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EXHIBIT 10.1



EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (“Agreement”), is made and entered into as of
this 27th day of April, 2004 by and between Danielson Holding Corporation, a
Delaware corporation (“Corporation”) and Jeffrey R. Horowitz, an individual
residing at 11 Laurel Lane, Bernardsville, New Jersey    (the “Executive”).



RECITALS




     WHEREAS, the Corporation desires to employ Executive as the interim
President and Chief Executive Officer of the Corporation;



     WHEREAS, the Executive desires to be employed by the Corporation as the
interim President and Chief Executive Officer at the salary and for the
benefits provided herein;



     WHEREAS, the Executive acknowledges and understands that during the course
of his employment, the Executive has and will become familiar with certain
confidential information of the Corporation which is exceptionally valuable to
the Corporation and vital to the success of the Corporation’s business; and



     WHEREAS, the Corporation and the Executive each desire to protect such
confidential information from disclosure to third parties or use of such
information to the detriment of the Corporation.



AGREEMENT




     NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:



     1. Employment. The Corporation hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, as the interim President and
Chief Executive Officer the Corporation.



     2. Term. The term of this Agreement shall commence on April 27, 2004 and
shall continue until March 2, 2005 (the “Term”), unless earlier terminated
pursuant to Section 12 of this Agreement.



     3. Duties. The Executive shall have the duties and responsibilities as
determined by the Board of Directors of the Corporation in accordance with the
Articles of Incorporation and the By-Laws of the Corporation in effect from
time to time, provided that such duties shall at all times be consistent with
the duties normally performed by Presidents and Chief Executive



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Officers of companies engaged in businesses similar to the business of the
Corporation. The Executive agrees to devote substantially all of his business
time, attention and energies to the diligent performance of his duties
hereunder and will not, during the Term hereof, engage in, accept employment
from, or provide services to any other person, firm, corporation, governmental
agency or other entity that engages in any activities which, in the opinion of
the Board of Directors, would conflict with or detract from the Executive’s
capable performance of such duties. The Corporation recognizes that during the
Term of this Agreement, the Executive may make passive investments which will
not interfere with or detract from the Executive’s performance of his duties
and obligations hereunder, subject to the policies applicable to senior
executive of the Corporation.



     4. Compensation.



     (a) Base Salary. During the Term of this Agreement, the Executive shall
receive compensation equal to the annual rate of $300,000 payable in equal
bi-weekly installments or as otherwise agreed to by the parties. The annual
amount of salary payments to the Executive during the Term of this Agreement
shall be referred to herein as the “Base Salary.”



     (b) Bonus. During the Term of this Agreement and commencing as of the
date hereof, the Executive shall participate in a bonus program to be adopted
by the Corporation providing the Executive with the opportunity to earn a cash
bonus equal to up to 80% of the Executive’s Base Salary (the “Bonus”). The
Bonus shall payable as follows: 75% of the Bonus shall be payable upon
termination of employment other than pursuant to Sections 12(a) or 12(e) and
25% of the Bonus shall be payable at the discretion of the Corporation’s
Compensation Committee of the Board of Directors of the Corporation.



     5. Benefits. During the Term of this Agreement, the Executive shall be
entitled to receive benefits as are provided generally to other senior
executives of the Corporation from time to time. As soon as practicable, the
Corporation shall use its reasonable best efforts to cause its subsidiary,
Covanta Energy Corporation, to amend its retirement, supplemental retirement
and 401(k) plans to permit employees of the Corporation, including the
Executive, to participate therein. Executive shall be entitled to four (4)
weeks of vacation during each twelve (12) month period hereunder.



     6. Expenses. During the Term of this Agreement, the Executive shall be
reimbursed by the Corporation for all reasonable, ordinary and necessary
out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or
any other similar expenses incurred by the Executive in performing services for
the Corporation to the extent that such expenditures are substantiated and
documented by the Executive as reasonably requested or required by the
Corporation.



     7. Non-Disclosure of Confidential Information.



     a. The Executive, except in furtherance of the business of the
Corporation, or otherwise with the prior authorization of the Corporation, will
not during, or for a period of three (3) years after termination of, this
Agreement, in any form or manner, directly or indirectly, divulge, disclose or
communicate to any person, entity, firm, corporation or any other third party
(other than in the course of the Executive’s employment hereunder), or utilize
for the



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Executive’s personal benefit or for the benefit of any competitor of the
Corporation, any Confidential Information (as hereinafter defined).



     b. For the purposes of this Agreement, the term “Confidential Information”
shall mean, but shall not be limited to, any technical or non-technical data,
formulae, patterns, compilations, programs, devices, methods, techniques,
drawings, designs, processes, procedures, improvements, models or manuals of
the Corporation or which are licensed by the Corporation, any financial data or
lists of actual or potential customers or suppliers (including contacts
thereat) of the Corporation, and any information regarding the Corporation’s
contracts, marketing and sales plans, which is not generally known to the
public through legitimate origins. The Corporation and the Executive
acknowledge and agree that such Confidential Information is extremely valuable
to the Corporation and shall be deemed to be a “trade secret.” In the event
that any part of the Confidential Information becomes generally known to the
public through legitimate origins (other than by the breach of this Agreement
by the Executive or by misappropriation), is required to be disclosed by legal,
administrative or judicial process (provided that the Executive has provided to
the Corporation reasonable prior notice of such request and the Corporation has
had a reasonable opportunity, at its expense, to dispute, defend or limit such
request for Confidential Information), that part of the Confidential
Information shall no longer be deemed Confidential Information for the purposes
of this Agreement, but the Executive shall continue to be bound by the terms of
this Agreement as to all other Confidential Information.



     c. Upon termination of this Agreement for any reason, the Executive will
promptly deliver to the Corporation all correspondence, drawings, blueprints,
manuals, letters, notes, notebooks, reports, programs, plans, proposals,
financial documents, or any other documents, including all copies in any form
or media, concerning the Corporation’s customers, marketing strategies,
products or processes and/or which contain any Confidential Information.



     8. Covenant-Not-To-Compete. The Executive will not without the consent of
the Corporation, at its sole discretion, during, or for a period of one (1)
year after termination of, this Agreement, in any form or manner, directly or
indirectly, on his own behalf or in combination with others, become engaged in
(as an individual, partner, stockholder, director, officer, principal, agent,
independent contractor, employee, trustee, lender of money or in any other
relation or capacity whatsoever, except as a holder of securities of a
corporation whose securities are publicly traded and which is subject to the
reporting requirements of the Securities Exchange Act of 1934, and then only to
the extent of owning not more than two percent (2%) of the issued and
outstanding securities of such corporation), or provide services similar to
those provided to the Corporation for, any business which renders services or
sells products, or proposes to render services or sell products, that compete
with the Business of the Corporation within the United States and any foreign
country in which the Corporation or any of its subsidiaries conducts business
during the term of this Agreement. For purposes of this Agreement, the
“Business” of the Corporation shall mean (i) the specialty insurance businesses
currently conducted by the Corporation’s subsidiaries, (ii) the ownership and
operation of waste-to-energy power generation projects, and (iii) the ownership
and operation of water and wastewater treatment facilities; provided, however,
that notwithstanding the foregoing, the Executive shall be permitted to engage
in the practice of law (other than in the legal department of an entity that
would otherwise result in a violation of this Section 8).



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     9. Covenant Not to Solicit.



     (a) Covenant Not to Solicit Employees. During Executive’s employment by
the Corporation and for a period of one (1) year following termination or
cessation of Executive’s employment pursuant to this Agreement, Executive
agrees and covenants that he will not, for any reason, directly or indirectly,
employ, solicit or endeavor to entice away from the Corporation or any of its
subsidiaries (whether for his own benefit or on behalf of another person or
entity), or facilitate the solicitation, employment or enticement of, any
employees of Corporation to work for Executive, any affiliate of Executive or
any competitor of Corporation, nor will Executive otherwise attempt to
interfere (to the Corporation’s detriment) in the relationship between the
Corporation or any of its subsidiaries and any such employees.



     (b) Covenant Not to Solicit Customers. During Executive’s employment
pursuant to this Agreement and for a period of one (1) year following
termination or cessation of Executive’s employment, Executive agrees and
covenants that he will not directly or indirectly in any form or manner,
contact, solicit, or facilitate the contacting or solicitation of any Customer
of the Corporation, for the purpose of competing with the Business of the
Corporation. For purposes of this Agreement, a “Customer” of the Corporation
shall mean and refer to (i) each person, entity, municipality or other
governmental entity that has received services or operated project with the
Corporation or any of its affiliates during the period of Executive’s
employment hereunder and (ii) each person, entity, municipality, or other
governmental entity formally solicited by the Corporation to provide services
or operate projects during the period of Executive’s employment hereunder;
provided, however, that notwithstanding the foregoing, the Executive shall be
permitted to act as an advisor or director of a business, provided that such
advise and business is not directly competitive with the Business.



     10. Equitable Remedies. In the event that the Executive breaches any of
the terms contained in Sections 7, 8 or 9 of this Agreement, the Executive
stipulates that said breach will result in immediate and irreparable harm to
the business and goodwill of the Corporation and that damages, if any, and
remedies at law for such breach would be inadequate. The Corporation shall
therefore be entitled to apply for and receive from any court of competent
jurisdiction an injunction to restrain any violation of this Agreement and for
such further relief as the court may deem just and proper. Following judgment
or other final determination by such court, the non-prevailing party in such
proceeding shall pay the costs and expenses (including court costs and
reasonable attorneys’ fees) of the prevailing party.



     11. Continuing Obligation. The obligations, duties and liabilities of the
Executive pursuant to Sections 7, 8 or 9 of this Agreement are continuing,
absolute and unconditional and shall remain in full force and effect as
provided therein despite any termination of this Agreement for any reason
whatsoever, including, without limitation, the expiration of the Term of this
Agreement. Notwithstanding anything else contained in this Agreement to the
contrary, the parties hereto agree that in the event the Executive breaches any
of the terms contained in Sections 7, 8 or 9 of this Agreement, the obligation
of the Corporation to pay any Base Salary or Bonus under this Agreement (or
pursuant to any severance payment set forth in Section 12 of this Agreement)
shall terminate as of the date of such breach by the Executive.



     12. Termination of Employment.



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     a. Termination by Corporation of Executive for Cause. The Corporation
shall have the right to terminate the Executive’s employment at any time for
“cause.” For purposes hereof, “cause” shall mean that the Executive has:





	 	i.	 	been convicted of, or plead nolo contendere to, a felony or
crime involving moral turpitude; or
	 
	 	ii.	 	committed an act of personal dishonesty or fraud involving
personal profit in connection with the Executive’s employment by the
Corporation; or
	 
	 	iii.	 	committed a breach of any covenant, provision, term,
condition, understanding or undertaking set forth in this Agreement,
including, without limitation, the provisions contained in Sections
7, 8 or 9 hereof, where such breach results in or is reasonably
likely to result in a material adverse affect on the Corporation; or
	 
	 	iv.	 	committed an act which the Board of Directors of the
Corporation has properly found to have involved willful misconduct
or gross negligence on the part of the Executive, which results in
or is reasonably likely to result in a material adverse affect on
the Corporation; or
	 
	 	v.	 	exhibited documented habitual absenteeism or been unable or
repeatedly failed to perform any reasonable or customary tasks
typically required in connection with the Executive’s employment and
position with the Corporation or its subsidiaries;




provided, however, that no termination under clause (iii), (iv) or (v) of this
Section 12(a) shall be effective unless the Executive shall have first received
written notice describing in reasonable detail the basis for the termination
and within fifteen (15) days following delivery of such notice the Executive
shall have failed to cure such alleged behavior constituting “cause,” provided,
further, that this notice requirement prior to termination shall be applicable
only if such behavior or breach is capable of being cured. If the Corporation
shall terminate the Executive’s employment pursuant to this Section 12(a), the
Corporation shall only be obligated to pay to the Executive the Base Salary,
but not any Bonus, payable to the Executive pursuant to this Agreement, accrued
up to and including the date on which the Executive’s employment is so
terminated. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive.




