Exhibit 10.1
COVANTA HOLDING CORPORATION
GROWTH EQUITY AWARD AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of ____________, 20__
(the Grant Date) by and between Covanta Holding Corporation, a Delaware corporation (the Company), and
___________________________
(the Employee), pursuant to the Covanta Holding Corporation Equity Award
Plan for Employees and Officers (the Plan). This Agreement and the award contained herein is
subject to the terms and conditions set forth in the Plan, which are incorporated by reference
herein, and the following terms and conditions:
WITNESSETH:
WHEREAS, Employee is an employee of the Company or its Affiliates or Subsidiaries;
WHEREAS, the Company has adopted the Plan in order to promote the interests of the Company and
its stockholders by using equity interests in the Company to attract, retain and motivate its
management and other eligible persons and to encourage and reward their contributions to the
Companys and/or its Affiliates and Subsidiaries performance and profitability;
WHEREAS, the Compensation Committee of the Board (the Compensation Committee) has determined
that it is in the best interests of the Company to grant Restricted Stock (as defined herein) under
the Plan to Employee pursuant to the terms and conditions set forth in this Agreement; and
WHEREAS, the Employee is entrusted with knowledge of the confidential and proprietary
information and particular business methods of the Company, Covanta Energy Corporation and their
respective Subsidiaries and Affiliates (Covanta Group) and the clients of the Covanta Group, and
the Employee is trained and instructed in the Covanta Groups particular operations, all of which
is exceptionally valuable to the Covanta Group and vital to the success of the Covanta Groups
business.
NOW, THEREFORE, in consideration of the various covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1.
Award of Restricted Stock Units
.
(a)
Award
. In consideration for Employees efforts in connection with the execution
of the Companys growth-based acquisition or development projects identified on
Schedule A
hereto and as part of the Plan, the Company hereby awards to the Employee, subject to the further
terms and conditions set forth in this Agreement, ____________
restricted stock units (the
Restricted Stock Units), as of the Grant Date.
(b)
Projected Net Present Value
. As of the Grant Date, the Compensation Committee
shall calculate the projected net present value of the growth-based projects forming the basis for
such award of Restricted Stock Units (Projected NPV). The Projected NPV shall be determined by
the Compensation Committee, in its sole discretion, based upon the projected discounted cash flows
of the growth-based projects less the Companys cost of capital applicable
to such growth-based projects. The Compensation Committee, in its sole discretion, will
determine any applicable assumptions or discount factors to be used in making the foregoing
determination of Projected NPV and there shall be no requirement that such assumptions be identical
for all growth-based projects within any period.
2.
No Rights of Stockholder
. Restricted Stock Units represent the Companys unfunded
and unsecured promise to issue shares of common stock of the Corporation, par value $0.10 per share
(Common Stock), at a future date subject to the terms of this Agreement. Employee has no rights
with respect to the Restricted Stock Units other than rights of a general creditor of the
Corporation. Except as set forth in Section 3 hereof, Employee shall not have any of the rights of
a stockholder with respect to unvested Restricted Stock Units.
3.
Dividend Equivalents
. Subject to the provisions of Section 5, in the event that
the Company declares a dividend on its Common Stock, the Company will hold in escrow an amount in
cash equal to the dividend that would have been paid on the Restricted Stock Units had they been
converted into the same number of shares of Common Stock and held by Employee on the record date of
such dividend. Upon adjustment and vesting of the Restricted Stock Units pursuant to Section 5
hereof, any cash payment with respect to vested Restricted Stock Units due to Employee pursuant to
this Section 3 shall be made within thirty (30) days following the Vesting Date.
4.
Restrictions on Transfer
. Except as otherwise provided in this Agreement, Employee
may not sell, transfer, assign, pledge, encumber or otherwise dispose of any of the Restricted
Stock Units or the rights granted hereunder (any such disposition or encumbrance being referred to
herein as a Transfer). Any Transfer or purported Transfer by Employee of any of the Restricted
Stock Units shall be null and void and the Company shall not recognize or give effect to such
Transfer on its books and records or recognize the person to whom such purported Transfer has been
made as the legal or beneficial holder of such Restricted Stock Units. The Restricted Stock Units
shall not be subject to sale, execution, pledge, attachment, encumbrance or other process and no
person shall be entitled to exercise any rights of Employee as the holder of such Restricted Stock
Units by virtue of any attempted execution, attachment or other process until the Restricted Stock
Units vest as provided in Section 5 hereof.
5.
Vesting of Restricted Stock Units
. Subject to Sections 5(b) and 5(c) hereof, the
Restricted Stock Units granted hereunder shall will vest in accordance with the terms of Section
5(a) hereof.
(a)
Restricted Stock Unit Vesting
. Subject to adjustment pursuant to Section 5(b)
hereof, the _________________
Restricted Stock Units awarded hereunder for the growth-based
acquisition or development projects identified on
Schedule A
hereto shall fully vest (1)
three years after the award relating to a growth-based acquisition project and (2) upon the later
of (i) three years after the award for a growth-based development project and (ii) one year
following commencement of commercial operations of a growth-based development project, as
determined by the Compensation Committee (Vesting Date).
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(b)
Net Present Value Adjustment
. The Compensation Committee shall determine the
validity of the Projected NPV determination made as of the date of this Agreement
by making a determination, as of the Vesting Date, of the net present value of the
growth-based projects forming the basis of this award of Restricted Stock Units (Bring-Down NPV).
The Bring-Down NPV shall be determined by the Compensation Committee in its sole discretion and
may, but shall not be required to, use the original assumptions and discount factors used to
determine the initial award. Notwithstanding anything to the contrary in Section 5(a), in the
event that the Bring-Down NPV is (i) greater than or equal to 95% of the Projected NPV, then all of
the Restricted Stock Units granted hereunder shall immediately vest, or (ii) less than 95%, then
the number of Restricted Stock Units that would otherwise vest pursuant to Section 5(a) shall be
proportionately reduced by multiplying the number of Restricted Stock Units originally granted
hereunder by a fraction equal to the Bring-Down NPV divided by the Projected NPV and such reduced
number of Restricted Stock Units shall immediately vest.
(c)
Termination of Employment.
Notwithstanding anything to the contrary in Sections
5(a) or (b), in the event that prior to the vesting of the Restricted Stock Units pursuant to
Section 5(a), Employees employment with all of the Covanta Group is voluntarily terminated by
Employee or terminated for Cause by the Company or its Affiliates or Subsidiaries, Employee shall
forfeit, on the date on which Employees employment is terminated, all unvested Restricted Stock
Units. In the event that prior to the vesting of the Restricted Stock Units pursuant to Section
5(a), Employees employment with all of the Covanta Group is terminated (i) without Cause by the
Company or its Affiliates or Subsidiaries, (ii) due to retirement at or after the age of 65 or
(iii) due to death or Disability (as defined in the Plan), then the Restricted Stock Units shall
continue to vest in accordance with Sections 5(a) and (b).
