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EXHIBIT 10.3




LATENT DEFICIENCY CLAIMS

ADMINISTRATION PROCEDURES AGREEMENT




     This Latent Deficiency Claims Administration Procedures Agreement is entered into as of the
date set forth below between John Garamendi, Insurance Commissioner of the State of California, in
his capacity as Trustee of the Mission Insurance Company Trust, the Mission National Insurance
Company Trust and the Enterprise Insurance Company Trust, on the one hand, and Covanta Holding
Corporation, formerly known as Danielson Holding Corporation on the other hand. Unless otherwise
defined herein, capitalized terms shall have the meaning ascribed to them in the Rehabilitation
Plan Implementation Agreement entered into as of even date herewith by and among the parties
hereto.



Definitions




     1. “Agreement” shall mean this Latent Deficiency Claims Administration Procedures Agreement
between the parties set forth above.



     2. “Deficiency Claims” shall have the meaning ascribed to such term in Section 1.8 of the RRR
Agreement.



     3. “Latent Deficiency Claim” shall mean a claim that is a “Deficiency Claim” except that the
claimant did not qualify as a creditor against EICT, MICT or MNICT under California Insurance Code
Sections 1021 to 1024 and 1032 for one or more of the reasons listed below



a. The claimant did not meet the August 18, 1995 deadline for filing amendments to
proofs of claim, pursuant to the Amended Final Liquidation Dividend plan for the EICT, MICT
and MNICT;





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b. The claimant’s claim was an otherwise valid policyholder priority claim within the
meaning of Section 1033 of the California Insurance Code, but did not become liquidated (in
whole or in part) and certain within the meaning of California Insurance Code Section 1025
by the court-ordered deadline of December 31, 2003 (for purposes of clarity and the
definition of Latent Deficiency Claims, but not for the purpose of any revaluation of proof
of claims for purposes of distributions under Section 1033 of the California Insurance Code,
and without limiting the generality of the foregoing, this category includes claims of
claimants under direct insurance contracts issued by Mission Insurance Company, Mission
National Insurance Company and Enterprise Insurance Company that were settled for less than
the stated amount of such claims); or



c. The claimant’s claim was an otherwise valid non-policyholder priority claim within the
meaning of Section 1033 of the California Insurance Code, but did not become liquidated (in
whole or in part) and certain within that meaning of California Insurance Code Section 1025
by the court-ordered deadline of August 2, 2004 (for purposes of clarity and the definition
of Latent Deficiency Claims, but not for the purpose of any revaluation of proof of claims
for purposes of distributions under Section 1033 of the California Insurance Code, and
without limiting the generality of the foregoing, this category include claims of claimants
under reinsurance contracts issued by Mission Insurance Company, Mission National Insurance
Company and Enterprise Insurance Company that were settled for less than the stated amount
of such claims).




     4. “Implementation Agreement” shall mean the Rehabilitation Plan Implementation Agreement
below between John Garamendi, Insurance Commissioner of the State of California, in his capacity as
Trustee of the Mission Insurance Company Trust, the Mission National




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Insurance Company Trust and
the Enterprise Insurance Company Trust, on the one hand, and Covanta Holding Corporation, formerly
known as Danielson Holding Corporation and Mission Insurance Group, Inc. on the other hand.




Initial Recitals




     5. Mission Insurance Company, Mission National Insurance Company, and Enterprise Insurance
Company are or were California-domiciled property and casualty insurance companies.



     6. On October 31, 1985, on the application of the Insurance Commissioner, the Superior Court
for the County of Los Angeles issued an order which placed Mission Insurance Company, Mission
National Insurance Company and Enterprise Insurance Company into conservation proceedings, in case
number C 572 724.



     7. On February 24, 1987, the Superior Court for the County of Los Angeles entered those orders
which placed Mission Insurance Company, Mission National Insurance Company and Enterprise Insurance
Company in liquidation proceedings in the case captioned Insurance Commissioner of the State of
California v. Mission Insurance Company, et al. case number C 572 724.



     8. As of December 13, 1989, the Insurance Commissioner, as Liquidator of Mission Insurance
Company, Mission National Insurance Company, Enterprise Insurance Company, and as Conservator of
Mission American Insurance Company and Compac Insurance Company, entered into the RRR Agreement
with the Missouri Insurance Director as Receiver of Holland-America Insurance Company and Mission
Reinsurance Corporation, and with Mission Insurance Group, Inc.




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     9. On April 25, 1990, the Final Order of Rehabilitation was issued by the Liquidation Court
which had the effect, inter alia, of entering a rehabilitation order as to Mission Insurance
Company, Mission National Insurance Company and Enterprise Insurance Company, and, upon
closing of the transactions described in the RRR Agreement, resulted in the creation of the MICT,
the MNICT and the EICT, pursuant to the agreement of MICT, the agreement of MNICT and the agreement
of the EICT.



