EX-10.2






Exhibit 10.2




[Bank Name and Address]




	 	 	 
	DATE:

	 	May 18, 2009
	 
	 	 
	TO:

	 	Covanta Holding Corporation
	 

	 	40 Lane Road
	 

	 	Fairfield, New Jersey
	ATTENTION:

	 	Treasurer
	TELEPHONE:

	 	973-882-4193
	FACSIMILE:

	 	973-882-7234
	 
	 	 
	FROM:

	 	[Bank Agent], acting as Agent for [Bank Name]
	TELEPHONE:

	 	[             ]
	 
	 	 
	SUBJECT:

	 	[Form of Cash Convertible Note Hedge Transaction]





The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions
of the Transaction entered into between [Bank Name] (“Bank”), through its agent [Bank Agent] (the
“Agent”), and Covanta Holding Corporation (“Counterparty”) on the Trade Date specified below (the
“Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the Master
Agreement specified below. [Barclays Bank PLC is regulated by the
Financial Services Authority. Barclays Bank PLC is not a
member of the Securities Investor Protection Corporation
(“SIPC”).]



The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.,
are incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms used
herein have the meanings assigned to them in the Indenture to be dated on or about May 22, 2009
between Counterparty and Wells Fargo Bank, National Association, as trustee (the “Indenture”)
relating to USD400 million aggregate principal amount of 3.25% Cash Convertible Senior Notes due
2014 (the “Cash Convertible Notes”) issued by Counterparty. In the event of any inconsistency
between the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of
doubt, references herein to sections of the Indenture are based on the draft of the Indenture most
recently reviewed by the parties at the time of the execution of this Confirmation. If any
relevant sections of the Indenture are changed, added, or renumbered following execution of this
Confirmation, the parties will amend this Confirmation in good faith to preserve the economic
intent of the parties. The parties further acknowledge that references to the Indenture herein are
references to the Indenture as in effect on the date of its execution and if the Indenture is
amended following its execution (other than such changes or additions as contemplated in the
immediately preceding sentence), any such amendment will be disregarded for purposes of this
Confirmation unless the parties agree otherwise in writing.



Each party is hereby advised, and each such party acknowledges, that the other party has engaged
in, or refrained from engaging in, substantial financial transactions and has taken other material
actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates
on the terms and conditions set forth below.



1. This Confirmation evidences a complete and binding agreement between Bank and Counterparty as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to, an agreement in the form of the ISDA 1992 Master
Agreement (Multicurrency — Cross Border) (the “Agreement”) as if Bank and Counterparty had
executed an agreement in such form (without any Schedule except for (i) the election of US Dollars
(“USD”) as the Termination Currency, (ii) the replacement of the word “third” in the last line of
Section 5(a)(i) of the Agreement with the word “first”, (iii) the election that the “Cross Default”
provisions of Section 5(a)(vi) of the Agreement (except that the phrase “, or becoming capable at
such time of being




1









 







declared,” shall have been deleted from Section 5(a)(vi)) shall apply to Bank with a “Threshold
Amount” equal to 3% of [Bank Parent Company] shareholders’ funds, and (iv) “Specified
Indebtedness” shall have the meaning specified in Section 14 of the Agreement, except that
indebtedness or obligations in respect of deposits received in the ordinary course of the banking
business of such party shall not constitute Specified Indebtedness) on the Trade Date. In the
event of any inconsistency between provisions of the Agreement and this Confirmation, this
Confirmation will prevail for the purpose of the Transaction. The parties hereby agree that no
Transaction other than the Transaction to which this Confirmation relates shall be governed by the
Agreement.



2. The terms of the particular Transaction to which this Confirmation relates are as follows:




	 	 	 
	General Terms:
	 	 
	 
	Trade Date:

	 	May 18, 2009.
	 
	 	 
	Option Style:

	 	Modified American, as described below under “Procedures
for Exercise”.
	 
	 	 
	Option Type:

	 	Call.
	 
	 	 
	Buyer:

	 	Counterparty.
	 
	 	 
	Seller:

	 	Bank.
	 
	 	 
	Shares:

	 	The common stock, par value USD0.10 per share, of
Counterparty (Ticker symbol “CVA”).
	 
	 	 
	Number of Options:

	 	400,000; provided that if the initial purchasers named in
the Purchase Agreement (as defined in Section 4(a) below)
exercised the option to purchase additional Cash
Convertible Notes (“Additional Cash Convertible Notes”)
pursuant to Section 3 of the Purchase Agreement, the
Number of Options shall be automatically increased,
effective upon payment by Counterparty of the Additional
Premium on the Additional Premium Payment Date, by a
number of Options equal to the number of Additional Cash
Convertible Notes in denominations of USD1,000 principal
amount issued pursuant to such exercise, and Calculation
Agent will promptly notify Counterparty of the increased
Number of Options.
	 
	 	 
	Option Entitlement:

	 	As of any date, a number of Shares per Option equal to
the “Conversion Rate” (as defined in the Indenture) as of
such date, but without regard to any adjustments to the
“Conversion Rate” pursuant to Section 10.03 or to Section
10.04(g) or (h) of the Indenture).
	 
	 	 
	Strike Price:

	 	As provided in Schedule A to this Confirmation.
	 
	 	 
	Applicable Percentage:

	 	[Barclays Bank PLC - 50%;
Citibank, N.A. - 25%; JPMorgan Chase Bank, National
Association - 25%].
	 
	 	 
	Number of Shares:

	 	The product of (i) the Number of Options, (ii) the Option
Entitlement and (iii) the Applicable Percentage.
	 