(d)
Change of Control
. Notwithstanding anything to the contrary in Section 5(a)
hereof, in the event of a Change in Control, the Restricted Stock Units shall immediately vest.
For purposes of this Agreement, a Change in Control shall mean the occurrence of any of the
following events, each of which shall be determined independently of the others: (i) any Person
(as hereinafter defined), other than a holder of at least 10% of the outstanding voting power of
the Company as of the date of this Agreement, becomes a beneficial owner (as such term is used in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act))
of a majority of the stock of the Company entitled to vote in the election of directors of the
Company; (ii) individuals who are Continuing Directors of the Company (as hereinafter defined)
cease to constitute a majority of the members of the Board; (iii) stockholders of the Company adopt
and consummate a plan of complete or substantial liquidation or an agreement providing for the
distribution of all or substantially all of the assets of the Company; (iv) the Company is a party
to a merger, consolidation, other form of business combination or a sale of all or substantially
all of its assets, with an unaffiliated third party, unless the business of the Company following
consummation of such merger, consolidation or other business combination is continued following any
such transaction by a resulting entity (which may be, but need not be, the Company) and the
stockholders of the Company immediately prior to such transaction hold, directly or indirectly, at
least a majority of the voting power of the resulting entity;
provided, however
, that a merger or
consolidation effected to implement a recapitalization of the Company (or similar transaction)
shall not constitute a Change in Control; (v) there is a Change in Control of the Company of a
nature that is reported in response to item 5.01 of Current Report on Form 8-K or any similar item,
schedule or form under the Exchange Act, as in effect at the time of the change, whether or not the
Company is then subject to such reporting requirements;
provided, however
, that for purposes of
this Agreement a Change in Control shall
not be deemed to occur if the Person or Persons deemed to have acquired control is a holder of
at least 10% of the outstanding voting power of the Company as of the date of this Agreement; or
(vi) the Company consummates a transaction which constitutes a Rule 13e-3 transaction (as such
term is defined in Rule 13e-3 of the Exchange Act) prior to the termination or expiration of this
Agreement.
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(e)
Rule 13e-3 Transactions
. In the event of a Rule 13e-3 transaction, then effective
coincident with the consummation of such Rule 13e-3 transaction, the restrictions on transfer
imposed by Section 3 on the shares of Common Stock after conversion of the Restricted Stock Units
shall lapse;
provided, however,
that notwithstanding the foregoing, in connection with the
consummation of such Change in Control or Rule 13e-3 transaction, all such unvested Restricted
Stock Units then held by Employee shall be deemed to vest at such time in order to permit Employee
to participate in such transaction.
(f)
Covanta Energy Corporation Reference
. In the event that Employee is an employee
of Covanta Energy Corporation or any of its subsidiaries or affiliates, then the references to the
Company in Section 5(d)(i), (iii), (iv), (v) and (vi) above shall also include, in the alternative,
Covanta Energy Corporation.
(g)
Section Definitions.
For purposes of this Section 5, Continuing Directors shall
mean the members of the Board on the date of execution of this Agreement, provided that any person
becoming a member of the Board subsequent to such date whose election or nomination for election
was supported by at least a majority of the directors who then comprised the Continuing Directors
shall be considered to be a Continuing Director; and the term Person is used as such term is used
in Sections 13(d) and 14(d) of the Exchange Act.
6.
Conversion of Restricted Stock Units into Common Stock upon Vesting
. On the
Conversion Date (as defined below), Restricted Stock Units shall be converted into an equivalent
number of shares of Common Stock that will be issued to Employee, or in the event of Employees
death, Employees beneficiary. Promptly after the Conversion Date, certificates representing such
shares of Common Stock shall be delivered to Employee. The Conversion Date shall be the date of
vesting as set forth in Section 5;
provided, however
, that if on the date of such vesting Employee
is prohibited from trading in the Companys securities pursuant to applicable securities laws
and/or the Companys policy on securities trading and disclosure of confidential information, the
Conversion Date shall be, in the determination of the Compensation Committee, the first date
Employee is no longer prohibited from such trading.
7.
Adjustment Provisions
. If, during the term of this Agreement, there shall be any
merger, reorganization, consolidation, recapitalization, stock dividend, stock split, rights
offering or extraordinary distribution with respect to the Common Stock, or other change in
corporate structure affecting the Common Stock, the Compensation Committee shall make or cause to
be made an appropriate and equitable substitution, adjustment or treatment with respect to the
Restricted Stock Units, including a substitution or adjustment in the aggregate number or kind of
shares subject to this Agreement, notwithstanding that the Restricted Stock Units are subject to
the restrictions on transfer imposed by Section 4 above. Any securities, awards or rights issued
pursuant to this Section 7 shall be subject to the same restrictions as the underlying Restricted
Stock Units to which they relate.
4
8.
Tax Withholding
. As a condition precedent to the receipt of any Restricted Stock
Units hereunder, Employee agrees to pay to the Company, at such times as the Company shall
determine, such amounts as the Company shall deem necessary to satisfy any withholding taxes due on
income that Employee recognizes pursuant to this award. The obligations of the Company under this
Agreement and the Plan shall be conditional on such payment or arrangements, and the Company, its
Affiliates and Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the Employee. In addition, Employee may elect, unless
otherwise determined by the Compensation Committee, to satisfy the withholding requirement by
having the Company withhold shares of Common Stock with a Fair Market Value, as of the date of such
withholding, sufficient to satisfy the withholding obligation.
9.
Registration
. This grant is subject to the condition that if at any time the Board
or Compensation Committee shall determine, in its discretion, that the listing of the shares of
Common Stock issuable upon vesting and conversion of the Restricted Stock Units granted hereunder
on any securities exchange, or the registration or qualification of such shares under any federal
or state law, or the consent or approval of any regulatory body, shall be necessary or desirable as
a condition of, or in connection with, the grant, receipt or delivery of shares of Common Stock
hereunder, such grant, receipt or delivery will not be effected unless and until such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Board or Compensation Committee. The Company agrees to make every
reasonable effort to effect or obtain any such listing, registration, qualification, consent or
approval.
10.
Rights of Employee
. In no event shall the granting of the Restricted Stock Units
or the other provisions hereof or the acceptance of the Restricted Stock Units by Employee
interfere with or limit in any way the right of the Company, an Affiliate or Subsidiary to
terminate Employees employment at any time, nor confer upon Employee any right to continue in the
employ of the Company, an Affiliate or Subsidiary for any period of time or to continue his or her
present or any other rate of compensation.
