Document:

<PAGE>

                                                                    EXHIBIT 10.6

                                    SCHEDULE

                                     to the

                              ISDA MASTER AGREEMENT

     This is the Schedule to that certain ISDA Master Agreement dated as of May
5, 2006, between Wells Fargo Bank, National Association ("Party A") and Lindsay
Manufacturing Co., a Delaware corporation ("Party B").

                                     PART 1

                             TERMINATION PROVISIONS

In this Agreement:

     (A) "Specified Entity" means "Affiliates" in relation to Party B, and "not
applicable" in relation to Party A.

     (B) "Specified Transaction" will have the meaning specified in Section 14
of this Agreement. In addition, Specified Transaction shall also include any
agreements or obligations between Party A and Party B, including, without
limitation, any loan, lines of credit, credit agreement, reimbursement
agreement, security agreement or other similar agreement.

     (C) The "Cross-Default" provisions of Section 5(a)(vi) of this Agreement
will apply to Party A and to Party B.

     "Specified Indebtedness" will have the meaning specified in Section 14; and
shall include, with respect to Party B, any indebtedness or obligation owing by
Party B to Party A (including, without limitation, any obligations owed by Party
B to Party A arising under any account agreement, loan, line of credit, credit
agreement, reimbursement agreement, security agreement or other similar
agreement); provided, however, with respect to Party A such term shall not
include deposits and obligations in respect of deposits received in the ordinary
course of Party A's banking business.

     "Threshold Amount" means with respect to Party A, an amount equal to 3% of
the Shareholders Equity (as hereinafter defined) of Party A and with respect to
Party B, $5,000,000.00; provided that with respect to obligations owed by Party
B to Party A and its Affiliates the Threshold Amount shall mean $0.

     "Shareholders' Equity" means, with respect to Party A, at any time, the sum
(as shown in its most recent annual audited financial statements) of (i) its
capital stock (including preferred stock outstanding, taken at par value), (ii)
its capital surplus and (iii) its retained earnings, minus

                                      -49-

<PAGE>

(iv) treasury stock, each to be determined in accordance with generally accepted
accounting principles.

     (D) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of this
Agreement will apply to Party A and to Party B.

     (E) The "Automatic Early Termination" provision of Section 6(a) of this
Agreement will not apply to Party A or to Party B.

     (F) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement: (i) Loss will apply, and (ii) Second Method will apply.

     (G) "Termination Currency" means United States Dollars.

     (H) Additional Termination Event will apply. Each of the following shall
constitute an Additional Termination Event:

          (i) Key Agreements. Any promissory note, loan agreement, credit
     agreement reimbursement agreement or other document or instrument
     evidencing a credit extension from Party A to Party B is terminated,
     cancelled, voided, breached or amended in any manner which would affect
     Party's B ability to perform its obligations under this Agreement,
     determined by Party A in its sole discretion. Upon the occurrence of such
     event, Party B shall be deemed to be the sole Affected Party and all
     Transactions shall be deemed to be Affected Transactions.

                                     PART 2

                               TAX REPRESENTATIONS

     (A) Payer Representations. For the purpose of Section 3(e) of this
Agreement, each party makes the following representation:

     It is not required by any applicable law, as modified by the practice of
     any relevant governmental revenue authority, of any Relevant Jurisdiction
     to make any deduction or withholding for or on account of any Tax from any
     payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
     Agreement) to be made by it to the other party under this Agreement. In
     making this representation, it may rely on (i) the accuracy of any
     representations made by the other party pursuant to Section 3(f) of this
     Agreement, (ii) the satisfaction of the agreement contained in Section
     4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness
     of any document provided by the other party pursuant to Section 4(a)(i) or
     4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of
     the other party contained in Section 4(d) of this Agreement, provided that
     it shall not be a breach of this representation where reliance is placed on
     clause

                                      -50-

<PAGE>

     (ii) and the other party does not deliver a form or document under Section
     4(a)(iii) by reason of material prejudice to its legal or commercial
     position.