	 	 
	Premium:

	 	As provided in Schedule A to this Confirmation; provided
that if the Number of Options is increased pursuant to
the proviso to the definition of “Number of Options”
above, Counterparty shall pay on the Additional Premium
Payment Date an additional Premium (the “Additional
Premium”) equal to the product of the number of Options
by which the aggregate Number of Options is so increased
and USD [Barclays Bank PLC - 122.15; Citibank, N.A. - 61.075;
JPMorgan Chase Bank, National Association - 61.075].
	 
	 	 
	Premium Payment Date:

	 	The closing date for the initial issuance of the Cash
Convertible Notes.






2









 






	 	 	 
	Additional Premium Payment Date:

	 	The closing date for the purchase and sale of the
Additional Cash Convertible Notes.
	 
	 	 
	Exchange:

	 	The New York Stock Exchange.
	 
	 	 
	Related Exchange(s):

	 	All Exchanges.
	 
	 	 
	Calculation Agent:

	 	Bank.
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	Exercise Dates:

	 	Each Conversion Date.
	 
	 	 
	Conversion Dates:

	 	Each “Conversion Date” (as defined in the Indenture).
	 
	 	 
	Exercisable Options:

	 	In respect of each Conversion Date, a number of Options
equal to the number of Cash Convertible Notes in
denominations of USD1,000 principal amount satisfying all
of the requirements for conversion on such Conversion
Date in accordance with the terms of the Indenture,
subject to “Notice of Exercise” below, but no greater
than the Number of Options.
	 
	 	 
	Expiration Date:

	 	The earlier of (x) the last day on which any Cash
Convertible Notes remain outstanding and (y) the maturity
date of the Cash Convertible Notes.
	 
	 	 
	Multiple Exercise:

	 	Applicable, as provided under “Exercisable Options” above.
	 
	 	 
	Automatic Exercise:

	 	Applicable, subject to “Notice of Exercise” below.






3









 






	 	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity
Definitions, in order to exercise any Exercisable
Options, Counterparty must notify, or cause the Trustee
to notify, Bank in writing prior to 5:00 p.m., New York
City time, on the day that is at least one Scheduled
Trading Day prior to the first day of the applicable
“Conversion Period” (as defined in the Indenture) in
respect of the Cash Convertible Notes being converted on
the Conversion Date relating to the relevant Exercise
Date (the “Notice Deadline”) of (i) the number of Options
being exercised on such Exercise Date; (ii) the Exercise
Date; (iii) the scheduled commencement date of the
“Conversion Period”; and (iv) the scheduled settlement
date under the Indenture for the relevant Cash
Convertible Notes converted on the Conversion Date
corresponding to such Exercise Date; provided that,
notwithstanding the foregoing, such notice (and the
related automatic exercise of such Options) shall be
effective if given after the relevant Notice Deadline but
prior to 5:00 PM New York City time, on the fifth
Scheduled Trading Day of such “Conversion Period”, in
which case the Calculation Agent shall have the right to
adjust the Delivery Obligation as appropriate to reflect
the additional costs (including, but not limited to,
hedging mismatches and market losses) and reasonable
expenses incurred by Bank in connection with its hedging
activities (including the unwinding of any hedge
position) as a result of its not having received such
notice prior to the Notice Deadline; provided further
that in respect of Cash Convertible Notes converted
during the period beginning on, and including the
55th “Scheduled Trading Day” (as defined in
the Indenture) prior to the “Maturity Date” (as defined
in the Indenture) for such Cash Convertible Notes and
ending on the first “Scheduled Trading Day” immediately
preceding the “Maturity Date”, the Notice Deadline shall
be the first “Scheduled Trading Day” immediately
preceding the “Maturity Date”.






4









 






	 	 	 
	Settlement Terms:
	 	 
	 
	 	 
	Delivery Obligation:

	 	In respect of an Exercise Date occurring on a Conversion
Date, in lieu of the obligations set forth in Sections
8.1 and 9.1 of the Equity Definitions, and subject to
“Notice of Exercise” above, Bank shall pay to
Counterparty on the related Settlement Date, with respect
to a number of Options exercised on such Exercise Date,
an amount in cash equal to the product of (i) the
Applicable Percentage and (ii) the excess, if any, of (x)
the aggregate “Cash Conversion Settlement Amount” (as
defined in the Indenture) that Counterparty is obligated
to pay to the holder(s) of the related Cash Convertible
Notes converted on such Conversion Date pursuant to
Section 10.02(b) of the Indenture over (y) the aggregate
principal amount of such Cash Convertible Notes (such
product, the “Net Cash Settlement Amount”); provided that
such obligation shall be determined excluding (a) any
cash that Counterparty is obligated to pay to holder(s)
of the Cash Convertible Notes as a result of any
adjustments to the Conversion Rate as set forth in
Section 10.03 or in Section 10.04(g) or (h) of the
Indenture and, (b) for the avoidance of doubt, any
interest payment or distribution that Counterparty is
obligated to deliver in respect of Cash Convertible Notes
converted on such Conversion Date.
	 
	 	 
	Notice of Delivery Obligation:

	 	No later than the Scheduled Trading Day immediately
following the last day of the “Conversion Period” (as
defined in the Indenture), Counterparty shall, or shall
cause Trustee to, give Bank notice of the final amount of
cash comprising the Net Cash Settlement Amount; it being
understood, for the avoidance of doubt, that the
requirement of Counterparty to deliver such notice shall
neither (i) limit Counterparty’s obligations with
respect to “Notice of Exercise” above nor (ii) affect
Bank’s delivery obligations hereunder in any way.
	 
	 	 
	Settlement Date:

	 	In respect of an Exercise Date occurring on a Conversion
Date, the settlement date for the cash to be paid in
connection with the related Cash Convertible Notes under
the terms of the Indenture; provided that the Settlement
Date shall not be prior to the Currency Business Day
immediately following the date on which Counterparty
gives notice to Bank of such Settlement Date.
	 
	 	 
	Settlement Currency:

	 	USD.
	 
	 	 
	Share Adjustments:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Notwithstanding Section 11.2 of the Equity Definitions,
upon any adjustment to the “Conversion Rate” (as defined
in the Indenture) and/or the nature of the Shares
underlying the Cash Convertible Notes pursuant to the
Indenture (other than an increase in the “Conversion
Rate” pursuant to Section 10.03 or to Section 10.04(g) or
(h) of the Indenture), the Calculation Agent will make a
corresponding adjustment to any one or more of the Strike
Price, Number of Options, the Option Entitlement and any
other variable relevant to the exercise, settlement,
payment or other terms of the Transaction to the same
extent as the adjustment under the Indenture.
Counterparty agrees that it will notify Bank upon the
effectiveness of any such adjustment.
	 
	 	 
	Extraordinary Events:
	 	 






5









 






	 	 	 
	Merger Events:

	 	Notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence of any
event or condition set forth in Section 10.05 of the
Indenture.
	 
	 	 
	Notice of Merger Consideration:

	 	Upon the occurrence of a Merger Event that causes the
Shares to be converted into or exchanged for more than a
single type of consideration (determined based in part
upon the form of election of the holders of the Shares),
Counterparty shall promptly notify the Calculation Agent
in writing of the types and amounts of consideration that
holders of Shares have affirmatively elected to receive
upon consummation of such Merger Event; provided that in
no event shall the date of such notification be later
than the date on which such Merger Event is consummated.
	 
	 	 
	Consequences of Merger Events:

	 	Notwithstanding Section 12.2 of the Equity Definitions,
upon the occurrence of a Merger Event, the Calculation
Agent shall make a corresponding adjustment in respect of
any adjustment under the Indenture to any one or more of
the nature of the Shares, the Strike Price, the Number of
Options, the Option Entitlement and any other variable
relevant to the exercise, settlement, payment or other
terms of the Transaction; provided, however, that such
adjustment shall be made without regard to any adjustment
to the “Conversion Rate” (as defined in the Indenture)
pursuant to Section 10.03 or to Section 10.04(g) or (h)
of the Indenture.
	 
	 	 
	Nationalization, Insolvency or Delisting:

	 	Cancellation and Payment (Calculation Agent
Determination); provided that, in addition to the
provisions of Section 12.6(a)(iii) of the Equity
Definitions, it will also constitute a Delisting if the
Exchange is located in the United States and the Shares
are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market or the NASDAQ
Global Market (or their respective successors); if the
Shares are immediately re-listed, re-traded or re-quoted
on any such exchange or quotation system, such exchange
or quotation system shall thereafter be deemed to be the
Exchange.
	 
	 	 
	Additional Disruption Events: 
	 	 
	 
	 	 
	Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii)(Y) of the
Equity Definitions is hereby deleted.
	 
	 	 
	Failure to Deliver:

	 	Applicable.
	 
	 	 
	Insolvency Filing:

	 	Applicable.
	 
	 	 
	Hedging Disruption:

	 	Applicable.
	 
	 	 
	Increased Cost of Hedging:

	 	Applicable.
	 
	 	 
	Hedging Party:

	 	Bank for all applicable Additional Disruption Events.
	 
	 	 
	Determining Party:

	 	Bank for all applicable Extraordinary Events.
	 
	 	 
	Acknowledgments:
	 	 
	 
	 	 
	Non-Reliance:

	 	Applicable.
	 
	 	 
	Agreements and Acknowledgments

Regarding Hedging Activities:

	 	Applicable.
	 
	 	 
	Additional Acknowledgments:

	 	Applicable.






6









 






3. Mutual Representations, Warranties and Agreements.



Each of Bank and Counterparty represents and warrants to, and agrees with, the other party that:





	 	(a)	 	Commodity Exchange Act. It is an “eligible contract participant” within the
meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”).
The Transaction has been subject to individual negotiation by the parties. The
Transaction has not been executed or traded on a “trading facility” as defined in
Section 1a(33) of the CEA; and
	 
	 	(b)	 	Securities Act. It is a “qualified institutional buyer” as defined in Rule
144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or an
“accredited investor” as defined in Section 2(a)(15)(ii) of the Securities Act.





4. Representations, Warranties and Agreements of Counterparty.



In addition to the representations and warranties in the Agreement and those contained elsewhere
herein, Counterparty further represents, warrants and agrees that:





	 	(a)	 	the representations and warranties of Counterparty set forth in Section 2 of
the Purchase Agreement dated as of the Trade Date between Counterparty and Barclays
Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as
representatives of the initial purchasers party thereto (the “Purchase Agreement”), are
true and correct and are hereby deemed to be repeated to Bank as if set forth herein;
	 
	 	(b)	 	Counterparty is not as of the Trade Date, and shall not be after giving effect
to the transactions contemplated hereby, “insolvent” (as such term is defined in
Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the
“Bankruptcy Code”));
	 
	 	(c)	 	Counterparty shall immediately provide written notice to Bank upon obtaining
knowledge of the occurrence of any event that would constitute an Event of Default      ,
adjustments specified under “Method of Adjustment”, a Merger Event or any other
Extraordinary Event; provided, however, that should Counterparty be in possession of
material non-public information regarding Counterparty, Counterparty shall not
communicate such information to Bank;
	 
	 	(d)	 	Counterparty’s investments in and liabilities in respect of the Transaction,
which it understands are not readily marketable, are not disproportionate to its net
worth, and Counterparty is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction;
	 
	 	(e)	 	Counterparty understands, agrees and acknowledges that Bank has no obligation
or intention to register the Transaction under the Securities Act, any state securities
law or other applicable federal securities law;
	 
	 	(f)	 	each of Counterparty’s filings under the Securities Act, the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or other applicable securities
laws that are required to be filed have been filed and that, as of the respective dates
thereof and as of the date of this representation, there is no misstatement of material
fact contained therein or omission of a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances under
which they were made, not misleading;
	 
	 	(g)	 	Counterparty is not, and after giving effect to the transactions contemplated
hereby will not be, required to register as an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended;




7









 






	 	(h)	 	Counterparty understands, agrees and acknowledges that no obligations of Bank
to it hereunder shall be entitled to the benefit of deposit insurance and that such
obligations shall not be guaranteed by any affiliate of Bank or any governmental
agency;
	 
	 	(i)	 	(A) Counterparty is acting for its own account, and it has made its own
independent decisions to enter into the Transaction and as to whether the Transaction
is appropriate or proper for it based upon its own judgment and upon advice from such
advisers as it has deemed necessary, (B) Counterparty is not relying on any
communication (written or oral) of Bank or any of its affiliates as investment advice
or as a recommendation to enter into the Transaction (it being understood that
information and explanations related to the terms and conditions of the Transaction
shall not be considered investment advice or a recommendation to enter into the
Transaction) and (C) no communication (written or oral) received from Bank or any of
its affiliates shall be deemed to be an assurance or guarantee as to the expected
results of the Transaction;
	 
	 	(j)	 	without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that Bank is not making any representations or warranties
with respect to the treatment of the Transaction under FASB Statements 128, 133, as
amended, 149 or 150, EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue
statements), under FASB’s Liabilities & Equity Project or under FASB Staff Position or
any other accounting guidance;
	 
	 	(k)	 	Counterparty is not entering into the Transaction for the purpose of (i)
creating actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or (ii) raising or depressing or otherwise
manipulating the price of the Shares (or any security convertible into or exchangeable
for the Shares) in violation of the Exchange Act;
	 
	 	(l)	 	Counterparty shall deliver to Bank an opinion of counsel, dated as of the Trade
Date in form and substance reasonably satisfactory to Bank, with respect to matters set
forth in Section 3(a) of the Agreement, and paragraph 4(g) of this Confirmation, and a
resolution of Counterparty’s board of directors authorizing the Transaction and such
other certificate or certificates as Bank shall reasonably request; and
	 
	 	(m)	 	COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT
MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR
QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND
CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS.





5. Other Provisions.





	 	(a)	 	Method of Delivery. Whenever delivery of funds or other assets is required
hereunder by or to Counterparty, such delivery shall be effected through the Agent. In
addition, all notices, demands and communications of any kind relating to the
Transaction between Bank and Counterparty shall be transmitted exclusively through the
Agent.
	 
	 	(b)	 	Additional Termination Event. (i) If (A) an Amendment Event occurs or (B) an
“Event of Default” with respect to Counterparty under the terms of the Cash Convertible
Notes as set forth in Section 6.01 of the Indenture occurs and the Cash Convertible
Notes are declared immediately due and payable under the terms of the Indenture, an
Additional Termination Event shall occur in respect of which (I) Counterparty shall be
the sole Affected Party and the Transaction shall be the sole Affected Transaction and
(II) Bank shall be the party entitled to designate an Early Termination Date pursuant
to Section 6(b) of the Agreement. Upon a written request by Counterparty following the
public announcement of an event that would otherwise constitute an Amendment Event (as
defined below), but prior to the occurrence of such event, Bank shall use good faith
efforts to propose an adjustment to the terms of the Transaction to account for the
expected economic effect on the Transaction of such event. If Counterparty accepts
Bank’s proposed adjustment prior to the occurrence of such event, Bank shall so adjust
the Transaction




8









 






	 	 	 	and such event shall not constitute an Amendment Event. However, (x) if Counterparty
does not accept such proposed adjustment or (y) Bank determines, in its sole
discretion, that no adjustment that it could make would produce a commercially
reasonable result, then the occurrence of such event shall constitute an Amendment
Event.
	 
	 	 	 	“Amendment Event” means that Counterparty amends, modifies, supplements or obtains a
waiver with respect to (i) any term of the Indenture or the Cash Convertible Notes
governing the principal amount, coupon, maturity, repurchase obligation of
Counterparty, redemption right of Counterparty, any term relating to conversion of
the Cash Convertible Notes (including changes to the conversion rate, conversion
settlement dates or conversion conditions), or (ii) any term of the Indenture or the
Cash Convertible Notes that would require consent of the holders of not less than
100% of the principal amount of the Cash Convertible Notes to amend, in each case
without the prior written consent of Bank, such consent not to be unreasonably
withheld.






	 	(ii)	 	Notwithstanding anything to the contrary in this Confirmation,
if any of the following events described in clauses (1) through (4) occurs, (A)
Counterparty shall immediately notify Bank of such event (such notice, a “Bond
Repurchase Notice”), (B) if Counterparty represents to Bank in writing in such
Bond Repurchase Notice that, at the time of delivery of such notice, none of
Counterparty and its affiliates is in possession of any material non-public
information regarding Counterparty or the Shares, then the delivery of such
notice shall constitute an Additional Termination Event in respect of which (I)
Counterparty shall be the sole Affected Party and the portion of the
Transaction relating to a number of Options equal to the number of Cash
Convertible Notes in denominations of USD1,000 principal amount so repurchased,
exchanged or repaid in connection with any of the events set forth below (the
“Affected Portion”) shall be deemed the sole Affected Transaction (II) Bank
shall designate an Exchange Business Day as an Early Termination Date pursuant
to Section 6(b) of the Agreement (such day to occur as close as practicable, in
Bank’s commercially reasonable judgment, to the settlement date of the
repurchase, exchange or repayment with respect to the Affected Portion) and
(III) for the avoidance of doubt, for purposes of determining any amount
payable pursuant to Section 6 of the Agreement in connection with such
Additional Termination Event, Bank (i) shall take into account the time value
of the Transaction with respect to the maturity date of the Cash Convertible
Notes, (ii) shall give effect to the use of the term “the Applicable
Percentage” under the definitions of “Number of Shares” and “Delivery
Obligation” above and (iii) may use a volume-weighted average price determined
over a time period reasonably determined by Bank:






(1) any Cash Convertible Notes are repurchased (whether in
connection with or as a result of a change of control, howsoever
defined, or for any other reason) by Counterparty or any of its
subsidiaries;




(2) any Cash Convertible Notes are delivered to Counterparty in
exchange for delivery of any property or assets of Counterparty or
any of its subsidiaries (howsoever described);




(3) any principal of any of the Cash Convertible Notes is repaid
prior to the final maturity date of the Cash Convertible Notes
(whether following acceleration of the Cash Convertible Notes or
otherwise); or




(4) any Cash Convertible Notes are exchanged by or for the benefit
of the holders thereof for any other securities of Counterparty or
any of its affiliates (or any other property, or any combination
thereof) pursuant to any exchange offer or similar transaction;




provided that, in the case of each of clauses (1) through (4), conversions of
the Cash Convertible Notes pursuant to the terms of the Indenture shall not be
an Additional Termination Event for purposes of this clause (ii).



9









 






	 	(iii)	 	Notwithstanding anything to the contrary in this Confirmation,
the giving of any Notice of Exercise shall constitute an Additional Termination
Event hereunder with respect to the number, if any, of Exercisable Options
specified in such Notice of Exercise as corresponding to a conversion of Cash
Convertible Notes in compliance with Section 10.03 of the Indenture. Upon
receipt of any such notice, Bank shall designate an Exchange Business Day as an
Early Termination Date (such day to occur as close as practicable, in Bank’s
commercially reasonable judgment, to the settlement date of the related Cash
Convertible Notes under the terms of the Indenture), with respect to the
portion of the Transaction corresponding to number of such Exercisable Options
so specified. In lieu of the provisions of “Delivery Obligation”, any payment
and/or delivery hereunder with respect to such conversion shall be calculated
pursuant to Section 6 of the Agreement; where, for the purposes of such
calculation, (A) Counterparty shall be the sole Affected Party with respect to
such Additional Termination Event and (B) for the avoidance of doubt, in
determining the amount payable pursuant to Section 6 of the Agreement, Bank (I)
shall take into account the time value of the Transaction with respect to the
maturity date of the Cash Convertible Notes (II) shall give effect to the use
of the term “the Applicable Percentage” under the definitions of “Number of
Shares” and “Delivery Obligation” above and (III) shall not take into account
any adjustments to the Option Entitlement that result from corresponding
adjustments to the Conversion Rate pursuant to Section 10.03 of the Indenture;
provided further that (A) in case of a partial termination, an Early
Termination Date shall be designated in respect of a Transaction having terms
identical to the Transaction and a Number of Options equal to the terminated
portion and such Transaction shall be the only Terminated Transaction; and (B)
the amount of cash payable in respect of such early termination by Bank to
Counterparty shall not be greater than the product of (x) the Applicable
Percentage and (y) the excess of (a) the total Cash Conversion Settlement
Amount (calculated by giving effect to any adjustment to the “Conversion Rate”
(as defined in the Indenture) in connection with the conversion of the relevant
Cash Convertible Notes pursuant to Section 10.03 of the Indenture)
over (b) the aggregate principal amount of such Cash Convertible Notes, as
determined by the Calculation Agent in its sole reasonable discretion.






	 	(c)	 	Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any repurchase of Shares, promptly give Bank a written notice of such
repurchase (a “Repurchase Notice”) on such day if following such repurchase, the
Options Equity Percentage as determined on such day is (i) equal to or greater than
[Barclays Bank PLC - 7.5%; Citibank, N.A. - 4.0%; JPMorgan
Chase Bank, National Association - 4.0%] or (ii) greater by 0.5% than the Options Equity Percentage included in the
immediately preceding Repurchase Notice (or, in the case of the first such Repurchase
Notice, greater than the Options Equity Percentage as of the Trade Date). The “Options
Equity Percentage” as of any day is the fraction (A) the numerator of which is the
Number of Shares and (B) the denominator of which is the number of Shares outstanding
on such day. Counterparty agrees to indemnify and hold harmless Bank and its
affiliates and their respective officers, directors, employees, affiliates, advisors,
agents and controlling persons (each, an “Indemnified Person”) from and against any and
all losses (including losses relating to Bank’s hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 “insider”, including without
limitation, any forbearance from hedging activities or cessation of hedging activities
and any losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s fees),
joint or several, which an Indemnified Person may become subject to, as a result of
Counterparty’s failure to provide Bank with a Repurchase Notice on the day specified in
this paragraph. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against the
Indemnified Person in respect of the foregoing, such Indemnified Person shall promptly
notify Counterparty in writing, and Counterparty, upon request of the Indemnified
Person, shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Counterparty may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Counterparty shall not be liable for any settlement of any proceeding
contemplated by this paragraph that is effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
Counterparty agrees to indemnify any Indemnified Person from




10









 






	 	 	 	and against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding contemplated by this
paragraph that is in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified Person
from all liability on claims that are the subject matter of such proceeding on terms
reasonably satisfactory to such Indemnified Person. If the indemnification provided
for in this paragraph is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities. The remedies provided for in
this paragraph (c) are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Person at law or in equity. The
indemnity and contribution agreements contained in this paragraph shall remain
operative and in full force and effect regardless of the termination of the
Transaction.






	 	(d)	 	Rule 10b-18. Except as disclosed to Bank in writing prior to the Trade Date,
Counterparty represents and warrants to Bank that it has not made any purchases of
blocks by or for itself or any of its Affiliated Purchasers pursuant to the one block
purchase per week exception in Rule 10b-18(b)(4) under the Exchange Act during each of
the four calendar weeks preceding such date (“Rule 10b-18 purchase,” “blocks” and
“Affiliated Purchaser” each as defined in Rule 10b-18 under the Exchange Act).
Counterparty agrees and acknowledges that it shall not, and shall cause its Affiliated
Purchasers not to, directly or indirectly (including by means of a derivative
instrument) enter into any transaction to purchase any Shares during the period
beginning on the Trade Date and ending on the day on which Bank has informed
Counterparty in writing that it has completed all purchases of Shares to hedge
initially its exposure to the Transaction; provided, that this Section shall not apply
to the following: (A) purchases of Shares pursuant to exercises of stock options
granted to former or current employees, officers, directors, or other affiliates of
Counterparty, including the withholding and/or purchase of Shares from holders of such
options to satisfy payment of the option exercise price and/or satisfy tax withholding
requirements in connection with the exercise of such options; (B) purchases of Shares
from holders of performance shares or units or restricted shares or units to satisfy
tax withholding requirements in connection with vesting; (C) the conversion or exchange
by holders of any convertible or exchangeable securities of the Counterparty previously
issued; or (D) purchases of Shares effected by or for a plan by an agent independent of
the Counterparty that satisfy the requirements of Rule 10b-18(a)(13)(ii).
	 
	 	(e)	 	Regulation M. Counterparty (A) was not on the Trade Date, has not since such
date, and is not on the date hereof, engaged in a distribution, as such term is used in
Regulation M under the Exchange Act, of any securities of Counterparty, and (B) shall
not engage in any “distribution,” as such term is defined in Regulation M, other than a
distribution meeting the requirements of the exceptions set forth in sections
101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day
immediately following the Trade Date.
	 
	 	(f)	 	Early Unwind. In the event the sale of Cash Convertible Notes is not
consummated with the initial purchasers for any reason by the close of business in New
York on May 22, 2009 (or such later date as agreed upon by the parties) (May 22, 2009
or such later date as agreed upon being the “Early Unwind Date”), the Transaction shall
automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of Bank and Counterparty
under the Transaction shall be cancelled and terminated and (ii) each party shall be
released and discharged by the other party from and agrees not to make any claim
against the other party with respect to any obligations or liabilities of the other
party arising out of and to be performed in connection with the Transaction either
prior to or after the Early Unwind Date; provided that Counterparty shall pay to Bank,
other than in cases involving a breach of the Purchase Agreement by the initial
purchaser thereunder, an amount of cash equal to the aggregate amount of reasonable
costs and expenses relating to the unwinding of Bank’s hedging activities in




11









 






	 	 	 	respect of the Transaction in a commercially reasonable manner (including market
losses incurred in reselling in a commercially reasonable manner any Shares
purchased by Bank or its affiliates in connection with such hedging activities,
unless Counterparty agrees to purchase any such Shares at the cost at which Bank
purchased such Shares) but only to the extent that such market costs and expenses
exceed any realized market gains in such Shares. Bank and Counterparty represent
and acknowledge to the other that, subject to the proviso included in this
paragraph, upon an Early Unwind, all obligations with respect to the Transaction
shall be deemed fully and finally discharged.
	 
	 	(g)	 	Transfer or Assignment. Neither party may transfer or assign any of its rights
or obligations under the Transaction without the prior written consent of the other
party, not to be unreasonably withheld; provided that any such assignment or transfer
by Counterparty shall be subject to receipt by Bank of opinions and documents
reasonably satisfactory to Bank and effected on terms reasonably satisfactory to Bank
with respect to any tax, legal and regulatory matters relevant to the Bank; provided
further that Counterparty shall not be released from its notice and indemnification
obligations hereunder, and Counterparty shall be responsible for all reasonable costs
and expenses, including reasonable counsel fees, incurred by Bank in connection with
any such transfer or assignment. Notwithstanding any provision of the Agreement to the
contrary, Bank may, subject to applicable law, freely transfer and assign all of its
rights and obligations under the Transaction without the consent of Counterparty to any
affiliate of Bank the obligations of which are guaranteed by Bank. In addition, in
order to remediate an Excess Ownership Position, as discussed below it shall use its
commercially reasonable efforts to assign the Excess Ownership Position to a third
party reasonably satisfactory to Counterparty with a rating (or whose guarantor has a
rating) for its long term, unsecured and unsubordinated indebtedness of A- or better by
Standard & Poor’s Ratings Services or its successor (“S&P”), or A3 or better by Moody’s
Investors Service, Inc. or its successor (“Moody’s”) or, if either S&P or Moody’s
ceases to rate such debt, at least an equivalent rating or better by a substitute
rating agency mutually agreed by Counterparty and Bank.
	 
