FIRST AMENDMENT

    

FIRST AMENDMENT, dated as of March 12, 2013 (this “Amendment”), to the CREDIT AND GUARANTY AGREEMENT, dated as of March 28, 2012 (as further amended, restated, supplemented or otherwise modified from time to time heretofore, the “Existing Credit Agreement” and as amended by this Amendment, the “Amended Credit Agreement”) by and among COVANTA ENERGY CORPORATION, a Delaware corporation (the “Company”), COVANTA HOLDING CORPORATION, a Delaware corporation (“Holding”), certain Subsidiaries of Company, as guarantors, the Lenders party thereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent and Issuing Bank (the “Administrative Agent”), MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent and BARCLAYS BANK PLC, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK and JPMORGAN CHASE BANK, N.A., as Co-Documentation Agents.

WHEREAS, the Company and Holding have requested that the Existing Credit Agreement be amended in the manner provided for herein; and

WHEREAS, (a) existing Term Lenders which consent to this Amendment (the “Consenting Term Lenders”) shall have the pricing of their Term Loans adjusted on the 2013 Repricing Date in accordance with this Amendment; (b) existing Term Lenders which do not consent to this Amendment (the “Non-Consenting Term Lenders”) shall have their Term Loans assigned to certain Persons (the “New Lenders”) on the 2013 Repricing Date in accordance with Section 2.23 of the Amended Credit Agreement and such New Lenders shall become Lenders under the Amended Credit Agreement and hold a portion of the Term Loans and (c) the consent of the Requisite Lenders is required pursuant to Section 2.23 of the Existing Credit Agreement to effectuate the assignment contemplated by the preceding clause (b);

NOW, THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Amended Credit Agreement and used herein shall have the meanings given to them in the Amended Credit Agreement.

SECTION 2. Amendments.

(a)Section 1.1 of the Existing Credit Agreement is hereby amended by adding the following definition in proper alphabetical order:

“2013 Repricing Date” as defined in the Amendment Agreement No. 1.

“Amendment Agreement No. 1” means that certain Amendment to this Agreement, dated as of March 12, 2013, by and among Holdings, the Company, each Guarantor Subsidiary, the Administrative Agent and the other parties thereto.

(b)Section 1.1 of the Existing Credit Agreement is hereby amended by deleting clause (ii) of the definition of “Applicable Margin” contained therein in its entirety and replacing it with the following:

(ii) with respect to the Term Loans 2.75% per annum for Eurodollar Rate Loans and 1.75% per annum for Base Rate Loans.

(c)Section 1.1 of the Existing Credit Agreement is hereby amended by deleting the proviso at the end of the definition of “Eurodollar Rate” and replacing it with the following:

provided that solely in the case of the Term Loans, the Eurodollar Rate shall be no less than 0.75% per annum at any time.

(d)Section 1.1 of the Existing Credit Agreement is hereby amended by deleting the word “(i)” and clause (ii) of the definition of “Pricing Grid” and deleting the last paragraph therein and replacing it with the following:

At any time Company has not submitted to Administrative Agent the applicable information as and when required under Section 5.1(c)(i), the Applicable Margin for the Revolving Loans or Swing Line Loans, as applicable, shall be determined as if the Leverage Ratio were in excess of 3.25:1:00 until such time as each failure is cured. Within one (1) Business Day of receipt of the applicable information under Section 5.1(c)(i), Administrative Agent shall give each Lender electronic, telefacsimile or telephonic notice (confirmed in writing) of the Applicable Margin in effect from such date.

(e)Section 2.11(f) of the Existing Credit Agreement is hereby amended by deleting the proviso at the end of the second sentence and replace it with the following:

provided that Company shall be subject to the requirements of this Section 2.11(f) only until (but including) the date that is six months following the 2013 Repricing Date.

SECTION 3. Conditions to Effectiveness. This Amendment (other than the amendments to be effectuated pursuant to Section 2 of this Amendment) shall become effective on the date that each of the following conditions shall have been satisfied (or waived by the Requisite Lenders):

(a)the Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of (i) Holding, the Company and each of its Guarantor Subsidiaries, as applicable and (ii) the Requisite Lenders and all Consenting Term Lenders and acknowledged by the Administrative Agent; and

(b)the Administrative Agent shall have received the Acknowledgement and Confirmation, substantially in the form of Exhibit A hereto, executed and delivered by an authorized officer of Holding, the Company and each of its Guarantor Subsidiaries, as applicable.