11.
Noncompetition; Nonsolicitation; Confidential Information, etc.
Employee hereby
acknowledges that, during and solely as a result of Employees employment by the Company or its
Subsidiaries or Affiliates, Employee has received and will continue to receive special training and
education with respect to the operations of such entity(ies) and access to confidential information
and business and professional contacts, all of which is exceptionally valuable to the Covanta Group
and vital to the success of the Covanta Groups business and other related matters. In
consideration of such special and unique opportunities afforded to Employee as a result of
Employees employment and the grant of Restricted Stock Units, Employee hereby agrees to be bound
by and acknowledges the reasonableness of the following covenants, which are specifically relied
upon by the Company and Covanta in entering into this Agreement and as a condition to the grant of
the Restricted Stock Units. Employee acknowledges and agrees that each of the individual
provisions of this Section 11 constitutes a separate and distinct obligation of Employee to the
Covanta Group, individually enforceable against Employee.
5
(a)
Covenant Not to Compete
. During the period Employee is employed by Company or its
Subsidiary and for a period following Employees termination of employment for any reason, equal to
[INSERT PERIOD]
, Employee shall not, without the consent of the Board, in any
form or any manner, directly or indirectly, on Employees own behalf or in combination with others,
become engaged in (as an individual, partner, stockholder, director, officer, principal, agent,
independent contractor, employee, trustee, lender of money or in any other relation or capacity
whatsoever, except as a holder of securities of a corporation whose securities are publicly traded
and which is subject to the reporting requirements of the Exchange Act, and then only to the extent
of owning not more than two percent (2%) of the issued and outstanding securities of such
corporation or other entity) or provide services to any business which renders services or sells
products, or proposes to render services or sell products, that compete with the Business of the
Covanta Group within the United States and any foreign country in which the Covanta Group conducts
any aspect of the Business during the term of this Agreement. For purposes of this Agreement, the
term Business shall mean the development, ownership and/or operation of businesses engaged in
waste-to-energy and other renewable energy facilities, waste management and/or waste procurement.
Notwithstanding the foregoing, after termination of Employees employment for any reason, Employee
shall be permitted to work for any business that owns and operates independent power generation
projects or that provides services to competitors or customers of the Covanta Group, so long as
such business, as determined in the good faith judgment of the Board, does not compete with the
Covanta Group.
(b)
Covenant Not to Solicit Employees
. During the period Employee is employed by the
Company or its Subsidiary and for a period following Employees termination of employment for any
reason, equal to
[INSERT PERIOD]
, Employee agrees and
covenants that he shall not, for any reason, directly or indirectly, employ, solicit or endeavor to
entice away from the Covanta Group (whether for Employees own benefit or on behalf of another
person or entity), or facilitate the solicitation, employment or enticement of, any employee of the
Covanta Group to work for Employee, any affiliate of Employee or any competitor of the Covanta
Group, nor shall Employee otherwise attempt to interfere (to the Covanta Groups detriment) in the
relationship between the Covanta Group and any such employees.
(c)
Covenant Not to Solicit Customers
. During the period Employee is employed by
Company or its Subsidiary and for a period following Employees termination of employment for any
reason, equal to
[INSERT PERIOD]
, Employee agrees and
covenants that he shall not, directly or indirectly, in any form or manner, contact, solicit, or
facilitate the contacting or solicitation of, any Customer of the Covanta Group for the purpose of
competing with the Business. For purposes of this Agreement, the term Customer shall mean and
refer to each person, entity, municipality or other governmental entity that has a contract with or
is actively being solicited by the Covanta Group to deliver waste, receive services or purchase
energy during the period of Employees employment hereunder.
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(d)
Covenant of Confidentiality
. At any time during the term of Employees employment
with the Company or its Subsidiary (pursuant to this Agreement or otherwise), and for a period of
five (5) years after the termination of Employees employment with the Company or its Subsidiary,
as applicable, for any reason, Employee shall not, except in furtherance of the Business of the
Covanta Group or otherwise with the prior authorization of the Company, in any
form or manner, directly or indirectly, divulge, disclose or communicate to any person,
entity, firm, corporation or any other third party (other than in the course of Employees
employment), or utilize for Employees personal benefit or for the benefit of any competitor of the
Covanta Group any Confidential Information. For purposes of this Agreement, Confidential
Information shall mean, but shall not be limited to, any technical or non-technical data,
formulae, patterns, compilations, programs, devices, methods, techniques, drawings, designs,
processes, procedures, improvements, models or manuals of any member of the Covanta Group or which
are licensed by any member of the Covanta Group, any financial data or lists of actual or potential
customers or suppliers (including contacts thereat) of the Covanta Group, and any information
regarding the contracts, marketing and sales plans, which is not generally known to the public
through legitimate origins of the Covanta Group. The parties hereto each acknowledge and agree
that such Confidential Information is extremely valuable to the Covanta Group and shall be deemed
to be a trade secret. In the event that any part of the Confidential Information becomes
generally known to the public through legitimate origins (other than by the breach of this
Agreement by Employee or by misappropriation), or is required to be disclosed by legal,
administrative or judicial process (provided that Employee has provided to the Company and Covanta
reasonable prior notice of such request and the Company or Covanta has had a reasonable
opportunity, at its expense, to dispute, defend or limit such request for the Confidential
Information), that part of the Confidential Information shall no longer be deemed Confidential
Information for purposes of this Agreement, but Employee shall continue to be bound by the terms of
this Agreement as to all other Confidential Information.
(e)
Return of Property
. Upon termination of Employees employment for any reason,
Employee shall promptly deliver to the Company or its Subsidiary all correspondence, drawings,
blueprints, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial
documents or any other documents, including all copies in any form or media, concerning the Covanta
Groups Customers, marketing strategies, products or processes which contain any Confidential
Information.