     (B) Payee Representations.

          (i) For the purpose of Section 3(f) of this Agreement, Party A
     represents that it is a national banking association organized under the
     laws of the United States.

          (ii) For the purpose of Section 3(f) of this Agreement, Party B
     represents that it is a corporation established under the laws of the State
     of Delaware.

                                     PART 3

                         AGREEMENT TO DELIVER DOCUMENTS

     For the purposes of Section 4(a)(i) and (ii) of this Agreement, the parties
agrees that the following documents will be delivered:

<TABLE>
<CAPTION>
                                                                                                   COVERED BY
PARTY REQUIRED TO                                                       DATE BY WHICH              SECTION 3(D)
DELIVER DOCUMENT             FORM/DOCUMENT/CERTIFICATE                 TO BE DELIVERED           REPRESENTATION
---------------------   ------------------------------------   -------------------------------   --------------
<S>                     <C>                                    <C>                               <C>
Party B and any         Satisfactory evidence of its           Upon execution of this                 Yes
Credit Support          capacity and ability to enter into     Agreement and upon request
Provider of Party B     this Agreement and any Transaction
                        hereunder

Party B and any         Certified evidence of the authority,   Upon execution of this                 Yes
Credit Support          incumbency and specimen signature of   Agreement and upon request
Provider of Party B     each person executing any document
                        on its behalf in connection with
                        this Agreement

Party A                 Party A Designation of Authority and   Upon the reasonable request of         Yes
                        related extract from Party A's         Party B in connection with the
                        By-Laws, certified by the Secretary    execution of this Agreement
                        or an Assistant Secretary,
                        authorizing the execution, delivery
                        and performance of derivative
                        instruments of any kind
</TABLE>

                                      -51-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                   COVERED BY
PARTY REQUIRED TO                                                       DATE BY WHICH              SECTION 3(D)
DELIVER DOCUMENT             FORM/DOCUMENT/CERTIFICATE                 TO BE DELIVERED           REPRESENTATION
---------------------   ------------------------------------   -------------------------------   --------------
<S>                     <C>                                    <C>                               <C>
Party B                 Duly executed and completed U.S.       Upon execution of this                 Yes
                        Internal Revenue Service Form W-9      Agreement, promptly upon
                        (or successor thereto).                reasonable demand by Party A
                                                               and promptly upon learning that
                                                               any such form previously
                                                               provided by Party B has become
                                                               obsolete or incorrect
</TABLE>

                                     PART 4

                                  MISCELLANEOUS

     (A) Addresses for Notices. For the purpose of Section 12(a) of this
Agreement:

          Address for notices or communications to Party B:

          Address: Lindsay Manufacturing Co.
                   2707 N. 108th Street, Suite 102
                   Omaha, NE 68154
                   Facsimile: 402 829 6836
                   Attention: Dave Downing

          Address for all notices or communications to Party A:

          Address: Wells Fargo Bank, National Association
                   417 Montgomery Street, Suite 500
                   MAC A0108-050
                   San Francisco, California 94104
                   Facsimile: 415 646 9166
                   Attention: Derivatives Documentation Manager

          Additional Address for notices or communications for operational
          purposes (payments and settlements):

                                      -52-

<PAGE>

          Address: Wells Fargo Bank, National Association
                   417 Montgomery Street, Suite 500
                   MAC A0108-050
                   San Francisco, California 94104
                   Facsimile No.: (415) 646-9208
                   Attention: Back Office Operations - Settlements

     (B) Process Agent. For the purpose of Section 13(c) of this Agreement,
neither Party A nor Party B will appoint a Process Agent.

     (C) Offices. The provisions of Section 10(a) will apply to this Agreement.

     (D) Multibranch Party. For the purpose of Section 10(c) of this Agreement:

          Party A is not a Multibranch Party.

          Party B is not a Multibranch Party.

     (E) Calculation Agent. The Calculation Agent is Party A.

     (F) Credit Support Document.