     10. The parties to this Agreement recognize that numerous claimants filed proofs of claim
against EICT, MICT and MNICT which were approved by the Trustee. The unsatisfied portions of such
claims shall be treated as Deficiency Claims under the RRR Agreement. This Agreement recognizes
that among the Deficiency Claims are the Latent Deficiency Claims that either in part or in whole
do not qualify for or are not entitled to receive cash distributions from the EICT, MICT or MNICT
pursuant to California Insurance Code sections 1011, et seq., but which claims nonetheless, qualify
and are entitled to share in the distribution of shares of Covanta common stock pursuant to the RRR
Agreement.



     11. Pursuant to the RRR Agreement, the Commissioner now holds as agent for and on behalf of
claimants against the MICT and MNICT, shares of Covanta common stock to be distributed to holders
of Deficiency Claims (as defined in the RRR Agreement).



     12. In order to effectuate the RRR Agreement, the parties enter into this Agreement to set
forth a method to evaluate the Deficiency Claims (including Latent Deficiency Claims) for the
purpose of distributing the shares of Covanta common stock in accordance with the RRR Agreement.



     13. Under the terms of the Implementation Agreement concurrently entered into between the
parties, Covanta has agreed to administer a Latent Deficiency Claims administration




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process, the
purpose of which is to evaluate Latent Deficiency Claims in order to ensure that any
distribution of shares of Covanta common stock to the Latent Deficiency Claims complies with
the stock for debt provision of former section 108(e)(8)(B) of the Internal Revenue Code and
implements the intents and purposes of Sections 2.1(a)(i), 2.1(b)(i) and 2.1(d)(i) of the RRR
Agreement.




     14. The Agreement contemplates that the court will issue an order establishing the aggregate
amount of the Latent Deficiency Claims. The Latent Deficiency Claims administration procedures
will be used to apportion individual Latent Deficiency Claims to the total amount of Latent
Deficiency Claims (set by court order) in order to determine the proportionate amount of shares of
Covanta common stock each Latent Deficiency Claimant shall receive as required under the RRR
Agreement.



Latent Deficiency Claims Administration




     15. The Commissioner’s Conservation and Liquidation Office personnel shall provide Covanta
with a listing of substantially all claimants who timely filed proofs of claim in the EICT, MICT
and MNICT liquidation proceedings; shall provide access to the claims files and other supporting
documentation submitted in support of those claims; and shall provide access to the documents and
other data reflecting the determination and adjudication of the claims in the liquidation
proceedings.



     16. Covanta shall send notice by first class mail to all claimants who timely filed proofs of
claim in the EICT, MICT and MNICT liquidation proceedings advising them of the Latent Deficiency
Claims administration evaluation process and procedures. Covanta and the Commissioner will agree
upon the form and content of the notification to be sent to claimants,




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and such notice will provide, at a minimum, the following information and instructions:





	 	•	 	the purpose of the Latent Deficiency Claims administration evaluation process;
	 
	 	•	 	an advisory that the claims evaluation process will rely upon the supporting
documentation the claimants have previously provided in the EICT, MICT and MNICT liquidation
proceedings, unless supplemented as provided in the notice;
	 
	 	•	 	a date after which claimants can no longer submit supplemental claims information;
	 
	 	•	 	a claims supplemental information form and directions for completing and filing such
form; and
	 
	 	•	 	a telephone call-in number for those who have questions about the process.





     17. Covanta shall establish the proper procedures to evaluate the Latent Deficiency Claims; to
exclude defective claims; and to provide the appropriate level of scrutiny and review based upon
the stated value and complexity of the claims and taking into account the ultimate value of the
recovery to respective claimants for their claims and the amount in controversy. The Commissioner
and Covanta have balanced the cost of review procedures against the benefits of (i) recognizing and
maximizing the value of payments to be made to claimants as a whole and (ii) reaching more refined
levels of evaluation of the Latent Deficiency Claims in the aggregate. Covanta and the Insurance
Commissioner’s Conservation and Liquidation Office personnel shall meet and confer as necessary
regarding the fulfillment by Covanta of its obligations under this provision, including without
limitation, to review forms to be utilized and processes to be adopted in connection herewith.



     18. Covanta shall provide written notice of the evaluation of any Latent Deficiency Claim to
any claimant requesting such in writing. Any claimant receiving written notice of a




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claims
evaluation may then file with Covanta within thirty (30) days of the mailing date of the notice of
evaluation, an intent to appeal. The appeal shall be determined by a retired Superior Court judge,
sitting as claims arbitrator. Covanta and the claimant shall equally share the cost of the claims
arbitrator. The claims arbitrator shall issue a determination, which shall be final and binding
upon the claimant and Covanta. The appeal to the claims arbitrator shall be conducted on the
written record, as contained in the claims file, and the formal rules of evidence will not apply.
The claims arbitrator will advise the claimant who appeals that the claimant may submit an appeal
brief within thirty (30) days of a date set by the claims arbitrator. Covanta shall then have
thirty (30) days to submit a response, after which the claimant shall have thirty (30) days to
submit a reply. The claims arbitrator shall rule based on the written record.