(f)
Assignment of Inventions
. Any and all writings, inventions, improvements,
processes, procedures and/or techniques now or hereafter acquired, made, conceived, discovered or
developed by Employee, either solely or jointly with any other person or persons, whether or not
during working hours and whether or not at the request or upon the suggestion of the Company or its
Subsidiaries or Affiliates, which relate to or are useful in connection with any business now or
hereafter carried on or contemplated by the Covanta Group, including developments or expansions of
its present fields of operations, shall be the sole and exclusive property of the Company or its
Subsidiaries or Affiliates, as applicable. Employee shall make full disclosure to the Company or
its Subsidiaries or Affiliates of all such writings, inventions, improvements, processes,
procedures, techniques, or any other material of a proprietary nature, including, without
limitation, any ideas, inventions, discoveries, improvements, developments, designs, methods,
systems, computer programs, trade secrets or other intellectual property whether or not patentable
or copyrightable and specifically including, but not limited to, copyright and mask works,
formulae, compositions, products, processes, apparatus, and new uses of existing materials or
machines (collectively, Inventions), made, conceived or first reduced to practice by Employee
solely or jointly with others while employed by the Company or its Subsidiaries or Affiliates and
which relate to or result from the actual or anticipated business, work, research or investigation
of the Covanta Group or which are
7
suggested by or result from any task assigned to or performed by Employee for the Covanta
Group; and Employee shall do everything necessary or desirable to vest the absolute title thereto
in the Company or its Subsidiaries or Affiliates, as applicable. Employee shall write and prepare
all descriptions, specifications and procedures regarding the Inventions as may be required by the
Company or its Subsidiaries or Affiliates to protect the Companys or its Subsidiaries or
Affiliates rights in and to the Inventions, and otherwise aid and assist the Company or its
Subsidiaries or Affiliates so that the Company or its Subsidiaries or Affiliates can prepare and
present applications for copyright or letters patent therefor and can secure such copyright or
letters patent wherever possible, as well as reissues, renewals, and extensions thereof, and can
obtain the record title to such copyright or patents so that the Company or its Subsidiaries or
Affiliates shall be the sole and absolute owner thereof in all countries in which it may desire to
have copyright or patent protection. Employee will, at the Companys or its Subsidiaries or
Affiliates request, execute any and all assignment, patent or copyright forms and the like, deemed
reasonably necessary by the Company or its Subsidiaries or Affiliate. The Companys or its
Subsidiaries or Affiliates rights hereunder shall not be limited to this country but shall extend
to any country in the world and shall attach to each Invention notwithstanding that it is
perfected, improved, reduced to specific form or used after termination Employees employment.
Employee agrees to lend such assistance as he or she may be able, at the Companys or its
Subsidiaries or Affiliates request in connection with any proceedings relating to such letters of
patent, trade secrets, copyright or application thereof, as may be determined by the Company or its
Subsidiaries or Affiliates to be reasonably necessary. The Company, in its sole discretion, may
agree to pay Employee a reasonable fee to defray any costs or time incurred by Employee in
providing such assistance. Employee shall not be entitled to any additional or special
compensation or reimbursement regarding any and all such writings, inventions, improvements,
processes, procedures and techniques.
(g)
Equitable Remedies
. In the event that Employee breaches any of the terms or
conditions set forth in this Section 10 (collectively, the Restrictive Covenants), Employee
stipulates that such breach will result in immediate and irreparable harm to the business and
goodwill of the Company and/or its Subsidiaries or Affiliates and that damages, if any, and
remedies at law for such breach would be inadequate. The Company and/or its Subsidiaries or
Affiliates shall therefore be entitled to seek for and receive from any court of competent
jurisdiction a temporary restraining order, preliminary and permanent injunctive relief and/or an
order for specific performance to protect its rights and interests and to restrain any violation of
this Agreement and such further relief as the court may deem just and proper, each without the
necessity of posting bond. Following judgment or other final determination by such court, the
non-prevailing party in such proceeding shall pay the costs and expenses (including court costs and
reasonable attorneys fees) of the prevailing party. The Company and/or its Subsidiaries or
Affiliates may elect to seek such remedies at its sole discretion on a case by case basis. Failure
to seek any or all remedies in one case shall not restrict the Company and/or its Subsidiaries or
Affiliates from seeking any remedies in another situation. Such action by the Company and/or its
Subsidiaries or Affiliates shall not constitute a waiver of any of its rights.
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(h)
Continuing Obligation
. During Employees employment and upon termination of
Employees employment for any reason the obligations, duties and liabilities of Employee pursuant
to Sections 11(a), 11(b), 11(c), 11(d) and 11(e) of this Agreement are continuing, and for the
periods set forth in such provisions hereof are absolute and unconditional,
and shall survive and remain in full force and effect as provided in each such Section.
Notwithstanding anything else contained in this Agreement to the contrary, the parties hereto agree
that in the event, and at the moment, Employee breaches any of the terms, duties or obligations
contained in Sections 11(a), 11(b), 11(c), and 11(d) of this Agreement, all of the Restricted Stock
Units as to which the restrictions on transfer imposed thereon by Section 4 hereof shall not have
lapsed prior to such date will immediately be cancelled and forfeited.
12.
Construction
.
(a)
Successors
. This Agreement and all the terms and provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their respective legal
representatives, heirs and successors, except as expressly herein otherwise provided.
(b)
Entire Agreement; Modification
. This Agreement contains the entire understanding
between the parties with respect to the matters referred to herein. Subject to Section 16(c) of
the Plan, this Agreement may be amended by the Board or Compensation Committee at any time.
(c)
Capitalized Terms; Headings; Pronouns; Governing Law
. Capitalized terms used and
not otherwise defined herein are deemed to have the same meanings as in the Plan. The descriptive
headings of the respective sections and subsections of this Agreement are inserted for convenience
of reference only and shall not be deemed to modify or construe the provisions which follow them.
Any use of any masculine pronoun shall include the feminine and vice-versa and any use of a
singular, the plural and vice-versa, as the context and facts may require. The construction and
interpretation of this Agreement shall be governed in all respects by the laws of the State of
Delaware.
(d)
Notices
. Each notice relating to this Agreement shall be in writing and shall be
sufficiently given if delivered by registered or certified mail, or by a nationally recognized
overnight delivery service, with postage or charges prepaid, to the address hereinafter provided in
this Section 12. Any such notice or communication given by first-class mail shall be deemed to
have been given two business days after the date so mailed, and such notice or communication given
by overnight delivery service shall be deemed to have been given one business day after the date so
sent, provided such notice or communication arrives at its destination. Each notice to the Company
shall be addressed to it at its offices at 40 Lane Road, Fairfield, New Jersey 07004 (attention:
Chief Financial Officer), with a copy to the Secretary of the Company or to such other designee of
the Company. Each notice to the Employee shall be addressed to the Employee at the Employees
address shown on the signature page hereof.
(e)
Severability
. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement or the application thereof to any party or circumstance shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the minimal extent of such
provision or the remaining provisions of this Agreement or the application of such provision to
other parties or circumstances.
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(f)
Counterpart Execution
. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which, when taken together, shall constitute the
entire document.
