<PAGE>
                                                                   EXHIBIT 10.20


                                                     July 28, 2003

Samuel Zell
President and Chief Executive Officer
Danielson Holding Corporation
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606

Dear Mr. Zell:

This letter agreement confirms our understanding that Danielson Holding
Corporation (the "Company" or "you") has engaged Credit Suisse First Boston LLC
and its affiliates, successors and assigns, as appropriate ("CSFB", "we" or
"us"), to act as its exclusive financial advisor with respect to the Company's
proposed Acquisition (as defined below) of the domestic waste-to-energy,
independent power production and water and wastewater operations of Covanta
Energy Corporation (the "Target").

As part of our engagement, we will, as requested:

(a)   assist the Company in evaluating the Acquisition, including as necessary
      business and financial due diligence and analysis of the Target;

(b)   assist the Company in developing a strategy to effectuate the Acquisition,
      including evaluating financing and structuring alternatives;

(c)   advise the Company on the structuring and terms of any potential equity or
      equity-linked financing at the Company undertaken in connection with the
      Acquisition; and

(d)   render a written opinion, upon further request, as to the fairness from a
      financial point of view to the Company of the consideration to be paid by
      the Company in the Acquisition (an "Opinion").

In connection with CSFB's engagement, the Company will furnish CSFB with all
information concerning the Company and, to the extent available to the Company,
the Target, which CSFB reasonably deems appropriate and will provide CSFB with
access to the officers, directors, employees, accountants, counsel and other
representatives (collectively, the "Representatives") of the Company and, as
practicable, the Target, it being understood that CSFB will rely solely upon
such information supplied by the Company, the Target and their respective
Representatives without assuming any responsibility for independent
investigation or verification thereof. In addition, the Company agrees to
promptly advise CSFB of any material event or change in the business, affairs,
condition (financial or otherwise) or prospects of the Company or, to the
knowledge of the Company, the Target that occurs during the term of CSFB's
engagement hereunder. All non-public information concerning the Company or the
Target, which is given to CSFB in connection with this engagement, will be used
solely in the course of the performance of our services hereunder and will be
treated confidentially by us for so long as it remains non-public. Except as
otherwise required by applicable law or judicial or regulatory process, CSFB
will not disclose this information to a third party without the Company's
consent.

As compensation for our financial advisory services hereunder, the Company
agrees to pay CSFB as follows (subject to setoff as set forth below):
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                                                                          Page 2

(1)   if, and only if, (a) a definitive acquisition agreement and other
      necessary transaction documents pertaining to the Acquisition (the
      "Acquisition Documents") are mutually executed and delivered, and (b) to
      the extent necessary, the United States Bankruptcy Court approves the
      terms and conditions of the Acquisition Documents, then upon such
      occurrence of (a) and (b), the Company shall be obligated to pay CSFB $1
      million in immediately available funds (the "Approval Payment"), which
      payment will be made within 2 business days after the reimbursement of any
      portion of the Company's expenses by the Target;

(2)   if, and only if, the Acquisition closes, the Company shall pay CSFB an
      additional $3 million in immediately available funds (the "Closing
      Payment") within 1 business day after the closing of the Acquisition; and

(3)   if, and only if, neither the Approval Payment nor the Closing Payment have
      been paid in accordance with this agreement on or before December 24,
      2003, or the Company terminates this agreement (other than for CSFB's
      gross negligence or bad faith), the Company shall pay CSFB $750,000 in
      immediately available funds (the "Guaranteed Payment"), within 5 business
      days thereafter; it being understood that the entire Guaranteed Payment
      (to the extent paid) shall be credited against the Approval Payment or the
      Closing Payment (but shall not be credited against both the Approval
      Payment and the Closing Payment) if and when such Approval Payment or
      Closing Payment, as the case may be, is paid.

As compensation for our rendering of an Opinion, the Company agrees to pay CSFB
an opinion fee equal to $500,000 (the "Opinion Fee"), payable upon the rendering
of an Opinion to the Company's Board of Directors. The Opinion Fee will be fully
creditable (to the extent paid) against the Approval Payment; provided, however,
that if the Approval Payment has already been paid at the time the Opinion Fee
becomes payable, the Opinion Fee will not be creditable against the Approval
Payment and will instead be fully creditable (to the extent paid) against the
Closing Payment.

In addition, the Company agrees to periodically reimburse CSFB for all customary
and reasonable out-of-pocket expenses, including the customary and reasonable
fees and expenses of its outside legal counsel, if any, and any other advisor
retained by CSFB (it being understood that the retention of any such advisor,
other than outside legal counsel, will be made only with the prior approval of
the Company, which shall not be unreasonably withheld or delayed), resulting
from or arising out of this engagement.

All fees and expenses payable hereunder are net of all applicable withholding
and similar taxes.