SECTION 4. Conditions to Effectiveness of Section 2. Section 2 of this Amendment shall become effective on the date (the “2013 Repricing Date”) occurring on or after March 29, 2013 that each of the following conditions shall have been satisfied (or waived by the Requisite Lenders):

(a)each New Lender has become a party to the Credit Agreement and this Amendment;

(b)the Administrative Agent shall have received from the Company payment of all fees and expenses required to be paid to the Administrative Agent on or before the 2013 Repricing Date; and

(c)immediately before and after giving effect to Section 2 of this Amendment, each of the representations and warranties made by the Credit Parties and set forth in each Credit Document shall be true and correct in all material respects with the same effect as if made on the 2013 Repricing Date (unless stated to relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date), in each case other than representations and warranties which are subject to a materiality qualifier, in which case such representations and warranties shall be (or shall have been) true and correct; and

(d)no Default or Event of Default shall have occurred and be continuing, or would result from the effectiveness of this Amendment on the 2013 Repricing Date.

SECTION 5. New Lenders. Each New Lender, the Administrative Agent and each Credit Party acknowledges and agrees that on the 2013 Repricing Date, upon the execution and delivery of an Assignment Agreement by each New Lender, it (i) shall become a “Lender” under, and for all purposes of, the Amended Credit Agreement and the other Credit Documents with a Term Loan in an amount as set forth on its signature page to this Amendment, (ii) shall be subject to and bound by the terms thereof and (iii) shall perform all the obligations of and shall have all rights of a Lender thereunder. Each Non-Consenting Term Lender which does not execute such Assignment Agreement shall be deemed to have executed and delivered to such Assignment Agreement in accordance with Section 2.23 of the Amended Credit Agreement.

SECTION 6. No Other Amendment or Waivers; Confirmation. Except as expressly provided hereby, all of the terms and provisions of the Existing Credit Agreement and the other Credit Documents are and shall remain in full force and effect. The amendments contained herein shall not be construed as an amendment of any other provision of the Existing Credit Agreement or the other Credit Documents or for any purpose except as expressly set forth herein or a consent to any further or future action on the part of any Credit Party that would require the waiver or consent of the Administrative Agent or the Lenders. This Amendment shall constitute a Credit Document for purposes of the Amended Credit Agreement and from and after the 2013 Repricing Date, all references to the Credit Agreement in any Credit Document and all references to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement in the Amended Credit Agreement shall, unless expressly provided otherwise, refer to the Amended Credit Agreement.

SECTION 7. APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTION 10.17 OF THE EXISTING CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN.

SECTOIN 8. Miscellaneous. (a) This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including permitted assignees of its Loans in whole or in part prior to effectiveness hereof).

SECTION 9. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

By:_/s/ Bradford J. Helgeson__________

Name: Bradford J. Helgeson

Title: Vice President & Treasurer

By:_/s/ Bradford J. Helgeson__________

Name: Bradford J. Helgeson

Title: Vice President & Treasurer

BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and Issuing Bank

By:_/s/ Maria F. Maia_________________

Name: Maria F. Maia

Title: Managing Director

1.    Reference is made to (i) the First Amendment, dated as of March [_], 2013 (the “First Amendment”) and (ii) the CREDIT AND GUARANTY AGREEMENT, dated as of March 28, 2012 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”) by and among COVANTA ENERGY CORPORATION, a Delaware corporation (the “Company”), COVANTA HOLDING CORPORATION, A Delaware corporation (“Holding”), certain subsidiaries of Company, as guarantors, the Lenders party thereto from time to time, each lender from time to time party thereto (the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent and Issuing Bank (the “Administrative Agent”), MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent and BARCLAYS BANK PLC, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK and JPMORGAN CHASE BANK, N.A., as Co-Documentation Agents.

2.    The Existing Credit Agreement is being amended pursuant to the First Amendment. Each of the parties hereto hereby agrees, with respect to each Credit Document to which it is a party:

(a)    all of its obligations, liabilities and indebtedness under such Credit Document shall remain in full force and effect on a continuous basis after giving effect to the First Amendment; and

(b)    all of the Liens and security interests created and arising under such Credit Documents remain in full force and effect on a continuous basis, and the perfected status and priority of each such Lien and security interest continues in full force and effect on a continuous basis, unimpaired, uninterrupted and undischarged, after giving effect to the First Amendment, as collateral security for its obligations, liabilities and indebtedness under the Existing Credit Agreement and under its guarantees in the Credit Documents.

3.    THIS ACKNOWLEDGMENT AND CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

4.    This Acknowledgment and Confirmation may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single document. Delivery of an executed counterpart of a signature page of this Acknowledgment and Confirmation by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Acknowledgment and Confirmation.

IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgement and Confirmation to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

By:______________________________

Name:

Title:

By:______________________________

Name:

Title: