<PAGE>

                                                                   EXHIBIT 10.25

                              TAX SHARING AGREEMENT

                  THIS TAX SHARING AGREEMENT (this "AGREEMENT") is dated as of
March 10, 2004 by and between Danielson Holding Corporation, a Delaware
corporation (hereinafter referred to as "PARENT"), Covanta Energy Corp.
("COVANTA"), a Delaware corporation and, solely for purposes of Section 6 of
this Agreement, Covanta Power International Holdings, Inc., a Delaware
Corporation ("COVANTA INTERNATIONAL").

                                   WITNESSETH

                  WHEREAS, Parent is the common parent corporation of an
"affiliated group" of corporations (as it may be constituted from time to time,
the "AFFILIATED GROUP"), as defined in Section 1504 of the Internal Revenue Code
of 1986, as amended (the "CODE"); and

                  WHEREAS, Parent will file a U.S. consolidated federal income
tax return on behalf of the Affiliated Group for the taxable year ending
December 31, 2004, and generally will be required to file consolidated federal
income tax returns for subsequent years, which will, beginning on March 11,
2004, include Covanta and all of its current and future subsidiaries that would
be treated as members of an affiliated group of corporations, as defined in
Section 1504(a) of the Code, for which Covanta would be the common parent
corporation if Covanta and such subsidiaries were not members of the Affiliated
Group (each of such subsidiary and Covanta, a "SUBGROUP MEMBER," such affiliated
group of Subgroup Members, "COVANTA SUBGROUP" as listed in Appendix A attached
hereto);

                  WHEREAS, Covanta International will not be a member of the
Affiliated Group; and

                  WHEREAS, it is the intent and desire of Parent and Covanta to
enter into this Agreement, to provide, with respect to federal, state and local
income taxes, for the amount and time of payments by Covanta to Parent and for
the amount and time of payments by Parent to Covanta.

                  NOW, THEREFORE, Parent and Covanta, intending to be legally
bound hereby, and in consideration of the mutual covenants herein contained,
agree as follows:

         1.       Consolidated Federal Return.

                  A U.S. consolidated federal income tax return and estimated
tax returns shall be prepared and filed by Parent for the taxable year ending
December 31, 2004 (THE "2004 TAXABLE YEAR"), and for each subsequent taxable
period in respect of which the Affiliated Group is required or permitted to file
a consolidated federal income tax return. With respect to such tax return
preparation, Parent shall act in good faith with regard to any and all Subgroup
Members. All Subgroup Members shall cooperate with Parent in the preparation and
filing of such tax return and shall provide such assistance and documents,
without charge, as may be requested by Parent for that purpose. Parent shall
have the right with respect to any consolidated federal income tax returns to
determine (a) the manner in which such returns, documents or statements

<PAGE>

shall be prepared and filed, including, without limitation, the manner in which
any item of income, gain, loss, deduction or credit shall be reported, (b)
whether any extensions should be requested, and (c) the elections that will be
made by any Subgroup Member. In addition, Parent shall have the sole right to
(x) contest, compromise, or settle any adjustments or deficiency proposed,
asserted or assessed as a result of any audit of any consolidated tax return,
(y) file, prosecute, compromise or settle any claim for refund, and (z)
determine whether any refunds shall be received by way of refund or credited
against tax liabilities. Each Subgroup Member and their respective counsel shall
cooperate, to the extent reasonably practicable, in the contest or compromise
of, or defense against any such suit, action or proceeding described above.
Parent may, and shall cause Subgroup Members to, execute and file such consents,
elections, and other documents as Parent determines are required or appropriate
for the proper filing of such returns.