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COVANTA HOLDING CORPORATION
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By:
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Title
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Accepted this ______________________
day of
__________________________________, 20__.
_______________________________________
EMPLOYEES ADDRESS:
10
Schedule A
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Percentage of
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Total Award
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Acquisitions
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Development Projects
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Total:
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100
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%
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11
Exhibit 10.2
SEVERANCE PLAN FOR
COVANTA ENERGY CORPORATION SENIOR OFFICERS
1.
Purpose of the Plan
. The purpose of the Severance Plan for Covanta Energy Corporation
Senior Officers (the Plan) is to provide for severance benefits to certain specified senior
officers whose employment with the Company Group is involuntarily terminated. This Plan is
intended to be the exclusive means by which the Company provides eligible employees with severance
benefits except to the extent different benefits are provided in written agreements signed by
authorized representatives of the Company. Except where specifically stated otherwise, the
provisions of this Plan in effect as of the Termination Date of an eligible Employee shall be
deemed to be effective for the eligible Employee whose Eligible Termination of Employment occurred
on or after the Plans Effective Date.
2.
Definitions
. The following terms and phrases when used in the Plan shall have the
following meanings:
(a) Administrator shall mean the Administrative Committee of Covanta Energy Corporation.
With respect to any period during which there is no such committee, the Compensation Committee of
the Board shall serve as Administrator.
(b) Beneficiary shall mean, with respect to an Employee, such Employees estate.
(c) Board shall mean the Board of Directors of Covanta Holding.
(d) Cause shall mean, with respect to the termination of an Employees employment with the
Company Group, such Employees (i) failure or refusal to perform the duties of his or her
employment with the Company Group in a reasonably satisfactory manner, (ii) fraud or other act of
dishonesty, (iii) serious misconduct in connection with the performance of his or her duties for
the Company Group, (iv) material violation of any policy or procedure of the Company Group, (v)
conviction of, or plea of nolo contendere to, a felony or other crime or (vi) other conduct that
has or reasonably is expected to result in material injury to the business or reputation of any
member of the Company Group, in any such case, as determined by the Plan Administrator in his/her
sole discretion.
(e) Change in Control shall mean the occurrence of any of the following events, each of
which shall be determined independently of the others:
(i) any Person (as hereinafter defined), other than a holder of at least 10% of the
outstanding voting power of Covanta Holding as of the date of this Plan, becomes a
beneficial owner (as such term is used in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) of a majority of the stock of Covanta
Holding entitled to vote in the election of directors of Covanta Holding;
(ii) individuals who are Continuing Directors (as hereinafter defined) of Covanta
Holding cease to constitute a majority of the members of the Board;
1
(iii) stockholders of Covanta Holding adopt and consummate a plan of complete or
substantial liquidation or an agreement providing for the distribution of all or
substantially all of the assets of Covanta Holding;
(iv) Covanta Holding is a party to a merger, consolidation, other form of business
combination or a sale of all or substantially all of its assets, with an unaffiliated third
party, unless the business of Covanta Holding following consummation of such merger,
consolidation or other business combination is continued following any such transaction by a
resulting entity (which may be, but need not be, Covanta Holding) and the stockholders of
Covanta Holding immediately prior to such transaction hold, directly or indirectly, at least
a majority of the voting power of the resulting entity;
provided, however
, that a merger or
consolidation effected to implement a recapitalization of Covanta Holding (or similar
transaction) shall not constitute a Change in Control;
(v) there is a Change in Control of Covanta Holding of a nature that is reported in
response to item 5.01 of Current Report on Form 8-K or any similar item, schedule or form
under the Exchange Act, as in effect at the time of the change, whether or not Covanta
Holding is then subject to such reporting requirements;
provided, however
, that for purposes
of this Plan a Change in Control shall not be deemed to occur if the Person or Persons
deemed to have acquired control is a holder of at least 10% of the outstanding voting power
of Covanta Holding as of the date of this Plan; or
(vi) Covanta Holding consummates a transaction which constitutes a Rule 13e-3
transaction (as such term is defined in Rule 13e-3 of the Exchange Act) prior to the
termination of this Plan.
(f) Code shall mean the Internal Revenue Code of 1986, as amended.
(g) Company Group shall mean, collectively or individually, as the context requires, Covanta
and each of its Subsidiaries. When referring to the employment of an Employee with the Company
Group (or the termination of such employment), references to Company Group shall be deemed to refer
to the member thereof that employs such Employee, as appropriate in the context.
(h) Continuing Directors shall mean the members of the Board on the date of execution of
this Plan, provided that any person becoming a member of the Board subsequent to such date whose
election or nomination for election was supported by at least a majority of the directors who then
comprised the Continuing Directors shall be considered to be a Continuing Director; and the term
Person is used as such term is used in Sections 13(d) and 14(d) of the Exchange Act.
(i) Covanta shall mean Covanta Energy Corporation, a corporation duly organized under the
laws of the state of Delaware, or any successor thereto.
(j) Covanta Holding shall mean Covanta Holding Corporation, a corporation duly organized
under the laws of Delaware or any successor thereto and the sole stockholder of Covanta.
2
(k) Disability shall mean an Employees absence, for a consecutive period of 6 months, from
the duties of his or her employment with the Company Group due to an illness or injury of such
Employee.
(l) Effective Date shall mean February 25, 2010.
(m) Eligible Termination of Employment shall mean the involuntary termination other than for
Cause of an Employees employment with the Company Group after the Effective Date.
(n) Employee shall mean only an individual directly employed by the Company Group on a
regular, full-time basis, and who is either a Senior Vice President, a Regional President, an
Executive Vice President or the President of Covanta or Covanta Holding .
(o) ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.
(p) Plan shall mean this Severance Plan for Covanta Energy Corporation Senior Officers, as
the same may be amended and in effect from time to time.
(q) Salary shall mean the Employees annual base salary rate in effect on his or her
Termination Date.
(r) Severance Period shall mean, with respect to an Employee who satisfies the severance
benefit conditions described in Section 6, the number of months or years such Employee is entitled
to receive continued payments of his or her Salary or other benefits pursuant to Section 7 or
Section 8.
(s) Subsidiary shall mean each entity in which Covanta owns, directly or indirectly, capital
stock or other ownership interests representing fifty percent (50%) or more of the combined voting
power of the outstanding voting stock or other ownership interests of such entity.
(t) Termination Date shall mean the effective date of an Employees termination of
employment with the Company Group.
3.
Administration
.
(a)
Appointment of Plan Administrator
. The Administrator shall appoint a Plan
Administrator, who initially shall be the Senior Vice President-Human Resources of the Company
Group, to manage the day-to-day operation of this Plan. The Plan Administrator may be removed by
action of the Administrator at any time, with or without cause, upon written notice. The Plan
Administrator may resign upon 30 days written notice to the Administrator. Upon such removal or
resignation of the Plan Administrator, the Administrator shall appoint a successor thereto. In the
event the Administrator fails to appoint a Plan Administrator under this Section, the Administrator
shall be the Plan Administrator.
