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January 6, 2004
Bruce W. Stone
10 Old Jackson Avenue, #41
Hastings on Hudson, NY 10706
Dear Bruce:
This will confirm your Separation from
COVANTA ENERGY CORPORATION (herein the
"Company") effective as of January 31, 2004
(hereafter the "Separation Date").
This letter agreement (the "Agreement and
Release") describes your existing
rights and obligations relating to your
departure from the Company and offers
you certain additional benefits.
1. Although you will no longer
be employed by the Company after the Separation
Date, certain of
your obligations to the Company will continue. Those
obligations are
in addition to and not a limitation upon your
confidentiality
obligations under your Employee Confidential Disclosure
Agreement dated
May 22, 1987. To ensure that you are aware of your
important
obligations under the Employee Confidential Agreement, a copy
is
attached. If you
receive a subpoena or other request for information, you
agree to
immediately notify COVANTA Energy Corporation's General
Counsel.
2. Prior to the Separation
Date, you must turn over to the Company, all
documents,
records and property including but not limited to computers,
computer
equipment, credit cards, keys, manuals, notebooks and all other
data relating to
the Company or any of its direct or indirect subsidiaries
(each, a
"COVANTA Company" and collectively, the "COVANTA Companies") in
your possession
or custody or under your control belonging to or in any way
relating to the
business of the Company, or any of the other COVANTA
Companies or any
of their respective customers.
3. Contingent upon the
continued and faithful performance of your obligations
as described
herein and in consideration for the waiver/release described
in this
Agreement and Release, we agree to pay you the gross amount of
$487,500 (such
gross amount, hereafter the "Cash Separation Payment" and,
together with
the subsidized continuation of your group medical and dental
insurance
coverage described under Section 6 hereinafter the "Separation
Payments") minus
normal payroll taxes and normal deductions relating to
benefits paid in
the next payroll cycle after the expiration of the
Revocation
Period referred to in the Agreement. The Cash Separation
Payment
represents 78
weeks of base pay and will be paid pursuant to the terms and
conditions of
the COVANTA Energy Corporation Key Employee Severance Pay
Plan (the
"Plan").
In addition, as
a participant in the COVANTA Energy Corporation Special
Retention Bonus
Plan (the "Retention Plan"), you will be entitled to a pro
rata portion of
your third installment
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(the "Retention
Bonus Award), payable at the time of the Company's
emergence from
bankruptcy, minus normal payroll taxes, in accordance with
the terms of the
Retention Plan.
Finally, as a
participant in the COVANTA Energy Corporation Long-Term
Incentive Plan
(the "LTIP"), on and subject to the terms and conditions of
the LTIP, you
will be entitled to an LTIP Award (as defined in the LTIP)
as, to the
extent, in the amount and at the time provided under the terms
and conditions
of the LTIP.
In the event of
your death before all the payments provided for in any of
the preceding
paragraphs of this Section 3 have been made to you, any
amounts still
due you will be paid to your estate.
You hereby
acknowledge and agree that, pursuant to the terms and
conditions
of the Plan,
your right to receive any Separation Payments and the
Company's
obligation to pay or provide any Separation Payments to you is
conditioned upon
your execution and delivery of this Agreement and Release
on or after your
Separation Date, including, without limitation, the
release of
claims contained in Section 12 (the "Release"), and your
refraining from
revoking the Release as permitted in Section 18 herein. If
you execute this
Agreement and Release prior to your Separation Date, this
Agreement and
Release shall not be binding upon the Company and shall have
no legal
effect.
4. You agree that, during the
period you are providing consulting services to
any Covanta
Company pursuant to the Consulting Agreement between you and
the Company,
dated as of March __, 2004, you shall not, directly or
indirectly, for
your own account or for the account of any individual,
person, firm or
other entity, (i) solicit for employment, employ or
otherwise
interfere with the employment relationship of any COVANTA
Company
with any natural
person who is or was (at any time within the six month
period
immediately preceding any such solicitation, employment or
other
interference)
employed by or otherwise engaged to perform services for any
COVANTA Company,
or (ii) solicit or otherwise attempt to establish any
business
relationship of a nature that is competitive with the business
or
relationship of any
COVANTA Company with any individual, person, firm or
other entity
which is or was (at any time within the 12 month period
immediately
preceding such solicitation or other attempt) a customer,
client or
distributor of any Covanta Company. You further agree that you
will be
available to consult with us at reasonable times upon
reasonable
notice so long
as such consultation does not unreasonably interfere with
any other
employment in which you may then be engaged.
5. While you may not be
precluded from applying for and receiving state
unemployment
compensation benefits, if you do receive any such benefits for
any of the 78
weeks immediately following your Separation Date (e.g., the
weeks for which
you are receiving Cash Separation Payments), you must
promptly pay to
the Company the aggregate amount of state unemployment
compensation
benefits received by you for any such weeks.
6. Any group accident
insurance, short-term disability insurance, life
insurance or
long-term disability insurance coverage you have with the
Company will
terminate on the Separation Date.
If enrolled, you
may continue, decrease or stop contributions to your
Health Care
Account. Dependent Care Account contributions must be
discontinued due
to IRS regulations. Contact Sue Ryan at (973) 882-7140 for
more
information.
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Under the
Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"),
you may continue
your group medical and dental insurance provided you
timely elect
continuation of such coverage. For the eighteen month period
following your
Separation Date or until the end of the month after the
month in which
you are offered or become eligible for such insurance
coverage from a
subsequent employer, whichever occurs first, the Company
will pay the
same portion of the cost of the medical and dental insurance
elected under
COBRA as it would if you remained an active employee of the
Company, subject
to your timely payment to the Company of all
contributions,
premiums, co-payments and deductibles required to be paid by
active employees
who participate in any such insurance plan. If you are
still eligible
for medical and dental insurance coverage under COBRA when
the Company's
obligation under this Section 6 to subsidize the cost of
group medical
and dental insurance you elected ends, you may continue such
coverage in
accordance with COBRA by paying the full COBRA premium.
Coverage during
the subsidized period under this Section 6 does not extend
the period of
coverage under COBRA. The Separation Date is the date of the
"qualifying
event" for COBRA purposes.
CobraServ will
send you information as it relates to the status of your
benefits. If you
have any have questions, you can contact Customer Service
at (800)
877-7994.
7. If your rights under the
Covanta Energy Pension Plan have vested, you will
receive a letter
containing an estimate of benefits payable and a
description of
the steps necessary to coll
