COVANTA HOLDING CORPORATION
EXCISE TAX GROSS-UP PLAN
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Purpose; Effective Date. The purpose of this Covanta Holding Corporation Excise Tax Gross-Up Plan (the Plan) is to make affected employees and directors whole for the impact of any excise tax imposed by Section 4999 of the Code with respect to certain compensation and benefits to be paid or provided in connection with the merger contemplated by the Agreement and Plan of Merger among Covanta Holding Corporation, Covert Intermediate, Inc., and Covert Mergeco, Inc., dated as of July 14, 2021 (the Merger Agreement). This Plan shall become effective upon, and subject to the occurrence of, the Closing of the Merger.
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Definitions. The following capitalized terms shall have the meanings given below when used in this Plan. Other capitalized terms used but not defined herein have the meaning ascribed to them in the Merger Agreement.
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Accounting Firm has the meaning specified in Section 4(b).
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Administrator means the Compensation Committee of the Board of Directors of the Company or its delegate.
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Code means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated or issued thereunder.
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Company Group means the Company and its Affiliates (including, after the Closing, Parent and its Affiliates).
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Excise Tax has the meaning specified in Section 4(a).
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Gross-Up Payment has the meaning specified in Section 4(a).
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Merger Agreement has the meaning specified in Section 1.
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Participation Agreement means each agreement between a Participant and the Company setting forth the terms and conditions of the Participants right to participate in this Plan.
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Participant means an employee of the Company or any of its Affiliates who meet the eligibility requirements set forth in Section 3.
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Payment has the meaning specified in Section 4(a).
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Taxing Authority has the meaning specified in Section 4(d).
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Underpayment has the meaning specified in Section 4(c).
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permit the Company to control and participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties and legal and accounting fees and expenses) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 4(d), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the Taxing Authority in respect of such claim and may, at its sole option, either direct the Participant to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Participant to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Participant, on an interest-free basis, and shall indemnify and hold the Participant harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income (including interest or penalties with respect thereto) with respect to such advance; and provided, further, that if the Participant is required to extend the statute of limitations to enable the Company to contest such claim, the Participant may, if permitted by the applicable taxing authority, limit this extension solely to such contested amount. Furthermore, the Companys control of the contest shall be limited to the issues with respect to which a Gross-Up Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as the case may be, any other issues raised by the Taxing Authority.
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Refunds. If, the Participant becomes entitled to receive any refund of any amount paid under this Plan, the Participant shall (subject to the Companys complying with the requirements of Section 4(d)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Participant of an amount advanced by the Company pursuant to Section 4(d), a determination is made by the applicable Taxing Authority that Participant shall not be entitled to any refund with respect to such claim and the Company does not notify the Participant in writing of its intent to contest such denial of refund prior to the expiration of ninety (90) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.
Form of Excise-Tax Gross-Up Plan Participation Agreement
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Participation in Covanta Holding Corporation Excise Tax Gross-Up Plan
Covanta Holding Corporation (the Company) maintains the Covanta Holding Corporation Excise Tax Gross-Up Plan (the Plan). I am pleased to inform you that you have been designated as an eligible participant in the Plan. All capitalized terms used and not otherwise defined in this Participation Agreement (this Agreement) shall have the meanings given to such terms in the Plan.
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Entitlement to Gross-Up Payment. The Company hereby agrees that you shall be eligible to receive a Gross-Up Payment in accordance with the terms and conditions of the Plan. As a condition to your participation in the Plan, you hereby acknowledge that a copy of the Plan has been made available to you, and you hereby agree that your entitlement to receive a Gross-Up Payment is subject to the terms and conditions of the Plan.
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[Noncompetition Agreement. You hereby acknowledge and agree that your entitlement to receive a Gross-Up Payment under the Plan is subject to your compliance with the post-termination non-competition covenant set forth in Annex A to this Agreement.]
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Amendment. No provision of this Agreement may be amended, waived, or discharged except by the mutual written agreement of the parties.
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Binding upon Successor. The obligations under this Agreement and the Plan shall be binding upon any successor to the Company and may be enforced against any successor to the Company by you.
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Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
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|COVANTA HOLDING CORPORATION || || || ||PARTICIPANT|
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