3
(b)
Plan Administrators Responsibilities
. The Plan Administrator shall have and
exercise all discretion and other authority to control and manage the day-to-day operation and
administration of the Plan, except such authority as is specifically allocated otherwise by or
under the terms of the Plan or that is retained or otherwise allocated by the Administrator.
Within such delegated authority, the Plan Administrator may take such actions or make such
decisions as he or she deems appropriate in his or her sole discretion. Without limiting the
foregoing, the Plan Administrator shall have authority, power, and discretion with respect to the
Plan:
(i) to construe, interpret, and apply the provisions of the Plan, and, in connection
therewith, to decide all questions of eligibility for, and the amount, manner, and time of payment
of, any benefits in accordance with the terms and conditions of the Plan;
(ii) to establish the policies, interpretations, practices, and procedures of this Plan;
(iii) to prescribe and require the use of appropriate forms;
(iv) to prepare all reports, notices, and any other documents relating to the Plan which may
be required by law;
(v) to hire all persons providing services to the Plan;
(vi) to delegate to one or more individuals such duties and functions relating to the daily
operation and administration of the Plan as he or she, in his or her discretion, sees fit;
(vii) to receive all disclosures required of fiduciaries and other service providers under
ERISA or any other federal or state law;
(viii) to act as this Plans agent for the service of legal process;
(ix) to perform all other responsibilities allocated to the Plan Administrator in the
instrument appointing the Plan Administrator.
All findings of fact, determinations, constructions, interpretations, and decisions of the Plan
Administrator shall be final, conclusive, and binding on all parties affected thereby, unless
arbitrary and capricious.
(c)
Action by the Company
.
Any authority or responsibility allocated or reserved to
the Plan Administrator under this Plan may be exercised by the Senior Vice President Human
Resources.
(d)
Compensation
.
The Plan Administrator shall not receive compensation (other than
regular compensation from the Company Group for services to the Plan), but shall be reimbursed by
the Company Group for expenses incurred in the performance of such duties.
4
(e)
Limitation of Liability; Indemnification
. The Administrator and the Plan
Administrator shall each be entitled to rely upon any report or other information furnished to it
by any officer or other employee of the Company Group and by any independent certified public
accountant, compensation consultant, legal counsel or other professional retained by any member of
the Company Group to assist in the administration of the Plan. To the maximum extent permitted by
law, neither the Administrator nor the Plan Administrator shall be liable to any person for, and
Covanta shall indemnify and hold the Administrator and the Plan Administrator harmless from and
against any liability in respect of, any action taken or omitted in good faith in connection with
the administration of the Plan.
4.
Eligibility
. Each Employee shall be eligible to participate in the Plan beginning on
the later of the Effective Date and the date such Employee commences regular, full-time employment
with the Company Group, provided an Eligible Termination of Employment occurs. No other individual
shall be eligible to participate in the Plan.
5.
Ineligibility For Severance Benefits
. An Employee will be ineligible for severance pay
or other benefits under this Plan if any of the following apply, unless otherwise determined by the
Plan Administrator:
(a) the Employee retires, resigns or dies before the effective date of the Eligible
Termination of Employment;
(b) the Employees employment is terminated for Cause as determined by the Company in its sole
discretion before the effective date of the Eligible Termination of Employment;
(c) the Employees employment is terminated or he or she is deemed to have resigned from
employment for failing to return from an approved leave of absence by the expiration date of the
approved leave before the effective date of the Eligible Termination of Employment;
(d) the Employees employment is terminated because the Employee is physically or otherwise
unable to perform the essential duties and functions of his position with or without reasonable
accommodation before the effective date of the Eligible Termination of Employment;
(e) the Employee is terminated while receiving or seeking payments or benefits under a
program, policy, plan or a law that provides payments or benefits to an Employee unable to work
because of illness, injury or disability;
(f) the Employee is not directly employed by any member of the Company Group; or
(g) the Employee is terminated in connection with a sale of all or part of the Company Group
and has been offered employment with the purchaser.
6.
Severance Benefit Conditions
. An Employees eligibility for severance benefits under
the Plan shall be subject to all of the following limitations and conditions precedent:
(a) the termination of such Employees employment must constitute an Eligible Termination of
Employment;
5
(b) to the extent requested by Covanta or the member of the Company Group that employs such
Employee, such Employee must remain in the active employment of the Company Group until the
Termination Date specified by Covanta or such member, provided that (i) such Termination Date may
not be more than one hundred eighty (180) days following the date notice of termination is given
and (ii) if Covanta or such member thereafter (but prior to the indicated Termination Date)
terminates such Employees employment without Cause (and such termination is not due to such
Employees death or Disability), such Employee shall be eligible to receive severance benefits
under the Plan provided he or she satisfies all of the other conditions specified in this Section
6; and
(c) promptly following such Employees Termination Date, but in no event later than sixty (60)
days following such Employees Termination Date, such Employee must (i) execute and deliver a
termination agreement which contains an effective release of all claims against the Company Group,
substantially in the form attached hereto as Appendix A, and (ii) refrain from revoking the release
contained in such termination agreement as permitted therein; provided, however, that such
termination agreement may contain additional terms and conditions relating to non-disparagement and
confidentiality. Failure to execute such termination agreement in substantially the form attached
hereto as Exhibit A or any revocation of such termination agreement prior to the sixtieth
(60
th
) day following such Employees Termination Date will result in forfeiture of any
payments or benefits hereunder.
(d) Notwithstanding any of the foregoing terms, in the event, and at the moment, that Employee
violates any of his or her duties or obligations set forth in the restrictive covenants contained
in any restricted stock award agreement, restricted stock unit agreement or any other equity award
agreement of Covanta Holding that continue after the termination of his or her employment, the
terms of Sections 7 and 8 will be of no force or effect and the Company Groups obligations under
those subsections to make severance payments or provide continued employee benefits will
immediately cease.
(e) No Employee shall be entitled to any severance payments or benefits under the Plan unless
and except as specifically determined by the Plan Administrator in his or her discretion. The Plan
Administrator, in his or her discretion, may also waive any provision of this Plan in a particular
case or cases;
provided, however,
that the Plan Administrator may not waive any provisions of this
Plan as they relate to any of the Employees covered by this Plan without the approval, in their
sole discretion, of the Covanta Holding Corporation Compensation Committee of the Board of
Directors.
7.
Severance Benefits
.