     b. Termination by Corporation of Executive Because of Executive’s
Disability, Injury or Illness. The Corporation shall have the right to
terminate the Executive’s employment if the Executive is unable to perform the
duties assigned to him by the Corporation because of the Executive’s
disability, injury or illness; provided, however, that in the event of such
disability, injury or illness, the Executive’s inability to perform such duties
must have existed for a total of three (3) months during the Term of this
Agreement before such termination can be made effective. If the Corporation
shall terminate the Executive’s employment pursuant to this Section 12(b), the
Corporation shall be obligated to pay to the Executive the Base Salary and the
Bonus payable to the Executive under this Agreement. Payments of the Base
Salary for the remaining term of the Agreement shall be paid in equal bi-weekly
installments, unless otherwise agreed to by the parties. The Bonus, if any,
payable to the Executive shall be paid to Executive



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30 days following the termination of Executive’s employment, unless
otherwise agreed to by the parties. Thereafter, the Corporation shall have no
further obligation whatsoever to the Executive.



     c. Termination by Corporation as a Result of Executive’s Death. The
obligations of the Corporation to the Executive under this Agreement (except as
provided in this Section 12(c)) shall automatically terminate upon the
Executive’s death and the Corporation shall pay to the Executive’s estate the
Base Salary and the Bonus payable to the Executive under this Agreement.
Payments of the Base Salary for the remaining term of the Agreement shall be
paid in equal bi-weekly installments, unless otherwise agreed to by the
Corporation and the Executive’s estate. The Bonus, if any, payable to the
Executive’s estate shall be paid 30 days following the termination of
Executive’s employment, unless otherwise agreed to by the Corporation and the
Executive’s estate. Thereafter, the Corporation shall have no further
obligation whatsoever to the Executive’s estate.



     d. Termination of Executive by the Corporation for Any Other Reason. The
Corporation shall have the right to terminate the Executive’s employment for
any other reason upon ten (10) days prior written notice to the Executive. In
the event of a termination by the Corporation of the Executive’s employment for
any reason other than the reasons set forth in Sections 12(a), 12(b) or 12(c)
hereof, the Corporation shall be obligated to pay to the Executive the Base
Salary and the Bonus payable to the Executive under this Agreement. Payments
of the Base Salary for the remaining term of the Agreement shall be paid in
equal bi-weekly installments, unless otherwise agreed to by the parties. The
Bonus, if any, payable to the Executive shall be paid 30 days following the
termination of Executive’s employment, unless otherwise agreed to by the
parties. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive.



     e. Termination by Executive. The Executive may resign and terminate his
employment by the Corporation for any reason whatsoever upon thirty (30) days
prior written notice to the Corporation. Thereafter, the Corporation shall
have no obligation to the Executive, except for paying the Executive the
portion of the Base Salary accrued up to and including the date of termination
and those obligations provided as a matter of federal or state law.



     f. Good Reason. If, during the Term of this Agreement, the Executive
resigns for Good Reason (as defined below), the Corporation shall be obligated
to pay to the Executive the Base Salary and the Bonus payable to the Executive
under this Agreement. Payments of the Base Salary for the remaining term of
the Agreement shall be paid in equal bi-weekly installments, unless otherwise
agreed to by the parties. The Bonus, if any, payable to the Executive shall be
paid 30 days following the termination of Executive’s employment, unless
otherwise agreed to by the parties. Thereafter, the Corporation shall have no
further obligation whatsoever to the Executive. For purposes of this
Agreement, “Good Reason” shall mean (i) a requirement by the Corporation that
the Executive report for the performance of his services hereunder on a regular
or permanent basis at any location or office more than fifty (50) miles from
the current principal executive offices of Covanta Energy Corporation in
Fairfield, New Jersey, (ii) the assignment to the Executive of duties and
responsibilities materially inconsistent with the intents and purposes of
Executive’s employment pursuant to this Agreement, or (iii) a material breach
by the Corporation of its obligations to the Executive pursuant to this
Agreement.



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     13. Capacity. The Executive hereby represents and warrants that, in
entering into this Agreement, he is not in violation of any contract or
agreement, whether written or oral, with any other person, firm, partnership,
corporation or other entity to which he is a party or by which he is bound and
will not violate or interfere with the rights of any other person, firm,
partnership, corporation or other entity. In the event that such a violation
or interference does occur, or is alleged to occur, notwithstanding the
representation and warranty made hereunder, the Executive shall indemnify the
Corporation from and against any and all manner of expenses and liabilities
incurred by the Corporation or any affiliated company of the Corporation in
connection with such violation or interference or alleged violation or
interference.