         2.       Allocation of Federal Tax Liability

                  (a)      Covanta agrees to pay to Parent, for each taxable
year or portion thereof during the term of this Agreement, as the Covanta
Subgroup's share of the tax liability of the Affiliated Group, an amount equal
to the apportioned tax liability of the Covanta Subgroup determined under
Regulation Section 1.1552 1(a)(1) with the modifications provided in Section 3
of this Agreement. For purposes of this Agreement, Covanta will be treated as
the common parent corporation of the Covanta Subgroup. Accordingly, the Covanta
Subgroup's proportionate share of the tax liability of the Affiliated Group
shall be determined by multiplying the Affiliated Group's tax liability by a
fraction, the numerator of which equals Covanta's Taxable Income (as defined
below in Section 3), and the denominator of which equals the Affiliated Group's
consolidated taxable income computed pursuant to Section 1552(a)(1) of the Code
and Treasury Regulations Section 1.1552-1(a)(1). For purposes of this Agreement,
tax liability shall include any liability for alternative minimum tax ("AMT").
The Covanta Subgroup shall compute its separate adjusted AMT in accordance with
the principles of Proposed Treasury Regulations Sections 1.1552-1(g) and
1.1502-55(h)(6)(iv) as the excess (if any) of the AMT of the Affiliated Group
over the AMT of the Affiliated Group as determined by excluding the Covanta
Subgroup's income, gains, deductions and losses (with the modifications provided
in Section 3 of this Agreement and assuming an AMT net operating loss as of the
Closing Date of $556,399,000) and credits, and Covanta Subgroup's proportionate
share of the AMT of the Affiliated Group shall be determined by multiplying the
AMT of the Affiliated Group by a fraction, the numerator of which equals Covanta
Subgroup's separate adjusted AMT and the denominator of which equals the sum of
the separate adjusted AMT's of all members of the Affiliated Group (determined
with the modifications provided in Section 3 of this Agreement and assuming an
AMT net operating loss as of the Closing Date of $556,399,000); provided,
however, Covanta shall pay Parent for any AMT liability actually incurred by
Parent if such AMT liability would not have been incurred if in an earlier
taxable year the Covanta Subgroup had computed its AMT liability under Section
55 et seq. of the Code (with the modifications provided in Section 3 of this
Agreement and assuming an AMT net operating loss as of the Closing Date of
$556,399,000) as if it had filed its own separate return as the common parent
corporation of the Covanta Subgroup and had not been included in the U.S.
consolidated federal income tax return filed by Parent on behalf of the
Affiliated Group, provided further however, that the amount of such payment
shall not exceed the excess of the cumulative Covanta Subgroup separate adjusted
AMT (as defined in Proposed Treasury Regulations Section 1.1502-

                                       2
<PAGE>

55(h)(6)(iv) with the modifications provided in Section 3 of this Agreement and
assuming an AMT net operating loss as of the Closing Date of $556,399,000) over
the sum of (A) the cumulative AMT amount the Covanta Subgroup has paid under
this Section 2(a) of this Agreement and (B) any reduction in Parent's AMT
liability resulting from the inclusion of the Covanta Subgroup in Parent's
Affiliated Group.

                  (b)      The Covanta Subgroup's allocable share of the U.S.
consolidated federal income tax liability of Parent for each year beginning with
the 2004 Taxable Year, determined as provided in Section 2(a) above, shall be
further apportioned among the Subgroup Members, other than Covanta Warren Energy
Resources Co., LP ("WARREN"), Covanta Equity of Stanislaus, Inc. ("STANISLAUS"),
Covanta Equity of Alexandria/Arlington, Inc. ("ALEXANDRIA"), Covanta Tampa
Construction, Inc. ("TAMPA CONSTRUCTION"), and Covanta Tampa Bay, Inc. ("TAMPA
BAY") (together, the "REMAINING DEBTORS") in a manner consistent with the
allocation method provided in Section 2(a) above. The Tax Sharing Agreement
between Covanta, Warren, Stanislaus and Alexandria dated as of March 10, 2004,
the Tax Sharing Agreement between Covanta and Tampa Construction dated as of
March 10, 2004 and the Tax Sharing Agreement between Covanta and Tampa Bay
provide, with respect to federal, state and local income taxes, for the amount
of payments by Covanta to the Remaining Debtors and for the amount of payments
by the Remaining Debtors to Covanta.

                  (c)      Covanta's payment of such apportioned tax liability
shall constitute a complete settlement of the federal income tax liability of
all Subgroup Members for such taxable year, except as otherwise provided in
Section 9 of this Agreement. Parent shall indemnify and hold harmless Covanta
against any liability for federal income tax (including alternative minimum tax
and additional amounts) relating to taxable years during the term of this
Agreement (including any liability for taxes attributable to other corporations
for which a Subgroup Member is liable under Regulation Section 1.1502-6) other
than such apportioned tax liability. All computations under this Agreement shall
be made on the basis that each Subgroup Member is a member of the Affiliated
Group and that such group files a consolidated return.

         3.       Taxable Income. For purposes of this Agreement, "Covanta's
Taxable Income" shall be Covanta's taxable income computed in accordance with
Regulation Section 1.1552-1(a)(1)(ii) (and shall not be negative), except that
the following modifications will apply:

                  (i) Covanta's    Taxable Income shall be computed in
         accordance with Regulation Section 1.1552-1(a)(1)(ii), assuming
         Covanta's separate taxable income is the amount that would be shown on
         the consolidated return for the Covanta Subgroup, had Covanta filed
         such return as the common parent corporation of the Covanta Subgroup;

                  (ii) for purposes of applying Regulation
         Section 1.1552-1(a)(1)(ii)(a), for each Taxable Year (beginning the day
         after the Closing Date), (A) the portion of the consolidated net
         operating loss deduction attributable to Covanta shall be deemed to be
         increased by the Adjustment Amount (as defined below) and (B) the net
         operating loss deduction attributable to other members of the
         Affiliated Group shall be accordingly reduced;

                  (iii) the "ADJUSTMENT AMOUNT" shall be the lesser of (A) the
         excess of Covanta's taxable income (computed as if Covanta had filed a
         separate return as the common parent

                                       3
<PAGE>

         of the Covanta Subgroup) over the portion of the consolidated net
         operating loss deduction attributable solely to the Covanta Subgroup
         and actually available to be used by the Affiliated Group and (B) the
         excess of $571,846,000 over: the sum of (i) the cumulative Adjustment
         Amount for all prior periods (beginning after the Closing Date); (ii)
         the cumulative amount of the consolidated net operating loss deduction
         utilized by affiliates of the Parent listed in Appendix B attached
         hereto for all prior periods (beginning after the Closing Date); and
         (iii) the sum of any net operating losses that (x) expired unused for
         such prior periods (except to the extent such expiration resulted from
         a current-year loss of a Parent Affiliate (other than a Subgroup
         Member) being used to offset Covanta's taxable income(computed as if
         Covanta had filed a separate return as the common parent of the Covanta
         Subgroup)) and (y) that would have expired unused for all such prior
         periods had the Covanta Subgroup and the affiliates of Parent listed in
         Appendix B been the only members of the Affiliated Group with Parent.
         For purposes of this clause (iii), the amount of net operating loss and
         time of expiration is as set forth on Appendix C (as adjusted due to a
         change in law).

         4.       Limitations on Attribute Use.

                  Notwithstanding anything in this Agreement to the contrary, if
Covanta realizes an item of income or gain as a result of any disposition of any
of its assets that is subject to Section 384 of the Code, the portion of tax
liability attributable to such item shall be paid in full by Covanta; provided,
however, the amount of such payment shall not exceed the tax liability of Parent
for such taxable year. Any remaining tax liability of the Affiliated Group shall
be allocated pursuant to this Agreement without taking into account such item of
income or gain.

         5.       No Current Payments for Utilization of Net Operating Losses.

                  Neither Covanta nor any other Subgroup Member shall have any
liability to make payments to Parent or to any other member of the Affiliated
Group for the utilization by the Covanta Subgroup of net operating losses deemed
to be attributable to Covanta pursuant to Section 3(ii) of this Agreement.

         6.       Covanta International.

                  If the Affiliated Group or any member of the Affiliated Group
is liable for any federal, state, local or foreign tax liability generated by
Covanta International, or would be liable but for the use of any Affiliated
Group attributes or offsets, then Covanta International will pay to Parent, on
an after-tax basis, the amount of any such liability.

         7.       Payment of Tax.

                  (a)      Each Subgroup Member shall pay to Covanta no later
than 4 business days before the date on which the Affiliated Group's
consolidated federal income tax return is required to be filed (taking account
of any extensions thereof) such Subgroup Member's separate return tax liability
determined as provided under Section 2(b) above plus its "Equitable Share" (as
defined below) of any interest or penalties shown on the Affiliated Group's
consolidated federal income tax return. Any payments made by the Remaining
Debtors under this Agreement

                                       4
<PAGE>

will be counted towards their obligations under the Tax Sharing Agreement
between Covanta, Warren, Stanislaus and Alexandria dated as of March 10, 2004,
the Tax Sharing Agreement between Covanta and Tampa Construction dated as of
March 10, 2004 and the Tax Sharing Agreement between Covanta and Tampa Bay dated
as of March 10, 2004.

                  (b)      Covanta shall pay to Parent no later than 2 business
days before the date on which the Affiliated Group's consolidated federal income
tax return is required to be filed (taking account of any extensions thereof)
Covanta Subgroup's separate return tax liability determined as provided under
Section 2 and 3 above plus its "Equitable Share" (as defined below) of any
interest or penalties shown on the Affiliated Group's consolidated federal
income tax return.

