragraph 35 shall limit the liability or obligation of an issuer of a
letter of credit to the beneficiary of such letter of credit or obligations of
the Plan Sponsor under the Investment and Purchase Agreement.
(b) Notwithstanding any other provision of the Second Reorganization
Plan or of this Confirmation Order, no holder of a Claim or Equity Interest, no
other party in interest, none of their respective agents, employees,
representatives, financial advisors, attorneys, or affiliates, and no successors
or assigns of the foregoing, shall have any right of action against any Debtor,
Reorganizing Debtor, Reorganized Debtor, Liquidating Debtor, Heber Debtor,
Specified Personnel, the Creditors' Committee and any subcommittee thereof, the
Agent Banks, the DIP Agents and the steering committee for the holders of the
Secured Bank Claims, the Bondholders Committee, the Indenture Trustee, the Plan
Sponsor, the Investors, nor any statutory committee, nor any of the respective
present or former members, officers, directors, employees, advisors or attorneys
or any of the foregoing, for any or omission in the connection with, related to,
or arising out of, the Chapter 11 Cases, formulating, negotiating, consummating
or implementing this Second Reorganization Plan, formulating, negotiating,
consummating or implementing the Investment and Purchase Agreement (except, with
respect to the Plan Sponsor and the Investors, as explicitly provided pursuant
to the Investment and Purchase Agreement), solicitation of acceptances of the
Second Reorganization Plan, the pursuit of confirmation of the Second
Reorganization Plan, the confirmation, consummation or administration of the
Second Reorganization Plan or the property to be distributed thereunder, except
for gross negligence or willful misconduct.
(c) Nothing in this Confirmation Order or any other provision of the
Second Reorganization Plan shall (i) be construed to exculpate any entity from
liability with respect to an act or omission to the extent that such act or
omission is determined by a Final Order to have constituted fraud, gross
negligence, willful misconduct, criminal conduct or misuse of confidential
information that causes damages, or (ii) to the extent applicable, limit the
liability of the professionals representing the Debtors, the Reorganized
Debtors, the Creditors' Committee, the Bondholders Committee, the Indenture
Trustee or the Agent Banks to their respective clients pursuant to DR 6-102 of
the New York Code of Professional Responsibility.
36. Release. As of the Effective Date, the Reorganizing
Debtors or Reorganized Debtors, on behalf of themselves and their Estates, shall
be deemed to release unconditionally all claims, obligations, suits, judgments,
damages, rights, causes of action, and liabilities whatsoever, against each of
the Released Parties, in each case whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, in law, equity or otherwise, based in
whole or in part upon actions taken with respect to any omission, transaction,
event, or other occurrence taking place on or prior to the Effective Date in any
way relating to the Reorganizing Debtors, the Liquidating Debtors, the Heber
Debtors, and the Plan Sponsor, the Investors, the Chapter 11 Cases, the Heber
Reorganization Plan, the Liquidation Plan, the Investment and Purchase Agreement
or the Second Reorganization Plan; provided that, the release granted pursuant
to this Confirmation Order shall in no way effect or release the Claims arising
prior to the respective Petition Dates, if any, of holders of the Debtors'
public securities against parties other than the Reorganizing Debtors; and
further provided that nothing in this Confirmation Order shall effect a release
in favor of any Person other than the Reorganizing Debtors with respect to any
debt owed to the United States Government or any regulatory agency thereof, any
state, city or municipality for any liability of such Person arising under (i)
the Internal Revenue Code, or any state, city or municipal tax code, (ii) the
environmental laws of the United States, any state, city or municipality, (iii)
any criminal laws of the United States, any state, city or municipality, or (iv)
any liability arising under federal securities laws; and further provided that,
with respect to the Plan Sponsor and the Investors, nothing herein shall release
the Plan Sponsor or the Investors with respect to obligations pursuant to their
contractual obligations under the Investment and Purchase Agreement and the
documents executed in connection therewith or as specifically provided pursuant
to the Second Reorganization Plan or this Confirmation Order; and further
provided that, with respect to any party to the Exit Financing Agreements,
nothing herein shall release any such parties with respect to obligations
pursuant to their contractual obligations, if any, under the Exit Financing
Agreements or as otherwise provided pursuant to the Second Reorganization Plan.