     14. Entire Agreement. This Agreement and the other agreements described
herein contains the entire agreement between the parties with respect to the
subject matter hereof and shall not be modified except in writing by the
parties hereto. Furthermore, the parties hereto specifically acknowledge and
agree that this Agreement and the other agreements described herein supersedes
all prior agreements between the Executive and the Corporation in whatever
capacity so entered into, whether written or oral, and all such prior
agreements, whether written or oral, shall be of no further force or effect
from and after the date hereof; provided, however, that this provision shall
not apply to any agreements between the Executive and any subsidiary of the
Corporation.



     15. Severability. If any phrase, clause or provision of this Agreement is
declared invalid or unenforceable by a court of competent jurisdiction, such
phrase, clause or provision shall be deemed severed from this Agreement, but
will not affect any other provisions of this Agreement, which shall otherwise
remain in full force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly restrictive by a
court of competent jurisdiction, it shall not be stricken in its entirety and
held totally void and unenforceable, but shall remain effective to the maximum
extent permitted by such court.



     16. Notices. Any notice, request or other communication required to be
given pursuant to the provisions hereof shall be in writing and shall be deemed
to have been given when delivered in person, on the next business day after
being delivered to a nationally-recognized overnight courier service (for such
next-day delivery) or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, return receipt requested and
addressed to the other party at its or his last known address. The address of
any party may be changed by notice in writing to the other party duly served in
accordance herewith.



     17. Waiver. The waiver by the Corporation or the Executive of any breach
of any term or condition of this Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or condition
hereof.



     18. Governing Law. This Agreement and the enforcement hereof shall be
governed and controlled in all respects by the internal laws, and not the laws
of conflict, of the State of Illinois.



     19. Assignment of Inventions. The Executive shall disclose promptly in
writing to a designated representative of the Corporation all material of a
proprietary nature, including, but not limited to, ideas, inventions,
discoveries, improvements, developments, designs, methods,



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systems, computer programs, trade secrets or any other intellectual
property whether or not patentable or copyrightable, specifically including,
but not limited to, copyright and mask works, formulae, compositions, products,
processes, apparatus, and new uses of existing materials or machines (hereafter
collectively called “Inventions”) made, conceived or first reduced to practice
by the Executive solely or jointly with others while employed by the
Corporation and which relate to or result from the actual or anticipated
business, work, research or investigation of the Corporation or any of its
affiliates or which are suggested by or result from any task assigned to or
performed by the Executive for the Corporation or any of its affiliates. The
Corporation shall be the owner of all property rights in any such Inventions,
including, but not limited to, rights arising from the obtaining of letters of
patent or copyright in respect thereof, which shall be vested in the
Corporation. The Executive will at the Corporation’s request execute any and
all assignment, patent or copyright forms and the like, deemed reasonably
necessary by the Corporation, and will assist in drafting of any description or
specification of the Inventions as may be required by the Corporation to
protect the Corporation’s rights in and to the Inventions, including, but not
limited to, application(s) for letters of patent. The Corporation’s rights
hereunder shall not be limited to this country but shall extend to any country
in the world and shall attach to each Invention notwithstanding that it is
perfected, improved, reduced to specific form or used after termination the
Executive’s employment. The Executive agrees to lend such assistance as he may
be able, at the Corporation’s request without charge in connection with any
proceedings relating to such letters of patent, trade secrets, copyright or
application thereof, as may be determined by the Corporation to be reasonably
necessary. In such case the Corporation will reimburse expenses which the
Executive may reasonably incur in assisting the Corporation to obtain, assert,
defend and protect such letters of patent, trade secrets, copyright or other
protection.



     20. Successors. This Agreement is personal to the Executive and shall not
be assignable by the Executive otherwise by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.



	 	 	 
	 

	 	DANIELSON HOLDING CORPORATION
	

	 	 
	

	 	By: /s/ Philip Tinkler
	

	 	
 
	

	 	Name: Philip Tinkler
	

	 	
 
	

	 	Its: Chief Financial Officer
	

	 	
 
	

	 	 
	

	 	EXECUTIVE
	

	 	 
	

	 	/s/ Jeffrey R. Horowitz
	

	 	
 
	

	 	Jeffrey R. Horowitz








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