                  (c)      To the extent that the interest and penalties shown
on a return are directly related to items of income, deduction, credit, etc. of
a particular "member" of the Affiliated Group as defined in Section 1504(a) of
the Code (a "MEMBER"), or such Member's delay in providing information to Parent
as provided in Section 1 above, such Member's Equitable Share of such interest
and penalties is 100%. Section 3(ii) shall not apply for purposes of determining
whether a consolidated net operating loss deduction is directly related to
Covanta. Each Member's Equitable Share of any interest and penalties shown on
the return that are not directly related to the items or delay of a particular
Member (and so allocated to that particular Member) will be a ratable share of
any such interest or penalties, determined by multiplying such interest or
penalties by a fraction, the numerator of which equals the portion of the
Affiliated Group's tax liability allocated to such Member determined as provided
under Section 2 above (before interest or penalties) and the denominator of
which equals the Affiliated Group's tax liability (before interest or
penalties).

         8.       Estimated Tax Payments.

                  (a)      If the Affiliated Group is required to make estimated
federal income tax payments (including payments due at the time any extension of
time is sought for the filing of the Affiliated Group's federal income tax
return), Covanta shall, if requested by Parent, pay to Parent, no later than 2
business days before the date each estimated tax payment is to be made by
Parent, that percentage of the estimated tax payment that equals the percentage
which the estimated separate return tax liability of Covanta Subgroup bears to
the sum of the Parties' estimated separate return tax liabilities for the
taxable year computed as provided under Sections 2 and 3 above. Parent shall
reasonably determine such estimates. If Covanta is required to make a payment to
Parent for estimated taxes as provided in the preceding sentence, each Subgroup
Member shall, if requested by Covanta, pay to Covanta, no later than 2 business
days before the date Covanta is required to make a payment to Parent, that
percentage of such payment that equals the percentage which the estimated
separate return tax liability of such Subgroup Member bears to the Covanta
Subgroup's estimated separate return tax liability for the taxable year computed
as provided under Sections 2 and 3 above.

                  (b)      Any estimated tax payments made by Covanta to Parent
and by any Subgroup Member to Covanta under this Section 8 with respect to any
taxable year shall be applied to reduce the amount, if any, owed by Covanta and
the Subgroup Member, as applicable, under Section 7 hereof with respect to such
year. Any excess of such estimated payments by

                                       5
<PAGE>

Covanta and the Subgroup Member, as applicable, over the amount described in
Section 7 for such year shall be repaid by Parent to Covanta and by Covanta to
the Subgroup Member, as applicable, no later than 10 business days after the
date of filing of the consolidated federal tax return for such taxable year or,
to the extent such excess represents all or a part of a tax refund to be
received by the Affiliated Group, no later than 10 business days after the
receipt of the refund.

         9.       Adjustments to Tax Liability.

                  (a)      If the consolidated federal tax liability is adjusted
for any taxable period, whether pursuant to an amended return, a claim for
refund, a tax audit by the Internal Revenue Service or some other reason, the
liability of the Parties and each Subgroup Member shall be recomputed to give
effect to such adjustments. In the case of a refund, Parent shall make payment
to Covanta, and Covanta shall make a payment to each Subgroup Member, for its
share of the refund determined in the same manner as in Section 2 above, within
10 business days after the refund is received by Parent or Covanta, as
applicable. In the case of an increase in tax liability, (i) each Subgroup
Member shall pay to Covanta its allocable share of such increased tax liability
(including its Equitable Share of any interest and penalties) within 5 business
days after receiving notice of such liability from Covanta, and (ii) Covanta
shall pay to Parent the Covanta Subgroup's share of such increase (including
Covanta Subgroup's Equitable Share of any interest and penalties) within 10
business days after receiving notice of such liability from Parent. The Members
recognize that a recomputation of the consolidated tax liability for any taxable
year under this Section 9 is not necessarily the final liability for such year,
and such liability may be recomputed more than once.

                  (b)      Each Subgroup Member or any Covanta Tax Affiliate (as
defined in the Investment and Purchase Agreement) shall be responsible for its
tax liability relating to periods prior to (and including) the Closing Date.
Thus, if the Affiliated Group pays any such tax resulting from any final
determination or settlement with the IRS, or any other taxing authority, or any
court decision relating to a tax period prior to the Closing Date, then such
Subgroup Member shall reimburse Parent the amount of any tax, interest,
penalties or other costs resulting from such final determination, settlement, or
court decision.