37. Automatic Stay. The stay in effect in the Chapter 11 Cases
pursuant to section 362(a) of the Bankruptcy Code shall continue to be in effect
until the Effective Date, and at that time shall be dissolved and of no further
force or effect, subject to the injunction set forth in the preceding paragraph
of this Order and/or sections 525 and 1141 of the Bankruptcy Code; provided,
however, that nothing herein shall bar the filing of financing documents
(including uniform commercial code financing statements, security agreements,
leases, mortgages, trust agreements and bills of sale) or taking of such other
actions as are necessary to effectuate the transactions contemplated by the Exit
Financing Agreements, the Covanta Unsecured Subordinated Notes Indenture , the
consummation of the Second Reorganization Plan or by this Confirmation Order
prior to the Effective Date.
38. Payment of Fees. As set forth in Section 13.4 of the
Second Reorganization Plan, all fees payable pursuant to section 1930 of Title
28 of the United States Code shall be paid by the Reorganized Debtors.
39. Payments for Services. On the Effective Date, the
Reorganizing Debtors shall pay all costs and expenses incurred in connection
with the Second Reorganization Plan, including, without limitation, fees and
expenses payable to the Plan Sponsor pursuant to Section 3.3(c) of the
Investment and Purchase Agreement, the Restructuring Fee payable to Chilmark
pursuant to the Chilmark Agreement, as modified by the Chilmark Retention Order
and the Confirmation Fee payable to Jefferies in accordance with the DIP Order.
40. Retention of Jurisdiction. Notwithstanding confirmation of
the Second Reorganization Plan or occurrence of the Effective Date, this Court
shall retain such jurisdiction as is legally permissible.
41. Modification of Second Reorganization Plan. Subject to
Section 13.4 of the Second Reorganization Plan, after the entry of this
Confirmation Order, the Reorganized Debtors may, upon due notice and order of
the Court (to the extent required), amend or modify the Second Reorganization
Plan in accordance with section 1127(b) of the Bankruptcy Code, or remedy any
defect or omission or reconcile any inconsistency in the Second Reorganization
Plan or the Investment and Purchase Agreement, as applicable, without prejudice
to the Plan Sponsor's rights under the Investment and Purchase Agreement, in
such manner as may be necessary to carry out the purpose and intent of the
Second Reorganization Plan. A holder of an Allowed Claim or Allowed Equity
Interest that has accepted or is deemed to have accepted the Second
Reorganization Plan shall be deemed to have accepted the Second Reorganization
Plan as modified if the proposed modification does not materially and adversely
change the treatment of the Claim or Equity Interest of such holder.
42. Severability. The Confirmation Order will constitute a
judicial interpretation that each term and provision of the Second
Reorganization Plan, as it may have been altered or interpreted in accordance
with the forgoing, is valid and enforceable pursuant to its terms.
43. Exemption from Securities Laws. The issuance or transfer
of any securities pursuant to the Second Reorganization Plan shall be exempt
from any securities laws registration requirements to the fullest extent
permitted by section 1145(a)(1)(A) of the Bankruptcy Code and section (3)(a)(7)
of the Securities Act of 1933.
44. Exemptions from Taxation. Pursuant to section 1146(c) of
the Bankruptcy Code, the Reorganizing Debtors and the Reorganized Debtors shall
not be subject to any document recording tax, stamp tax, conveyance fee,
intangibles or similar tax, mortgage tax, real estate transfer tax, documentary
transfer tax, mortgage recording tax or other similar tax or governmental
assessment, and the appropriate state and local governmental officials or
agents, shall be, and hereby are, ordered and directed to forego the collection
of any such tax or governmental assessment and to accept for filing and
recordation any of the foregoing instruments or other documents without the
payment of any such tax or governmental assessment.
45. Separate Confirmation Orders. This Confirmation Order is
and shall be deemed a separate Confirmation Order with respect to each of the
Reorganizing Debtors in each such Reorganizing Debtors' separate Chapter 11 Case
for all purposes. The Clerk of the Court is directed to file and docket this
Confirmation Order in the Chapter 11 Case of each of the Reorganizing Debtors.
46. References to Second Reorganization Plan Provisions. The
failure specifically to include or reference any particular provision of the
Second Reorganization Plan in this Confirmation Order shall not diminish or
impair the effectiveness of such provision, it being the intent of the Court
that the Second Reorganization Plan be confirmed in its entirety.
47. Confirmation Order Controlling. If there is any direct
conflict between the Second Reorganization Plan and this Confirmation Order, the
terms of this Confirmation Order shall control.