In consideration of the mutual promises made herein, notwithstanding anything to
the contrary in the letter agreement between CSFB, the Company and the Special
Committee of the Board of Directors of the Company, dated December 20, 2002 (the
"ACL Engagement Letter"), CSFB shall not be entitled to any payment of the
Restructuring Fee (as such term is defined in the ACL Engagement Letter);
provided, however, that, the parties shall allocate a portion (as agreed upon)
of the Approval Payment, Closing Payment or Guaranteed Payment, as applicable,
in respect of the services provided by CSFB pursuant to the ACL Engagement
Letter. Notwithstanding anything to the contrary herein, CSFB shall continue to
be entitled to reimbursement of out-of-pocket expenses pursuant to Section 3(c)
of the ACL Engagement Letter without duplication hereunder. The ACL Engagement
Letter shall continue in full force and effect as modified hereby.

For purposes of this agreement, "Acquisition" shall include, without limitation,
any investment in or acquisition (whether in one or a series of transactions) of
all or a majority of the capital stock, assets or other interests of the Target
or any entity comprising the Target by the Company or its affiliates, regardless
of the form any such investment or acquisition takes. Without limiting the
generality of the foregoing, it is understood that any transaction resulting in
the Company's ownership of more than 50% of Target's voting stock will be deemed
a consummated Acquisition for purposes of determining if and when the full
Approval Payment and Closing Payment are payable.
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                                                                          Page 3

If we are requested to render an Opinion to the Company with respect to the
fairness from a financial point of view of the consideration paid by the Company
pursuant to the Acquisition, the nature and scope of our analysis as well as the
form and substance of our Opinion shall be such as we reasonably deem
appropriate. If requested by you, our Opinion shall be delivered in writing.

No advice or Opinion rendered by CSFB, whether formal or informal, may be
disclosed, in whole or in part, or summarized, excerpted from or otherwise
referred to without our prior written consent, which shall not be unreasonably
withheld or delayed. In addition, neither CSFB, the Company, nor the terms of
this engagement may be otherwise referred to without CSFB's or the Company's
prior written consent, as the case may be (provided, that such restrictions on
references to the Company only apply to references to the Company by the
investment banking division of CSFB in connection with this engagement and
furthermore, without limiting the generality of the foregoing, do not restrict,
amend or alter any of CSFB's rights pursuant to the following paragraph and
CSFB's policies and procedures related to its research analysts), which consent
shall not be unreasonably withheld or delayed. The Company (and each employee,
representative or other agent of the Company) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the Acquisition and all materials of any kind (including opinions or other tax
analyses) that are provided to the Company relating to such tax treatment and
structure. The obligations of the Company and CSFB pursuant to this paragraph
shall survive any expiration or termination of this agreement or CSFB's
engagement hereunder.

The Company acknowledges that CSFB may, at its option and expense and after
announcement of the Acquisition, place announcements and advertisements or
otherwise publicize the Acquisition and CSFB's role in it (which may include the
reproduction of the Company's logo) on CSFB's Internet Website and in such
financial and other newspapers and journals as it may choose, stating that CSFB
has acted as financial advisor to the Company in connection with the
Acquisition.

Since CSFB will be acting on behalf of the Company in connection with its
engagement hereunder, the Company and CSFB agree to the indemnity provisions and
other matters set forth in Annex A which is incorporated by reference into this
agreement.

In addition, if the Target undertakes a public offering or private placement of
debt securities, or the Company or one of its subsidiaries undertakes a public
offering or private placement of debt securities for the benefit of the Target
(in each case, a "Debt Financing"), CSFB shall have the right of first refusal
to serve in the role of lead arranger, lead managing underwriter or exclusive
placement agent or principal counterparty, as applicable, so long as the
proposed terms, conditions and fees related to such transaction are at least as
favorable to the Company as any other bona fide written offer to serve in such
role made to the Company by an internationally recognized bulge bracket
investment bank, in connection with any Debt Financing through December 31,
2005. As compensation for any such services in connection with a Debt Financing,
the Company agrees to pay CSFB its customary fees to be mutually agreed upon at
the appropriate time. The terms of any such additional engagements will be set
forth in separate letter agreements containing terms and conditions to be
mutually agreed upon, including without limitation appropriate indemnification
provisions. The obligations of the Company pursuant to this paragraph shall
survive any expiration or termination of this agreement or CSFB's engagement
hereunder.