         10.      Parent's Obligations. Parent shall:

                  (a)      timely file returns and other documents and take such
other action as may be necessary and appropriate to carry out the purpose of
this Agreement; and

                  (b)      subject to receipt by Parent of the payments required
to be made pursuant to Section 7 of this Agreement, timely pay to the Internal
Revenue Service the federal income taxes of the Affiliated Group, including
deficiencies.

         11.      New Members of Affiliated Group.

                  For all taxable periods or portions thereof during which this
Agreement remains in effect, if Covanta acquires (directly or indirectly) or
organizes another entity treated as a corporation for federal, state or local
tax purposes that is required to be included in the Affiliated Group's
consolidated federal income tax return, then such corporation shall join in and
be bound by this Agreement.

                                       6
<PAGE>

         12.      Amendment and Termination of Agreement.

                  (a)      This Agreement may be amended or terminated in whole
or in part only by a written instrument signed by all the parties hereto.

                  (b)      This Agreement shall not be automatically terminated
because Covanta ceases to be included in the Affiliated Group. In such case,
Covanta shall be liable to Parent for an amount determined by multiplying the
Affiliated Group's tax liability (calculated assuming Covanta was still a member
of the Affiliated Group) by a fraction, the numerator of which equals Covanta's
Taxable Income, and the denominator of which equals the Affiliated Group's
consolidated taxable income so computed pursuant to Section 1552(a)(1) of the
Code and Treasury Regulations Section 1.1552-1(a)(1) and assuming Covanta was
still a member of the Affiliated Group. Such payment by Covanta shall constitute
a complete settlement of the federal income tax liability of all Subgroup
Members for such taxable year, except as otherwise provided in Section 9 of this
Agreement. Parent shall indemnify and hold harmless Covanta against any
liability for federal income tax (including alternative minimum tax and
additional amounts) relating to taxable years during the term of this Agreement
other than such apportioned tax liability.

         13.      Audits and Refund Claims.

                  Parent and a former Member shall also consult and furnish each
other with information concerning the status of any tax audit or tax refund
claim relating to a taxable year in which the former Member was included in the
Affiliated Group and a consolidated federal income tax was filed. Parent shall
have the right to make the final determination as to the response of the
Affiliated Group to any audit and shall have the sole right to control any
contest of any change proposed and any proposed disallowance of a refund claim
by the Internal Revenue Service through the Appeals Office of the Internal
Revenue Service and the courts in connection with any taxable year for which
this Agreement is in effect. Each Member shall bear an equitable share of the
cost of any such contest (including fees and expenses of outside accountants,
lawyers or other experts)

         14.      State and Local Income Taxes.

                  The principles underlying the rights and obligations hereunder
of the Members in respect of federal income taxes shall be applied in respect of
any state or local tax (it being understood that the principles provided in
Section 3(ii) of this Agreement shall apply only to the extent Parent has net
operating losses for such applicable state and local taxes on the Closing Date)
based on or measured by all or any part of the net income or loss of the
Affiliated Group or several of its members (a "COMBINED TAX"). All of the
procedural and timing requirements of this Agreement applicable to federal
income taxes shall be equally applicable to any Combined Tax, with appropriate
adjustments thereto to reflect the differences, if any, in corresponding
provisions of the applicable income tax code, law or statute governing any such
Combined Tax and any administrative provisions relating thereto.

         15.      Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein.

                                       7
<PAGE>

         16.      Successors. This Agreement shall be binding upon and inure to
the benefit of any successor, whether by statutory merger, acquisition of
assets, or otherwise, to any of the parties hereto, to the same extent as if the
successor had been an original party to the agreement.

         17.      Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

         18.      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       8
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives on the first date mentioned
herein.

                                    DANIELSON HOLDING CORPORATION

                                    By: ___________________________________
                                    Name:
                                    Title:

                                    COVANTA ENERGY CORP.

                                    By: ___________________________________
                                    Name:
                                    Title:

                                    COVANTA POWER INTERNATIONAL HOLDINGS, INC.