	 	 	 	If at any time at which (1) the Equity Percentage
exceeds 9% or (2) Bank, Bank
Group (as defined below) or any person whose ownership position would be aggregated
with that of Bank or Bank Group (Bank, Bank Group or any such person, a “Bank
Person”) under Section 203 of the Delaware General Corporation Law (the “DGCL
Takeover Statute”) or any state or federal bank holding company or banking laws, or
other federal, state or local laws, regulations or regulatory orders applicable to
ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively
owns, controls, holds the power to vote or otherwise meets a relevant definition of
ownership in excess of a number of Shares equal to (x) the number of Shares that
would give rise to reporting or registration obligations or other requirements
(including obtaining prior approval by a state or federal regulator) of a Bank
Person under Applicable Laws (including, without limitation, “interested
stockholder” or “acquiring person” status under the DGCL Takeover Statute) and with
respect to which such requirements have not been met or the relevant approval has
not been received minus (y) 1% of the number of Shares outstanding on the date
of determination (either such condition described in clause (1) or (2), an “Excess
Ownership Position”) and Bank is unable, after commercially reasonable efforts, to
effect a transfer or assignment on pricing terms and within a time period reasonably
acceptable to it of all or a portion of the Transaction pursuant to the preceding
sentence such that an Excess Ownership Position no longer exists, Bank may designate
any Scheduled Trading Day as an Early Termination Date with respect to a portion
(the “Terminated Portion”) of the Transaction, such that an Excess Ownership
Position no longer exists. In the event that Bank so designates an Early
Termination Date with respect to a portion of the Transaction, a payment shall be
made pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had
been designated in respect of a Transaction having terms identical to the
Transaction and a Number of Options equal to the Terminated Portion, (y)
Counterparty shall be the sole Affected Party with respect to such partial
termination and (z) such Transaction shall be the only Terminated Transaction. The
“Equity Percentage” as of any day is the fraction, expressed as a percentage, (A)
the numerator of which is the number of Shares that Bank and any of its affiliates
subject to aggregation with Bank, for purposes of the




12









 






	 	 	 	“beneficial ownership” test under Section 13 of the Exchange Act, and all persons
who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act) with Bank (“Bank Group”), beneficially own (within the meaning of Section 13 of
the Exchange Act) on such day plus [ ]% of the Shares outstanding on such day and
(B) the denominator of which is the number of Shares outstanding on such day.
	 
	 	 	 	Notwithstanding any other provision in this Confirmation to the contrary requiring
or allowing Bank to purchase, sell, receive or deliver any Shares or other
securities to or from Counterparty, Bank may designate any of its affiliates to
purchase, sell, receive or deliver such Shares or other securities and otherwise to
perform Bank’s obligations in respect of the Transaction and any such designee may
assume such obligations. Bank shall be discharged of its obligations to
Counterparty to the extent of any such performance.






	 	(h)	 	Role of Agent. Each of Bank and Counterparty acknowledges to and agrees with
the other party hereto and to and with the Agent that (i) the Agent is acting as agent
for Bank under the Transaction pursuant to instructions from such party, (ii) the Agent
is not a principal or party to the Transaction, and may transfer its rights and
obligations with respect to the Transaction, (iii) the Agent shall have no
responsibility, obligation or liability, by way of issuance, guaranty, endorsement or
otherwise in any manner with respect to the performance of either party under the
Transaction, (iv) Bank and the Agent have not given, and Counterparty is not relying
(for purposes of making any investment decision or otherwise) upon, any statements,
opinions or representations (whether written or oral) of Bank or the Agent, other than
the representations expressly set forth in this Confirmation or the Agreement, and (v)
each party agrees to proceed solely against the other party, and not the Agent, to
collect or recover any money or securities owed to it in connection with the
Transaction. Each party hereto acknowledges and agrees that the Agent is an intended
third party beneficiary hereunder. Counterparty acknowledges that the Agent is an
affiliate of Bank. Bank will be acting for its own account in respect of this
Confirmation and the Transaction contemplated hereunder.
	 
	 	(i)	 	Regulatory Provisions. The time of dealing for the Transaction will be
confirmed by Bank upon written request by Counterparty. The Agent will furnish to
Counterparty upon written request a statement as to the source and amount of any
remuneration received or to be received by the Agent in connection with the
Transaction.
	 
	 	(j)	 	Netting and Setoff. Obligations under the Transaction shall not be netted,
recouped or set off (including pursuant to Section 6 of the Agreement) against any
other obligations of the parties, whether arising under the Agreement, this
Confirmation, under any other agreement between the parties hereto, by operation of law
or otherwise, and no other obligations of the parties shall be netted, recouped or set
off (including pursuant to Section 6 of the Agreement) against obligations under the
Transaction, whether arising under the Agreement, this Confirmation, under any other
agreement between the parties hereto, by operation of law or otherwise, and each party
hereby waives any such right of setoff, netting or recoupment; provided that both
parties agree that subparagraph (ii) of Section 2(c) of the Agreement shall
apply to the Transaction.
	 