(a)
Cash Payments
. Except as provided in Section 8, each Employee who satisfies the
severance benefit conditions described in Section 6 shall receive (or, in the event of his or her
death after the effective date of the Eligible Termination of Employment, such Employees
Beneficiary shall thereafter receive) continued payments of his or her Salary in accordance with
the applicable payroll policies of the member of the Company Group employing such Employee as
follows:
6
(i) Executive Vice Presidents, Regional Presidents and Senior Vice Presidents: eighteen (18)
months; and
(ii) Chief Executive Officer: twenty four (24) months.
Salary continuation payments shall commence ninety (90) days following such Employees Termination
Date in accordance with the Company Groups normal payroll cycle, provided that, unless otherwise
determined by the Plan Administrator, the period during which severance benefits are being paid to
any Employee shall not exceed the maximum period allowed under Department of Labor Regulation
§2510.3-2(b) to avoid classification as an employee pension benefit plan under ERISA.
(b)
Additional Discretionary Payments
. No additional payments may be made to any of
the Employees covered by Plan without the approval, in their sole discretion, of the Covanta
Holding Corporation Compensation Committee of the Board of Directors.
(c)
Continued Medical and Dental Benefits
. Each Employee who satisfies the severance
benefit conditions described in Section 6 shall be entitled to continue during such Employees
Severance Period his or her participation and the participation of such Employees eligible
dependents in the medical and dental benefit plans in which such Employee (and eligible dependents)
participated immediately prior to his or her Termination Date, in accordance with the generally
applicable terms of such plans as in effect from time to time, subject to timely payment by such
Employee (and eligible dependents) of all contributions, premiums, co-payments and deductibles
required to be paid by participants in such plans; provided that an Employees right to continue
his or her participation and the participation of such Employees eligible dependents in any such
medical or dental plan shall cease immediately if such Employee is offered or becomes eligible for
coverage under a medical or dental plan, as applicable, of any subsequent employer.
8.
Change in Control
. Notwithstanding anything to the contrary in this Plan, in the event
of an Eligible Termination of Employment within one (1) year following a Change in Control of an
eligible Employee who satisfies the severance benefit conditions described in Section 6, the
following provisions shall apply and supersede any contrary provisions in Section 7 hereof;
provided
,
however
, that if the Change in Control does not fall within the scope of
a change in the ownership of a corporation, a change in the effective control of a corporation
or a change in the ownership of a substantial portion of a corporations assets as described in
Treas. Reg. §1.409A-3(i)(5), then the sum of the amounts payable described in Section 8(b)(i) and
Section 8(b)(ii) shall be payable in accordance with the schedule set forth in Section 7(a):
(a)
Eligible Termination of Employment following Change in Control Base Payments
.
Employee shall be entitled to receive a cash payment equal to the sum of the following:
(i) accrued but unpaid portion of the annual base salary, if any, accrued up to and
including the Termination Date,
(ii) any annual cash bonus, if any, earned but unpaid for any year preceding the then
current employment year,
7
(iii) unreimbursed business expenses, and
(iv) the cash equivalent of any vested benefits as of the date of such termination
under any benefit plans maintained, or contributed to, by Covanta, or any disability
benefits program sponsored by Covanta, to the extent permitted by, and in accordance with,
the terms and conditions of each such plan or program, and any benefit required by COBRA.
(b)
Eligible Termination of Employment following Change in Control Additional
Payments
. In addition to the provisions of Section 8(a), above, Employee shall be entitled to
the following:
(i) an amount equal to the product of (x) Employees then current Salary plus
Employees average annual cash bonus received by Employee during the two prior full
employment years, and (y) the number of years set forth with respect to Employee in Section
8(c) hereof, to be paid to Employee as provided in Section 8(d) hereof;
(ii) an amount equal to the pro rata portion of the annual cash bonus, to be paid to
Employee at the time that cash bonuses are paid to other senior-level executives of Covanta
for such employment year; and
(iii) the continuation of medical, dental and life insurance coverage (at the rates and
on the coverage terms available to other senior-level executives) for the duration of the
applicable period set forth in Section 8(c) hereof.
(c)
Post-Termination Continuing Payment Amounts
.
(i) Executive Vice Presidents, Regional Presidents and Senior Vice Presidents: one and
one-half (1.5) years; and
(ii) Chief Executive Officer: two (2) years.
(d)
Terms of Payments
. The amounts due to Employee pursuant to Section 8 hereof shall
be paid by Covanta as follows:
(i) fifty percent (50%) of the aggregate amount due to Employee shall be paid to
Employee on the ninetieth (90
th
) day following the date of Employees Termination
Date from the Company Group; and
(ii) fifty percent (50%) of the aggregate amount due to Employee shall be paid on a
monthly basis to Employee over the duration of the applicable period set forth in Section
8(c) hereof, beginning on the ninetieth (90
th
) day following the date of
Employees Termination Date from the Company Group.
9.
Tax Treatment of Benefits
. All payments of severance benefits shall be subject to any
applicable income or employment tax withholding and other appropriate deductions.
8
10.
Claims Procedure
.
An Employee can make a claim for benefits under the Plan by sending
written notification thereof to the Plan Administrator. If an Employee who has submitted such a
claim is denied benefits for any reason, such Employee will be notified in writing of such denial
within ninety (90) days after the claim is submitted or will receive written notice within that
period of time stating that an additional ninety (90) days is required to rule upon the claim. In
that case, if such Employees claim for benefits is denied, such Employee will receive written
notice of such denial within one hundred eighty (180) days. Such notification will:
(a) indicate the reasons for the denial and cite the specific Plan provisions upon which the
denial is based;
(b) describe any additional information that may be needed for approval of such Employees
claim; and
(c) contain an explanation of the review procedure.
An Employee can request a review of the denial within ninety (90) days after the time he or
she receives the denial notice. Within sixty (60) days after receiving such written notice for
review, the Plan Administrator will notify the Employee, in writing, of the final decision unless
the Plan Administrator notifies the Employee, in writing, that special circumstances require an
extension (for no more than a single, additional sixty (60) day period), in which case the Plan
Administrator will render its written decision within one hundred twenty (120) days after receiving
the written notice for review. If the Plan Administrator denies the request for review, the Plan
Administrators final decision will be in writing and will contain specific reason and references
to the Plan provisions on which the denial is based. The Plan Administrators decision shall be
final and binding and not subject to further review.
11.
Section 409A Compliance
.
(a) With respect to any benefits provided by this Plan that are subject to Code section 409A,
it is intended that the terms of this Plan comply with the terms and conditions of Code section
409A and the regulations and guidance promulgated thereunder and all provisions of this Plan shall
be construed in a manner consistent with the requirements for avoiding taxes or penalties under
Code section 409A. Notwithstanding the foregoing, neither Covanta Holding, Covanta nor any member
of the Company Group shall have any liability with regard to any failure to comply with Code
section 409A so long as they have acted in good faith with regard to compliance therewith.