The Company further understands that if CSFB is asked to act for the Company in
any other formal additional capacity relating to this engagement but not
specifically addressed in this letter, such as acting as an underwriter in
connection with the issuance of securities by the Company and/or the Target,
then such activities shall constitute separate engagements and the terms and
conditions of any such additional engagements will be embodied in one or more
separate written agreements, containing provisions and terms to be mutually
agreed upon, including without limitation appropriate indemnification
provisions. The indemnity provisions in Annex A shall apply to any such
additional engagements, unless superseded by an indemnity provision set forth in
a separate agreement applicable to any such additional engagements, and shall
remain in full force and effect regardless of any completion, modification or
termination of CSFB's engagement(s).
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                                                                          Page 4

CSFB's engagement hereunder may be terminated at any time by either CSFB or the
Company upon ten days' prior written notice thereof to the other party;
provided, however, that in the event of any termination of CSFB's engagement
hereunder by the Company (other than for CSFB's gross negligence or bad faith)
CSFB will continue to be entitled to the full Approval Payment and Closing
Payment provided for herein, as applicable, if CSFB would be entitled to such
payment or payments but for such termination of CSFB's engagement hereunder,
less the amount of the Guaranteed Payment, if paid, in the event that at any
time prior to the expiration of twelve months after any such termination the
Company consummates, or enters into a definitive agreement providing for, an
Acquisition; and provided, further, that no termination of CSFB's engagement
hereunder shall affect the Company's obligation to reimburse CSFB for its
out-of-pocket expenses as provided for herein and to indemnify CSFB and certain
related persons and entities as provided in Annex A.

CSFB is a full service securities firm engaged in securities trading and
brokerage activities as well as investment banking and financial advisory
services. In the ordinary course of our trading and brokerage activities, CSFB
or its affiliates may hold positions, for its own account or the accounts of
customers, in equity, debt or other securities of the Company or any other
company that may be involved in the matters contemplated by this agreement.
Additionally, the Company acknowledges that CSFB is a contingent creditor to
Covanta Energy Corporation pursuant to an existing letter of credit facility,
and in such other capacity, may acquire information about the Target, Covanta
Energy Corporation, and other prospective purchasers, CSFB shall have no
obligation to disclose such information, or the fact that CSFB is in possession
of such information, to the Company or to use such information on the Company's
behalf. CSFB has adopted policies and procedures designed to preserve the
independence of its research analysts whose views may differ from those of
CSFB's investment banking division.

In connection with this engagement, CSFB is acting as an independent contractor
and not in any other capacity, with duties owing solely to the Company. All
aspects of the relationship created by this agreement shall be governed by and
construed in accordance with the laws of the State of New York, applicable to
contracts made and to be performed therein. All actions and proceedings arising
out of or relating to this letter agreement shall be heard and determined
exclusively in any New York state or federal court sitting in the Borough of
Manhattan of the City of New York, to whose jurisdiction the Company hereby
irrevocably submits. The Company hereby irrevocably waives any defense or
objection to the New York forum designated above. Each of CSFB and the Company
waives all right to trial by jury in any action, suit, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising out of the engagement of CSFB pursuant to, or the performance by CSFB of
the services contemplated by, this agreement.
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                                                                          Page 5

We are delighted to accept this engagement and look forward to working with you
on this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter.

                                    Very truly yours,

                                    CREDIT SUISSE FIRST BOSTON LLC



                                    By:
                                        ---------------------------------------
                                        Name: Niron Stabinsky
                                        Title: Director


Accepted and agreed to as of the date first written above:

DANIELSON HOLDING CORPORATION



By:
    ---------------------------------------------
    Name:  Samuel Zell
    Title: President and Chief Executive Officer
<PAGE>
                                                                          Page 6