                                    By: ___________________________________
                                    Name:
                                    Title:

                                       9
<PAGE>

                            APPENDIX A

                         COVANTA SUBGROUP

Greenway Insurance Company of Vermont
DSS Environmental, Inc.
Covanta Cunningham Environmental Support, Inc.
Haverhill Power, Inc.
LMI, Inc.
Michigan Waste Energy, Inc.
Covanta Oahu Waste Energy  Recovery, Inc.
Covanta Energy Group, Inc.
Covanta Energy Resource Corp.
Covanta Energy International, Inc.
Covanta Energy West, Inc.
Covanta Engineering Services, Inc.
Covanta Haverhill Properties, Inc.
Covanta Marion Land Corp.
Covanta Alexandria/Arlington, Inc.
Covanta Babylon, Inc.
Covanta Bristol, Inc.
Covanta Fairfax Inc.
Covanta Haverhill, Inc.
Covanta Hillsborough, Inc.
Covanta Huntington Res. Rec. 1 Corp.
Covanta Huntington Res. Rec. 7 Corp.
Covanta Huntsville, Inc.
Covanta Indianapolis, Inc.
Covanta Kent, Inc.
Covanta Lancaster, Inc.
Covanta Lee, Inc.
Covanta Long Island, Inc.
Covanta Marion, Inc.
Covanta Montgomery Inc.
Covanta Onondaga Five Corp.
Covanta Onondaga Four Corp.
Covanta Onondaga Inc.

                                       10
<PAGE>

Covanta Onondaga Three Corp.
Covanta Onondaga Two Corp.
Covanta Pasco, Inc.
Covanta Stanislaus, Inc.
Covanta Tulsa, Inc.
Covanta Union, Inc.
Covanta Systems, Inc.
Covanta Omega Lease, Inc.
Covanta Plant Services of New Jersey, Inc.
Covanta Projects of Hawaii, Inc.
Covanta Projects, Inc.
Covanta Energy Services, Inc.
Covanta Wallingford Associates, Inc.
Covanta Waste to Energy, Inc.
Covanta Secure Services, Inc.
Covanta Water Holdings, Inc.
Covanta Water Systems, Inc.
Covanta Warren Energy Resources Co, L.P.
Covanta Water Treatment Services, Inc.
Covanta Acquisition, Inc.
Covanta Bessemer, Inc.
Covanta Onondaga Operations, Inc.
Covanta OPW Associates, Inc.
Covanta OPWH, Inc.
Covanta Mid-Conn, Inc.
Covanta RRS Holdings, Inc.
Olmec Insurance, Ltd.
8309 Tujunga Avenue Corp.
Burney Mountain Power, Inc.
Covanta New Martinsville Hydroelectric, Corporation
ERC Energy, Inc.
ERC Energy II, Inc.
Covanta Geothermal Operations Holdings, Inc.
Heber Field Energy II, Inc.
Covanta Imperial Power Services, Inc.
Mammoth Power Co.
Mt. Lassen Power
Covanta New Martinsville Hydro Operations

                                       11
<PAGE>

Corporation
Covanta Geothermal Operations, Inc.
Covanta Heber Field Energy, Inc.
Covanta Hydro Energy, Inc.
Covanta Hydro Operations, Inc.
Covanta Power Equity Corp.
Covanta Power Pacific, Inc.
Covanta Power Plant Operations
Covanta SIGC Geothermal Operations, Inc.
Pacific Energy Resources, Inc.
Pacific Hydropower Co.
Pacific Oroville Power, Inc.
Pacific Recovery Corp.
Pacific Wood Fuels Co.
Pacific Wood Services Co.
Penstock Power Co.
Covanta Energy Construction, Inc.
Three Mountain Operations, Inc.
Covanta Hydro Operations West, Inc.
Covanta Tampa Bay, Inc.
Three Mountain Power LLC
Covanta Tampa Construction
Covanta Equity Stanislaus, Inc.
Covanta Equity of Alexandria/Arlington, Inc.

                                       12
<PAGE>

                                   APPENDIX B

            Danielson Insurance Co. (Mission Insurance Company Trust)
          Danielson Insurance Co. (Enterprise Insurance Company Trust)
 Danielson National Insurance Company (Mission National Insurance Company Trust)
      Danielson Indemnity Company (Holland-America Insurance Company Trust)
    Danielson Reinsurance Corporation (Mission Reinsurance Corporation Trust)

                                       13
<PAGE>

                                   APPENDIX C

                   Schedule of Expiring Net Operating Losses

<TABLE>
<CAPTION>
Year of Expiration                                           Amount Expiring
------------------                                           ---------------
<S>                                                          <C>
       2004                                                  $   69,947,000
       2005                                                     106,225,000
       2006                                                      92,355,000
       2007                                                      89,790,000
       2008                                                      31,688,000
       2009                                                      39,665,000
       2010                                                      23,600,000
       2011                                                      19,755,000
       2012                                                      38,255,000
       2019                                                      33,635,000
       2022                                                      26,931,000
       Total                                                 $  571,846,000
</TABLE>

                                       14