          Credit Support Document means, in relation to Party A: None.

          Credit Support Document means, in relation to Party B: None.

     (G) Credit Support Provider.

          Credit Support Provider means in relation to Party A: None.

          Credit Support Provider means in relation to Party B:  None.

     (H) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law doctrine.

     (I) Netting of Payments. Section 2(c) of this Agreement will apply to each
Transaction.

     (J) "Affiliate" will have the meaning specified in Section 14 of this
Agreement; provided, however, that Party A shall not have any Affiliates for
purposes of this Agreement.

                                     PART 5

                                OTHER PROVISIONS

                                      -53-

<PAGE>

     (A) Confirmations. Notwithstanding anything to the contrary in this
Agreement:

          (i) The parties hereto agree that with respect to each Transaction
     hereunder a legally binding agreement shall exist from the moment that the
     parties hereto agree on the essential terms of such Transaction, which the
     parties anticipate will occur by telephone.

          (ii) For each Transaction Party A and Party B agree to enter into
     hereunder, Party A shall promptly send to Party B a Confirmation setting
     forth the terms of such Transaction. Party B shall execute and return the
     Confirmation to Party A or request correction of any error within three
     Business Days of receipt. Failure of Party B to respond within such period
     shall not affect the validity or enforceability of such Transaction and
     shall be deemed to be an affirmation of such terms.

     (B) Definitions. For each Transaction (unless otherwise specified in a
Confirmation) all provisions of the 2000 ISDA Definitions (as published by the
International Swaps & Derivatives Association, Inc.), including the Annex to the
2000 ISDA Definitions and any supplements thereto, are hereby incorporated by
this reference into this Agreement and shall form a part hereof as if set forth
in full herein.

     (C) Additional Representations. Section 3 of this Agreement is hereby
amended by adding at the end thereof the following subsections (g) through (l):

     "(g) ELIGIBLE CONTRACT PARTICIPANT. It is either an "eligible contract
     participant" as that term is defined in Section 1a(12) of the Commodity
     Exchange Act (7 U.S.C. 1a(12)) and was not formed solely for the purposes
     of constituting an "eligible contract participant, or if it is not an
     eligible contract participant, this Agreement (including each Transaction)
     is undertaken in conjunction with its line of business (including financial
     intermediation services) or the financing of its business."

     "(h) NO AGENCY. It is entering into this Agreement, any Credit Support
     Document to which it is a party, each Transaction and any other
     documentation relating to this Agreement or any Transaction as principal
     (and not as agent or in any other capacity, fiduciary or otherwise)."

     "(i) CREDITWORTHINESS. The economic terms of this Agreement, and any Credit
     Support Documents to which it is a party, and each Transaction have been
     individually tailored and negotiated by it, and the creditworthiness of the
     other party was a material consideration in its entering into or
     determining the terms of this Agreement, such Credit Support document, and
     such Transaction."

     "(j) INDIVIDUAL NEGOTIATION. This Agreement (including each Transaction)
     has been subject to individual negotiation by the parties, including
     individualized creditworthiness determinations."

     "(k) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of
     and understanding (on its own behalf or through independent professional
     advice), and understands and accepts the terms, conditions and risks of
     this Agreement and each

                                      -54-

<PAGE>

     Transaction hereunder. It is also capable of assuming, and assumes, the
     risks of this Agreement and each Transaction hereunder."

     "(l) NON-RELIANCE. It is acting for its own account, and it has made its
     own independent decisions to enter into that Transaction and as to whether
     that Transaction is appropriate or proper for it based upon its own
     judgment and upon advice from such advisers as it has deemed necessary. It
     is not relying on any communication (written or oral) of the other party as
     investment advice or as a recommendation to enter into that Transaction: it
     being understood that information and explanations related to the terms and
     conditions of a Transaction shall not be considered investment advice or a
     recommendation to enter into a Transaction. No communication (written or
     oral) received from the other party shall be deemed to be an assurance or
     guarantee of the expected results of that Transaction."

     (D) Right of Setoff. Section 6 of this Agreement is amended by adding the
following new Section 6(f):

     "(f) SET-OFF. Any amount (the "Early Termination Amount") payable to one
     party (the Payee) by the other party (the Payer) under Section 6(e), in
     circumstances where there is a Defaulting Party or one Affected Party,
     will, at the option of the party ("X") other than the Defaulting Party or
     the Affected Party (and without prior notice to the Defaulting Party or the
     Affected Party), be reduced by its set-off against any amount(s) (the
     "Other Agreement Amount") payable (whether at such time or in the future or
     upon the occurrence of a contingency) by the Payee to the Payer
     (irrespective of the currency, place of payment or booking office of the
     obligation) under any other agreement(s) issued or executed by one party to
     or in favour of, the other party (and the Other Agreement Amount will be
     discharged promptly and in all respects to the extent it is so set-off). X
     will give notice to the other party of any set-off effected under this
     Section 6(f).

     For this purpose, either the Early Termination Amount or the Other
     Agreement Amount (or the relevant portion of such amounts) may be converted
     by X into the currency in which the other is denominated at the rate of
     exchange at which such party would be able, acting in a reasonable manner
     and in good faith, to purchase the relevant amount of such currency.

     If an obligation is unascertained, X may in good faith estimate that
     obligation and set-off in respect of the estimate, subject to the relevant
     party accounting to the other when the obligation is ascertained.

     Nothing in this Section 6(f) shall be effective to create a charge or other
     security interest. This Section shall be without prejudice and in addition
     to any right of set-off, combination of accounts, lien or other right to
     which any party is at any time otherwise entitled (whether by operation of
     law, contract or otherwise)."

                                      -55-

<PAGE>

     (E) Inconsistency Among Definitions or Provisions. In the event of any
inconsistency between the definitions or provisions in any of the following
documents, the relevant document first listed below shall govern: (i) a
Confirmation (with respect only to definitions in such Confirmation; provided,
however, that other provisions in a Confirmation will govern over inconsistent
provisions in the following documents to the extent that such Confirmation
explicitly states its intent to modify the following documents); (ii) the
Schedule to the ISDA Master Agreement; (iii) the ISDA Master Agreement; and (v)
the 2000 ISDA Definitions.

     (F) Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of the Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. The parties hereto
shall endeavor in good faith negotiations to replace the prohibited or
unenforceable provision with a valid provision, the economic effect of which
comes as close as possible to that of the prohibited or unenforceable provision.

     (G) WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY TRIAL OR LITIGATION ARISING OUT OF OR IN
CONNECTION WITH ANY TRANSACTION OR THIS AGREEMENT.

     (H) RISK DISCLOSURE. PARTY B HEREBY ACKNOWLEDGES AND AGREES THAT IT HAS:
(X) READ THE RISK DISCLOSURE SET FORTH ON EXHIBIT A; (Y) UNDERSTANDS SUCH RISK
DISCLOSURE; AND (Z) HAD AN ADEQUATE OPPORTUNITY TO DISCUSS ANY QUESTIONS OR
COMMENTS THAT IT MAY HAVE HAD WITH RESPECT TO SUCH RISK DISCLOSURE PRIOR TO THE
EXECUTION OF THIS AGREEMENT.

     (J) Consent to Recording. Each party (i) consents to the recording of the
telephone conversations of trading and marketing personnel of the parties in
connection with this Agreement or any potential Transaction, and (ii) agrees to
obtain any necessary consents of and give notice of such recording to its
personnel, and (iii) consents to the submission of any such tape recording in
evidence in any Proceedings.

     IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified on the
first page of this document.

Party A                                 Party B

WELLS FARGO BANK, NATIONAL              LINDSAY MANUFACTURING CO.,
ASSOCIATION                             a Delaware corporation

                                      -56-

<PAGE>

By: /s/ Martha Burke                    By: /s/ Richard W. Parod
    ---------------------------------       ------------------------------------
Name: Martha Burke                      Name: Richard W. Parod
Title: Authorized Signatory             Title: President & Chief Executive
                                               Officer

                                    EXHIBIT A

                                 RISK DISCLOSURE

AS IS COMMON WITH MANY OTHER FINANCIAL INSTRUMENTS AND TRANSACTIONS, FINANCIAL
RISK MANAGEMENT PRODUCTS, IN ADDITION TO PROVIDING SIGNIFICANT BENEFITS, MAY IN
CERTAIN CASES INVOLVE A VARIETY OF SIGNIFICANT RISKS.

BEFORE ENTERING INTO ANY FINANCIAL RISK MANAGEMENT TRANSACTION, YOU SHOULD
CAREFULLY CONSIDER WHETHER THE TRANSACTION IS APPROPRIATE FOR YOU IN LIGHT OF
YOUR OBJECTIVES, EXPERIENCE, FINANCIAL AND OPERATIONAL RESOURCES, AND OTHER
RELEVANT CIRCUMSTANCES. YOU SHOULD ALSO ENSURE THAT YOU FULLY UNDERSTAND THE
NATURE AND EXTENT OF YOUR EXPOSURE TO RISK OF LOSS, IF ANY, WHICH IN SOME
CIRCUMSTANCES MAY SIGNIFICANTLY EXCEED THE AMOUNT OF ANY INITIAL PAYMENT MADE BY
OR TO YOU.

FINANCIAL RISK MANAGEMENT PRODUCTS PERMIT PRECISE CUSTOMIZATION TO ACCOMPLISH
PARTICULAR FINANCIAL AND RISK MANAGEMENT OBJECTIVES THAT MIGHT OTHERWISE BE
UNACHIEVABLE. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR TRANSACTION
NECESSARILY DEPEND UPON THE TERMS OF THAT TRANSACTION AND YOUR CIRCUMSTANCES.
COMMON TO ALL, HOWEVER, IS THEIR NATURE AS LEGALLY BINDING CONTRACTUAL
COMMITMENTS, WHICH, ONCE AGREED TO, CANNOT BE ALTERED OTHER THAN BY TERMINATION
OR MODIFICATION. YOU SHOULD UNDERSTAND THAT SUCH TERMINATION AND/OR MODIFICATION
MAY, IN CERTAIN CIRCUMSTANCES, RESULT IN SIGNIFICANT LOSSES.

AS IN ANY FINANCIAL TRANSACTION, YOU SHOULD ENSURE THAT YOU UNDERSTAND THE
REQUIREMENTS, IF ANY, APPLICABLE TO YOU THAT ARE ESTABLISHED BY YOUR REGULATORS
OR BY YOUR BOARD OF DIRECTORS OR OTHER GOVERNING BODY. YOU SHOULD ALSO CONSIDER
THE LEGAL, TAX, ACCOUNTING, AND ECONOMIC IMPLICATIONS OF ENTERING INTO ANY
FINANCIAL RISK MANAGEMENT TRANSACTION, INDEPENDENTLY AND IF

                                      -57-

<PAGE>

NECESSARY, THROUGH CONSULTATION WITH SUCH ADVISORS AS MAY BE APPROPRIATE TO
ASSIST YOU IN UNDERSTANDING THE RISKS INVOLVED.

IN ENTERING INTO ANY FINANCIAL RISK MANAGEMENT TRANSACTION WITH, OR ARRANGED BY,
US, WELLS FARGO BANK, N.A. (THE "BANK"), YOU SHOULD ALSO UNDERSTAND THAT THE
BANK IS ACTING SOLELY IN THE CAPACITY OF AN ARM'S LENGTH CONTRACTUAL COUNTER
PARTY AND NOT IN THE CAPACITY OF YOUR FINANCIAL ADVISOR OR FIDUCIARY UNLESS THE
BANK HAS SO AGREED IN WRITING AND THEN ONLY TO THE EXTENT SO PROVIDED.

THIS BRIEF STATEMENT DOES NOT PURPORT TO DISCLOSE ALL OF THE RISKS OR OTHER
RELEVANT CONSIDERATIONS OF ENTERING INTO FINANCIAL RISK MANAGEMENT TRANSACTIONS.

                                      -58-exv10w1

 

Exhibit 10.1

COVANTA HOLDING CORPORATION

RESTRICTED STOCK AWARD AGREEMENT

     THIS AGREEMENT is made and entered into as of this 31st day of May, 2006 (the “Grant Date”) by
and between Covanta Holding Corporation, a Delaware corporation (the “Company”), and
__________________(the “Awardee”), pursuant to the Covanta Holding Corporation 2005
Equity Award Plan for Directors (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:

     1. Award of Restricted Stock. In consideration for the continued service of the
Awardee as a Director, the Company hereby awards to the Awardee, subject to the further terms and
conditions set forth in this Agreement, 4,500 shares (the “Restricted Stock”) of its common stock,
$0.10 par value per share (the “Common Stock”), as of the Grant Date.

     2. Rights of Stockholder. Awardee shall have all of the rights of a stockholder with
respect to the shares of Restricted Stock (including the right to vote the shares of Restricted
Stock and the right to receive dividends with respect to the shares of Restricted Stock), except as
provided in Section 3 and Section 6 hereof.

     3. Restrictions on Transfer. Except as otherwise provided in this Agreement, Awardee
may not sell, transfer, assign, pledge, encumber or otherwise dispose of any of the shares of
Restricted Stock or the rights granted hereunder (any such disposition or encumbrance being
referred to herein as a “Transfer”). Any Transfer or purported Transfer by Awardee of any of the
shares of Restricted Stock 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 shares. The shares of Restricted
Stock shall not be subject to sale, execution, pledge, attachment, encumbrance or other process and
no person shall be entitled to exercise any rights of Awardee as the holder of such Restricted
Stock by virtue of any attempted execution, attachment or other process until the restrictions
imposed herein on the Transfer of the shares of Restricted Stock shall lapse as provided in Section
4 hereof. All certificates representing the shares of Restricted Stock shall have endorsed thereon
the following legend (in addition to any other legends that are customary or required on
certificates representing shares of the Company’s Common Stock):

     “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER TERMS AND CONDITIONS (INCLUDING FORFEITURE) SET FORTH IN A
RESTRICTED STOCK AWARD AGREEMENT DATED AS OF MAY 31, 2006, BETWEEN THE COMPANY AND
THE REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY. ANY TRANSFER OR PURPORTED TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IN VIOLATION OF SUCH RESTRICTED STOCK AWARD AGREEMENT SHALL BE NULL AND
VOID.”

 

 

     If and when the restrictions imposed herein on the transfer of shares of Restricted Stock
shall have lapsed as provided in Section 4 hereof, certificates for such shares without the
restricted stock legend set forth in this section shall be delivered to the Awardee. Until such
restrictions have lapsed, any certificates representing any shares of Restricted Stock shall be
held in custody by the Company. Awardee may request the removal of such restricted stock legend
from certificates representing any shares of Restricted Stock as to which the restrictions imposed
herein on the transfer thereof shall have lapsed as provided in Section 5 hereof. Such request
shall be in writing to the General Counsel of the Company.

     4. Lapse of Restrictions and Forfeiture. Subject to Section 4(c) hereof, the
restrictions on transfer imposed on the shares of Restricted Stock by this Section 4 shall lapse
with respect to the shares of Restricted Stock and the Awardee will vest, or gain actual
“ownership” of the shares of Restricted Stock in accordance with the terms of Section 4(a) hereof.
Except as set forth below, in the event that prior to the lapse of restrictions on transfer,
Awardee’s service as a Director terminates, then all shares of Restricted Stock as to which the
restrictions upon transfer imposed by Section 3 hereof shall not have lapsed prior to such date,
shall be forfeited as of the date such service as a Director terminates.