48. Reversal. If any or all of the provisions of this
Confirmation Order are hereafter reversed, modified or vacated by subsequent
order of this Court or any other court, such reversal, modification or vacatur
shall not affect the validity or enforceability of the acts or obligations
incurred or undertaken under or in connection with the Second Reorganization
Plan prior to the Reorganized Debtors' receipt of written notice of such order.
Notwithstanding any such reversal, modification or vacatur of this Confirmation
Order, any such act or obligation incurred or undertaken pursuant to, and in
reliance on, this Confirmation Order prior to the effective date of such
reversal, modification or vacatur shall be governed in all respects by the
provisions of this Confirmation Order and the Second Reorganization Plan and all
related documents or any amendments or modifications thereto.
49. No Stay of Confirmation Order. Pursuant to Bankruptcy Rule
3020(e), this Confirmation Order shall not be stayed and shall be effective upon
entry on the docket of this Court. Subject to the provisions of Sections 10.1,
10.2 and 10.3 of the Second Reorganization Plan, and notwithstanding any
otherwise applicable law, immediately upon the entry of this Confirmation Order,
the terms of the Second Reorganization Plan (including the Plan Exhibits and all
documents and agreements executed pursuant to the Plan) and this Confirmation
Order are deemed binding upon (a) the Debtors, (b) the Reorganized Debtors, (c)
all holders of Claims against and Equity Interests in the Debtors, whether or
not Impaired under the Second Reorganization Plan and whether or not, if
Impaired, such holders accepted the Plan, (d) the Plan Sponsor, (e) any other
party in interest, (f) any other Person making an appearance in the Chapter 11
Cases, and (g) each of the foregoing's respective heirs, successors, assigns,
trustees, executors, administrators, affiliates, officers, directors, agents,
representatives, attorneys, beneficiaries, or guardians.
50. Applicable Non-Bankruptcy Law. To the extent provided in
sections 1123(a) and 1142(a) of the Bankruptcy Code, the provisions of this
Confirmation Order, the Second Reorganization Plan or any amendments or
modifications thereto shall apply and be enforceable notwithstanding any
otherwise applicable nonbankruptcy law.
51. Post-Confirmation Notices. Covanta shall serve notice of
entry of this Confirmation Order pursuant to Bankruptcy Rules 2002(f)(7),
2002(k) and 3020(c) to all creditors, indenture trustees and equity security
holders of the Reorganizing Debtors as of the Voting Record Date (as defined in
the Second Disclosure Statement) no later than ten (10) Business Days after the
Confirmation Date.
52. Tax Reports of Commonwealth of Pennsylvania, Department of
Revenue. On or before sixty (60) days after the Effective Date, any Reorganizing
Debtors against whom the Commonwealth of Pennsylvania, Department of Revenue
("Pennsylvania"), has alleged a claim shall provide Pennsylvania with all tax
reports required by law to have been submitted to Pennsylvania prior to the
Effective Date in connection with the Priority Tax Claims of Pennsylvania, to
the extent the Reorganizing Debtors have not yet submitted such tax reports to
Pennsylvania.
53. If the Effective Date does not occur by June 15, 2004,
this Confirmation Order shall be deemed vacated and of no force and effect,
unless extended by order of the Court and in accordance with the terms of the
Investment and Purchase Agreement.