	 	(k)	 	Registration. Counterparty hereby agrees that if, in the good faith reasonable
judgment of Bank, based on the advice of counsel, the Shares (“Hedge Shares”) acquired
by Bank for the purpose of hedging its obligations pursuant to the Transaction cannot
be sold in the public market by Bank without registration under the Securities Act,
Counterparty shall, at its election, either (i) in order to allow Bank to sell the
Hedge Shares in a registered offering, make available to Bank an effective registration
statement under the Securities Act and (A) enter into an agreement, in form and
substance satisfactory to Bank, substantially in the form of a customary underwriting
agreement for a registered offering, (B) use its reasonable best efforts to provide
accountant’s “comfort” letters customary in form for registered offerings of equity
securities, (C) provide customary disclosure opinions of outside counsel to
Counterparty reasonably acceptable to Bank, (D) provide other customary opinions,
certificates and closing documents customary in form for registered offerings of equity
securities and (E) afford Bank a reasonable opportunity to conduct a




13









 






	 	 	 	due diligence investigation with respect to Counterparty customary in scope for
underwritten offerings of equity securities; provided, however, that if Bank, in its
sole reasonable discretion, is not satisfied with access to due diligence materials,
the results of its due diligence investigation, or the procedures and documentation
for the registered offering referred to above, then clause (ii) or clause (iii) of
this paragraph shall apply at the election of Counterparty, (ii) in order to allow
Bank to sell the Hedge Shares in a private placement, enter into and comply with a
private placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance satisfactory to Bank (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction that are necessary, in its reasonable
judgment, to compensate Bank for any discount from the public market price of the
Shares incurred on the sale of Hedge Shares in a private placement), or (iii)
purchase the Hedge Shares from Bank at the closing price on such Exchange Business
Days, and in the amounts, requested by Bank.
	 
	 	(l)	 	Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity
Definitions or in the Agreement, and notwithstanding any express or implied claims of
exclusivity or proprietary rights, the parties (and each of their employees,
representatives or other agents) are authorized to disclose to any and all persons,
beginning immediately upon commencement of their discussions and without limitation of
any kind, the tax treatment and tax structure of the Transaction, and all materials of
any kind (including opinions or other tax analyses) that are provided by either party
to the other relating to such tax treatment and tax structure.
	 
	 	(m)	 	Securities Contract; Swap Agreement. The parties hereto agree and acknowledge
that Bank is a “financial institution,” “swap participant” and “financial participant”
within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.
The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a
“securities contract,” as such term is defined in Section 741(7) of the Bankruptcy
Code, with respect to which each payment and delivery hereunder or in connection
herewith is a “termination value,” “payment amount” or “other transfer obligation”
within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” or
a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap
agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with
respect to which each payment and delivery hereunder or in connection herewith is a
“termination value,” a “payment amount” or “other transfer obligation” within the
meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of
Section 546 of the Bankruptcy Code, and (B) that Bank is entitled to the protections
afforded by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o),
546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.
	 
	 	(n)	 	No Material Non-Public Information. Counterparty represents and warrants to
Bank as of the Trade Date that it is not aware of any material non-public information
concerning itself or the Shares.
	 
	 	(o)	 	Right to Extend. Bank may postpone any Exercise Date or postpone or extend any
other date of valuation or delivery with respect to some or all of the relevant Options
(in which event the Calculation Agent shall make appropriate adjustments to the Cash
Conversion Settlement Amount for such Options), if Bank determines, in its reasonable
discretion, that such postponement or extension is reasonably necessary or appropriate
to preserve Bank’s hedging or hedge unwind activity hereunder in light of existing
liquidity conditions or to enable Bank to effect purchases of Shares in connection with
its hedging, hedge unwind or settlement activity hereunder in a manner that would, if
Bank were Counterparty or an affiliated purchaser of Counterparty, be in compliance
with applicable legal, regulatory or self-regulatory requirements, or with related
policies and procedures applicable to Bank.
	 
	 	(p)	 	Payments on Early Termination. The parties hereto agree that for the
Transaction, for the purposes of Section 6(e) of the Agreement, Loss and Second Method
will apply.




14









 






	 	(q)	 	Governing Law. The law of the State of New York (without reference to choice
of law doctrine). The parties hereto irrevocably submit to the non-exclusive
jurisdiction of the courts of the State of New York and the United States Court for the
Southern District of New York in connection with all matters relating hereto and waive
any objection to the laying of venue in, and any claim of inconvenient forum with
respect to, these courts.
	 
	 	(r)	 	Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING RELATING TO THE TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR
PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE
OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.





6. Account Details:





	 	(a)	 	Account for payments to Counterparty:
	 
	 	 	 	Wire instructions:
	 
	 	 	 	[                                        ]
	 
	 	 	 	ACH instructions:
	 
	 	 	 	[                                        ]
	 
	 	(b)	 	Account for payments to Bank:
	 
	 	 	 	[                                        ]





7. Offices:



The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch
Party.



The Office of Bank for the Transaction is: Inapplicable, Bank is not a Multibranch Party.




8. Notices:



For purposes of this Confirmation:





	 	(a)	 	Address for notices or communications to Counterparty:
	 
	 	 	 	Covanta Holding Corporation

40 Lane Road

Fairfield, New Jersey

Attention: General Counsel

Telephone No.: (+1) 973-882-4193

Facsimile No.: (+1) 973-882-7357
	 
	 	(b)	 	Address for notices or communications to Bank:
	 
	 	 	 	[                                        ]




15









 






	 	 	 	with a copy to:
	 
	 	 	 	[                                        ]
	 
	 	 	 	and
	 
	 	 	 	[                                        ]




This Confirmation may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.




16









 







Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly
sets forth the terms of the Transaction by signing in the space provided below and returning to
Bank a facsimile of the fully-executed Confirmation to Bank at [            ]. Originals shall be provided
for your execution upon your request.



Very truly yours,



AGENT

acting solely as Agent for Bank in connection with the Transaction




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






Accepted and confirmed as of the Trade Date:




COVANTA HOLDING CORPORATION




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






[Cash Convertible Note Hedge Transaction Signature Page]




 









 





SCHEDULE A



For purposes of the Transaction, the following terms shall have the following values/meanings:




	 	 	 	 	 
	1.

	 	Strike Price:
	 	USD[                                        ].
	2.

	 	Premium:
	 	USD[                                        ].