          (a) Restricted Stock Vesting. The Restricted Stock shall vest as of the dates and in
the amounts set forth below provided that the Awardee is serving as a Director on such date:

	 	A.	 	1,500 shares shall vest on May 31, 2006;
	 
	 	B.	 	1,500 shares shall vest on May 31, 2007; and
	 
	 	C.	 	1,500 shares shall vest on May 31, 2008.

          (b) Notwithstanding anything to the contrary in Section 4(a), in the event that prior to the
lapse of restrictions on transfer pursuant to Section 4(a), Awardee’s service as a Director is
terminated as a result of (i) Awardee’s death, disability or retirement as a Director, or (ii) the
decision of the Company’s Nominating and Governance Committee not to recommend Awardee for
re-election to the Board of Directors for any reason other than (A) “for cause” (as that term is
contemplated by the General Corporation Law of the State of Delaware), (B) for failure to comply
with the Company’s Board Charter, Corporate Governance Guidelines, or Policy of Business Conduct,
or (C) at Awardee’s request not to be nominated other than as a result of Awardee’s disability or
retirement, then the Restricted Stock shall continue to vest pursuant to Section 4(a)
notwithstanding Awardee’s termination of service as a Director.

          (c) Notwithstanding anything to the contrary in Sections 4(a) or (b) hereof, in the event of a
Change in Control, the restrictions on transfer imposed by Section 3 on the shares of Restricted
Stock shall lapse. 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

2

 

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.

          (d) 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
Restricted Stock 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 shares
of Restricted Stock then held by Awardee shall be deemed to vest and become exercisable at such
time in order to permit Awardee to participate in such transaction.

          (e) For purposes of this Section 4, “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 Sections 13(d) and 14(d) of
the Exchange Act.

     5. Transferability. Notwithstanding anything contained in this Agreement to the
contrary, shares of Restricted Stock are not transferable or assignable by the Awardee until the
restrictions thereon have lapsed.

     6. Adjustment Provisions. If, during the term of this Agreement, there shall be any
merger, reorganization, consolidation, recapitalization, stock dividend, stock split, rights
offering

3

 

or extraordinary distribution with respect to the Common Stock, or other change in
corporate structure affecting the Common Stock, the Committee shall make or cause to be made an
appropriate and equitable substitution, adjustment or treatment with respect to the Restricted
Stock, including a substitution or adjustment in the aggregate number or kind of shares subject to
this Agreement, notwithstanding that the Restricted Stock are subject to the restrictions on
transfer imposed by Section 3 above. Any securities, awards or rights issued pursuant to this
Section 6 shall be subject to the same restrictions as the underlying Restricted Stock to which
they relate.

     7. Tax Withholding. As a condition precedent to the receipt of any shares of
Restricted Stock hereunder, Awardee 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 Awardee recognizes as a result of (i) the lapse of the restrictions imposed by
Section 3 hereof on the shares of Restricted Stock or (ii) Awardee’s filing of an election pursuant
to Section 83(b) of the Internal Revenue Code of 1986 (the “Code”), as amended, with respect to the
shares of Restricted Stock. 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 Awardee.

     8. 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 subject hereto 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 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.

     9. Rights of Awardee. In no event shall the granting of the Restricted Stock or the
other provisions hereof or the acceptance of the Restricted Stock by Awardee confer upon Awardee
any right to continue as a Director.

     10. 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 17(c) of the Plan, this Agreement may be amended by the Board or Compensation
Committee at any time.

4

 

     (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 10. 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 Awardee shall be addressed to the Awardee or such other person
or persons at the address shown below the Awardee’s name 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.

     (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.

	 	 	 	 	 
	 	COVANTA HOLDING CORPORATION

 	 
	 	By:  	 	 
	 
	 	 	Title 	 	 
	 	 	 	 
	 

Accepted
this
____________ day
of

________________________, 2006.

 

AWARDEE’S ADDRESS:

5

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