(b) If under this Plan, an amount is to be paid in two or more installments, for purposes of
Code section 409A, each installment shall be treated as a separate payment.
(c) A termination of employment shall not be deemed to have occurred for purposes of any
provision of this Plan providing for the payment of amounts or benefits upon or following a
termination of employment unless such termination is also a separation from service within the
meaning of Code section 409A and, for purposes of any such provision of this Agreement, references
to a termination, termination of employment or like terms shall mean Separation from Service.
9
(d) Notwithstanding the foregoing, if Employee is a specified employee of a public
corporation (as described in Treas. Reg. § 1.409A-1(i)), then to the extent a separate payment
described in this Section 8(d) does not fall within the short-term deferral exclusion (as
described in Treas. Reg. § 1.409A-1(b)(4)) or the exclusion for separation pay due to involuntary
separation from service (as described in Treas. Reg. § 1.409A-1(b)(9)(iii)), and such separate
payment would be paid during the first six months following Employees separation from service,
such payment shall instead be paid on the first business day following the end of the six-month
period following Employees separation from service.
(e) Notwithstanding anything in this Plan to the contrary, the severance payments payable
hereunder shall be exempt from Code section 409A to the extent that:
(i) The severance payments are paid in full no later than December 31 of the second calendar
year following the calendar year in which the Employees Termination Date occurs; and
(ii) The amount of severance payments payable to the Employee does not exceed two times the
lesser of the following:
(A) the Employees annual compensation for the calendar year preceding the
calendar year (the look-back year) in which the Employee has an Eligible
Termination of Employment. For this purpose, the Employees annual
compensation means the Employees base pay (plus such other amounts as are
permitted to be included as prescribed in Code section 409A) for the
look-back year (determined on an annualized basis if the Employee was
employed for less than the full calendar year), as adjusted for any increase
during the look-back year that was expected to continue indefinitely but for
the Employees termination of employment; or
(B) the maximum amount that may be taken into account under a qualified plan
pursuant to Code section 401(a)(17) for the calendar year in which the
Employees Eligible Termination of Employment occurs.
(f) To the extent the severance payments payable under this Plan do not meet the exemption
under subsection (e), then the Plan Administrator will determine, in his/her sole discretion, and
specify in writing at the time of approving the severance benefits whether:
(i) Such benefits will be paid no later than 2
1
/
2
months following the end of the calendar year
in which the Employees Eligible Termination of Employment occurs, so as to meet the requirements
for a short-term deferral as described in Treas. Reg. §1.409A-1(b)(4) that is exempt from Code
section 409A; or
(ii) Such benefits shall be paid in a manner that complies with Code section 409A, such as at
a specified date or pursuant to a fixed schedule.
10
(g) With regard to any provision herein that provides for reimbursement of costs and expenses
or in-kind benefits, except as permitted by Code section 409A, (i) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall
not be violated with regard to expenses reimbursed under any arrangement covered by Code section
105(b) solely because such arrangement provides for a limit on the amount of expenses that may be
reimbursed over some or all of the period the arrangement is in effect and (iii) such payments
shall be made on or before the last day of Employees taxable year following the taxable year in
which the expenses was incurred.
12.
Amendment and Termination
. Covanta may, in its sole discretion, amend, alter, suspend,
discontinue or terminate the Plan at any time and for any or no reason, with or without notice and
without the consent of any Employee, stockholder or other person;
provided, however
, that in the
event of the occurrence of a Change in Control, the payments provided in Sections 8(a), (b) and/or
(c) hereof may not be reduced or otherwise amended in a manner adverse to the Covered Employees
without their prior written consent.
13.
General Provisions
.
(a)
No Special Employment Rights
. Nothing contained in the Plan shall confer upon any
Employee any right with respect to the continuation of such Employees employment by the Company
Group or interfere in any way with the right of the Company Group at any time to terminate such
employment or to increase or decrease the base salary or hourly wage rate, other compensation or
benefits of such Employee or otherwise modify the terms or conditions of such Employees
employment; provided that such actions may trigger severance benefits if they constitute an
Eligible Termination of Employment.
(b)
No Assignment by Employees
. Each Employees rights hereunder are personal and no
Employee may assign or transfer any part of his or her rights or duties hereunder, or any benefits
due to him or her, to any other person, except that, in the event of the Employees death after the
effective date of an Eligible Termination of Employment, any benefits payable to such Employee
shall be paid instead to his or her Beneficiary.
(c)
Certain Withholdings
. The Company Group shall have the right to deduct from
amounts otherwise payable under the Plan any sums that federal, state, local or foreign tax law
requires to be withheld with respect to such payment.
(d)
Governing Law
. The validity, construction and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the laws of the State
of New Jersey, without giving effect to principles of conflicts of laws, and any applicable
provisions of federal law.
(e)
Arbitration
. Any dispute or controversy arising under or in connection with the
Plan shall be resolved by binding arbitration after the Employee has exhausted his or her
administrative remedies under Section 9. The arbitration shall be held in Fairfield, New Jersey
and, except to the extent inconsistent with the Plan, shall be conducted in accordance with the
National Employment Dispute Resolution Rules of the American Arbitration Association then in effect
at the time of the
11
arbitration, and otherwise in accordance with principles which would be applied by a court of
law or equity. The arbitrator shall be acceptable to both the Employee and Covanta. If the
parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by the Employee, one appointed by Covanta, and the third appointed by
the other two arbitrators. All expenses of arbitration shall be borne by Covanta;
provided,
however,
that each party shall be responsible for any attorneys fees or expenses borne by such
party, or, in the case of joint expenses, by both parties in equal portions, except that, in the
event the Employee prevails on the principal issues of such dispute or controversy, all such
expenses shall be borne by Covanta.
(f)
Funding
. The Plan shall be an unfunded plan. Severance benefits under the Plan
shall be paid from the general assets of the Company Group.
(g)
Severability
. If any term or provision of the Plan or the application thereof to
any person or circumstance is to any extent held invalid or unenforceable, the remainder of the
Plan or the application of such term or provision to persons or circumstances other than those as
to which it is held invalid or unenforceable will not be affected thereby, and each term and
provision of the Plan will be valid and enforceable to the fullest extent permitted by law.
(h)
Construction
. The captions and numbers preceding the sections of the Plan are
included solely as a matter of convenience of reference and are not to be taken as limiting or
extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words
used in the singular shall include the plural or the plural may be read as the singular.
12
Appendix A
Form of
Termination Agreement and Release
13