Dated: New York, New York
March __, 2004
UNITED STATES BANKRUPTCY JUDGE
EXHIBIT A TO CONFIRMATION ORDER
LIST OF REORGANIZING DEBTORS
Reorganizing Debtor Case Number
------------------- -----------
Covanta Acquisition, Inc. 02-40861 (CB)
Covanta Alexandria/Arlington, Inc. 02-40929 (CB)
Covanta Babylon, Inc. 02-40928 (CB)
Covanta Bessemer, Inc. 02-40862 (CB)
Covanta Bristol, Inc. 02-40930 (CB)
Covanta Cunningham Environmental Support, Inc. 02-40863 (CB)
Covanta Energy Americas, Inc. 02-40881 (CB)
Covanta Energy Construction, Inc. 02-40870 (CB)
Covanta Energy Corporation 02-40841 (CB)
Covanta Energy Group, Inc. 03-13707 (CB)
Covanta Energy International, Inc. 03-13706 (CB)
Covanta Energy Resource Corp. 02-40915 (CB)
Covanta Energy Services, Inc. 02-40899 (CB)
Covanta Energy West, Inc. 02-40871 (CB)
Covanta Engineering Services, Inc. 02-40898 (CB)
Covanta Fairfax, Inc. 02-40931 (CB)
Covanta Geothermal Operations Holdings, Inc. 02-40873 (CB)
Covanta Geothermal Operations, Inc. 02-40872 (CB)
Covanta Heber Field Energy, Inc. 02-40893 (CB)
Covanta Hennepin Energy Resource Co., L.P. 02-40906 (CB)
Covanta Hillsborough, Inc. 02-40932 (CB)
Covanta Honolulu Resource Recovery Venture 02-40905 (CB)
Covanta Huntington Limited Partnership 02-40916 (CB)
Covanta Huntington Resource Recovery One Corp. 02-40919 (CB)
Covanta Huntington Resource Recovery Seven Corp. 02-40920 (CB)
Covanta Huntsville, Inc. 02-40933 (CB)
Covanta Hydro Energy, Inc. 02-40894 (CB)
Covanta Hydro Operations West, Inc. 02-40875 (CB)
Covanta Hydro Operations, Inc. 02-40874 (CB)
Covanta Imperial Power Services, Inc. 02-40876 (CB)
Covanta Indianapolis, Inc. 02-40934 (CB)
Covanta Kent, Inc. 02-40935 (CB)
Covanta Lancaster, Inc. 02-40937 (CB)
Covanta Lee, Inc. 02-40938 (CB)
Covanta Long Island, Inc. 02-40917 (CB)
Covanta Marion Land Corp. 02-40940 (CB)
Covanta Marion, Inc. 02-40939 (CB)
Covanta Mid-Conn, Inc. 02-40911 (CB)
Covanta Montgomery, Inc. 02-40941 (CB)
Covanta New Martinsville Hydro-Operations Corp. 02-40877 (CB)
Covanta Oahu Waste Energy Recovery, Inc. 02-40912 (CB)
Covanta Onondaga Five Corp. 02-40926 (CB)
Covanta Onondaga Four Corp. 02-40925 (CB)
Covanta Onondaga Limited Partnership 02-40921 (CB)
Covanta Onondaga Operations, Inc. 02-40927 (CB)
Covanta Onondaga Three Corp. 02-40924 (CB)
Covanta Onondaga Two Corp. 02-40923 (CB)
Covanta Onondaga, Inc. 02-40922 (CB)
Covanta Operations of Union, LLC 02-40909 (CB)
Covanta OPW Associates, Inc. 02-40908 (CB)
Covanta OPWH, Inc. 02-40907 (CB)
Covanta Pasco, Inc. 02-40943 (CB)
Covanta Plant Services of New Jersey, Inc. 02-40900 (CB)
Covanta Power Development of Bolivia, Inc. 02-40856 (CB)
Covanta Power Development, Inc. 02-40855 (CB)
Covanta Power Equity Corp. 02-40895 (CB)
Covanta Power International Holdings, Inc. 03-13708 (CB)
Covanta Projects, Inc. 03-13709 (CB)
Covanta Projects of Hawaii, Inc. 02-40913 (CB)
Covanta Projects of Wallingford, L.P. 02-40903 (CB)
Covanta RRS Holdings, Inc. 02-40910 (CB)
Covanta Secure Services, Inc. 02-40901 (CB)
Covanta SIGC Geothermal Operations, Inc. 02-40883 (CB)
Covanta Stanislaus, Inc. 02-40944 (CB)
Covanta Systems, Inc. 02-40948 (CB)
Covanta Union, Inc. 02-40946 (CB)
Covanta Wallingford Associates, Inc. 02-40914 (CB)
Covanta Waste to Energy of Italy, Inc. 02-40902 (CB)
Covanta Waste to Energy, Inc. 02-40949 (CB)
Covanta Water Holdings, Inc. 02-40866 (CB)
Covanta Water Systems, Inc. 02-40867 (CB)
Covanta Water Treatment Services, Inc. 02-40868 (CB)
DSS Environmental, Inc. 02-40869 (CB)
ERC Energy II, Inc. 02-40890 (CB)
ERC Energy, Inc. 02-40891 (CB)
Heber Field Energy II, Inc. 02-40892 (CB)
Heber Loan Partners 02-40889 (CB)
OPI Quezon, Inc. 02-40860 (CB)
Three Mountain Operations, Inc. 02-40879 (CB)
Three Mountain Power, LLC 02-40880 (CB)