     19. Parties to an arbitration shall have the right to apply to the Liquidation Court, or if
the Liquidation Court no longer has jurisdiction over any disputes hereunder to a court of
competent jurisdiction in the County of Los Angeles for an order to enforce the findings of a
claims arbitrator as to the amount of the Latent Deficiency Claim to which a holder may be entitled
to claim; provided, however, that any such orders shall be limited solely to the entitlement of
such claimant to the amount of the Latent Deficiency Claim so claimed.



     20. Determinations by Covanta which are not appealed as to a Latent Deficiency Claim’s
evaluation shall be final.



     21. Nothing in this Agreement shall create a right in any claimant to share in cash
distributions from the EICT, MICT or the MNICT. The claims procedures in this Agreement are
solely for the purposes of evaluating the Latent Deficiency Claims in order to comply with the
stock for debt provisions in former section 108(e)(8)(B) of the Internal Revenue Code and shall not
be binding for or determinative of any other issue.




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     22. The Insurance Commissioner and Covanta shall cooperate to ensure that the claims process
reaches a timely conclusion. Covanta shall use commercially reasonable best efforts to ensure that
all initial claims evaluations are completed on or prior to December 31, 2006.



     23. Nothing in this Agreement is intended to alter the liquidation priorities set forth in
California Insurance Code Section 1033. The shares of Covanta common stock herein are distributed
solely through the rehabilitation plan set forth in the RRR Agreement, and do not constitute any
variation from the RRR Agreement. Nothing in this plan alters Section 1025 of the California
Insurance Code, or any other requirements of the California Insurance Code.



Miscellaneous Provisions




     24. The Trustee (but not the State of California) is a party to this Agreement, only in his
representative capacity as Trustee and as agent for and on behalf of holders of Latent Deficiency
Claims, and not individually. Neither the Trustee nor the Insurance Commissioner, nor their
agents, employees, attorneys, deputies or representatives, shall have personal liability on this
transaction.



     25. This agreement is governed by California law, without regard to principles of conflicts of
law.



     26. The headings and captions in this Agreement are set forth for convenience only, and shall
not be deemed a part of this Agreement.



     27. The recitals herein are introductory only and not binding agreements or admissions.



     28. Any failure of a party to comply with any obligation, covenant, agreement or condition
herein may be waived in writing, but such waiver or failure to insist upon a duty, obligation or
condition shall not waive or estop the right of a party to require performance of a subsequent
duty, condition or obligation. Any waiver of a term of this Agreement must be




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written and signed
by a duly authorized representative of the party on whose behalf the waiver is being made.




     29. Each party shall execute and deliver to the other party such documents as may reasonably
be required to effectuate this document, but nothing in this Agreement shall impose the duty on the
Trustee to enter into additional agreements not set forth in this Agreement.



     30. This Agreement may be executed in counterparts, which, when combined, shall constitute a
single Agreement.



     31. Any disputes arising from or relating to this Agreement shall be submitted to the Mission
Liquidation Court for resolution; provided, however, that if the liquidation of MICT, MNICT and
EICT is closed, then the party initiating the dispute shall petition to re-open the case. If the
case is not open or re-opened, then the Superior Court of Los Angeles County, California shall have
jurisdiction over any such dispute, and, to the extent permitted by law, such jurisdiction shall be
exclusive as to all matters other than enforcement of judgments.



     32. The addresses for notice and for counsel are set forth below the signatures. Each party
may change its address for notice by written notice. Notices may be given by mail, by facsimile or
by federal express; provided, however, that if facsimile notice is given, then a letter shall also
be sent by mail.



     So agreed as of January 11, 2006:


John Garamendi, Insurance Commissioner of the State of California, in his capacity as Trustee of
the MICT, the MNICT and the EICT




	 	 	 
	 

	 	 
	     /s/ David E. Wilson
	 	 
	 	 	 
	David E. Wilson

Special Deputy Insurance Commissioner
	 	 






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Additional notice to:




Mohsen Sultan

Conservation and Liquidation Office

425 Market Street, 23rd Floor

San Francisco, CA 94105-2406




Jack Hom

State of California Insurance Department

45 Fremont Street, 19th Floor

San Francisco, CA 94105-2204




Robert H. Nunnally, Jr.

Wisener*Nunnally*Gold, LLP

625 W. Centerville Road, Suite 110

Garland, Texas 75041




	 	 	 	 	 
	 

	 	 	 	 
	Covanta Holding Corporation
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Craig D. Abolt	 	 
	 	 	 	 	 
	 

	 	Craig D. Abolt	 	 
	Title:

	 	Senior Vice President and Chief Financial Officer	 	 






With additional notice to:




Timothy J. Simpson

Senior Vice President and General Counsel

Covanta Holding Corporation

40 Lane Road

Fairfield, NJ 07004




David S. Stone

Neal, Gerber & Eisenberg LLP

2 North LaSalle Street

Suite 2200

Chicago, IL 60602




C. Guerry Collins

Lord Bissell & Brook LLP

300 South Grand Avenue

8th Floor


Los Angeles, California 90071






Latent Deficiency Claims Administration

Procedures Agreement




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