                                     ANNEX A

                                                                   July 28, 2003

In further consideration of the agreements contained in our engagement letter
dated the date hereof (the "engagement"), in the event that Credit Suisse First
Boston LLC ("CSFB") or any of its affiliates, the respective directors,
officers, partners, agents or employees of CSFB or any of its affiliates, or any
other person controlling CSFB or any of its affiliates (collectively,
"Indemnified Persons") becomes involved in any capacity in any action, claim,
suit, investigation or proceeding, actual or threatened, brought by or against
any person, including stockholders of Danielson Holding Corporation (the
"Company"), in connection with or as a result of the engagement or any matter
referred to in the engagement, the Company will reimburse such Indemnified
Person for its reasonable and customary out-of-pocket legal and other expenses
(including without limitation the out-of-pocket costs and expenses incurred in
connection with investigating, preparing for and responding to third party
subpoenas or enforcing the engagement) incurred in connection therewith as such
out-of-pocket expenses are incurred, except to the extent that indemnification
would be unavailable for such claims as provided below. The Company will also
indemnify and hold harmless any Indemnified Person from and against, and the
Company agrees that no Indemnified Person shall have any liability to the
Company or its owners, parents, affiliates, security holders or creditors for,
any losses, claims, damages or liabilities (including actions or proceedings in
respect thereof) (collectively, "Losses") (A) related to or arising out of (i)
the Company's actions or failures to act (including statements or omissions made
or information provided by the Company or its agents) or (ii) actions or
failures to act by an Indemnified Person with the Company's consent or in
reasonable reliance on the Company's actions or failures to act (provided, that
CSFB's unreasonable reliance on the Company's actions or failures to act shall
be deemed to be included within clause (B))or (B) otherwise related to or
arising out of the engagement or CSFB's performance thereof, except that this
clause (B) shall not apply to any Losses that are finally determined by a court
or arbitral tribunal to have resulted primarily from the bad faith or gross
negligence of any Indemnified Person. If such indemnification is for any reason
not available or insufficient to hold an Indemnified Person harmless, the
Company agrees to contribute to the Losses involved in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by the Company, on the one hand, and by CSFB, on the other hand, with
respect to the engagement or, if such allocation is determined by a court or
arbitral tribunal to be unavailable, in such proportion as is appropriate to
reflect other equitable considerations such as the relative fault of the Company
on the one hand and of CSFB on the other hand; provided, however, that, to the
extent permitted by applicable law, the Indemnified Persons shall not be
responsible for amounts which in the aggregate are in excess of the amount of
all fees actually received by CSFB from the Company in connection with the
engagement. Relative benefits to the Company, on the one hand, and CSFB, on the
other hand, with respect to the engagement shall be deemed to be in the same
proportion as (i) the total value paid or proposed to be paid or received or
proposed to be received by the Company or its security holders, as the case may
be, pursuant to the transaction(s), whether or not consummated, contemplated by
the engagement, bears to (ii) all fees actually received by CSFB in connection
with the engagement.

The Company will not, without CSFB's prior written consent, which shall not be
unreasonably withheld or delayed, settle, compromise, consent to the entry of
any judgment in or otherwise seek to terminate any action, claim, suit,
investigation or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is a party thereto) unless such
settlement, compromise, consent or termination includes a release of each
Indemnified Person from any liabilities arising out of such action, claim, suit,
investigation or proceeding. The Company will not permit any such settlement,
compromise, consent or termination to include a statement as to, or an admission
of, fault, culpability or a failure to act by or on behalf of an Indemnified
Person, without such Indemnified Person's prior written consent, which shall not
be unreasonably withheld or delayed. No Indemnified Person seeking
indemnification, reimbursement or contribution under this agreement will,
without the Company's prior written consent, which shall not be unreasonably
withheld or delayed, settle, compromise, consent to the entry of any judgment in
or otherwise seek to terminate any action, claim, suit, investigation or
proceeding referred to herein.
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                                                                          Page 7

Prior to entering into any agreement or arrangement with respect to, or
effecting, any merger, statutory exchange or other business combination or
proposed sale or exchange, dividend or other distribution or liquidation of all
or a significant portion of its assets in one or a series of transactions or any
significant recapitalization or reclassification of its outstanding securities
that does not directly or indirectly provide for the assumption of the
obligations of the Company set forth herein, the Company will notify CSFB in
writing thereof (if not previously so notified) and, if requested by CSFB, shall
arrange in connection therewith alternative means of providing for the
obligations of the Company set forth herein, including the assumption of such
obligations by another party, insurance, surety bonds or the creation of an
escrow, in each case in an amount and upon terms and conditions satisfactory to
CSFB.

The Company's obligations hereunder shall be in addition to any rights that any
Indemnified Person may have at common law or otherwise. The Company acknowledges
that in connection with the engagement CSFB is acting as an independent
contractor and not in any other capacity with duties owing solely to the
Company. This agreement and any other agreements relating to the engagement
shall be governed by and construed in accordance with the laws of the State of
New York, applicable to contracts made and to be performed therein and, in
connection therewith, the parties hereto consent to the exclusive jurisdiction
of the Supreme Court of the State of New York sitting in New York County or the
United States District Court for the Southern District of New York and the
respective appellate courts thereof. Notwithstanding the foregoing, solely for
purposes of enforcing the Company's obligations hereunder, the Company consents
to personal jurisdiction, service and venue in any court proceeding in which any
claim subject to this agreement is brought by or against any Indemnified Person.
CSFB HEREBY AGREES, AND THE COMPANY HEREBY AGREES ON ITS OWN BEHALF AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS SECURITY HOLDERS, TO WAIVE
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION
ARISING OUT OF THE ENGAGEMENT OR CSFB'S PERFORMANCE THEREOF.

The provisions of this agreement shall apply to the engagement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the engagement. If any term, provision, covenant or restriction
herein is held by a court of competent jurisdiction to be invalid, void or
unenforceable or against public policy, the remainder of the terms, provisions
and restrictions contained herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.


DANIELSON HOLDING CORPORATION



By:
    --------------------------------
    Name:  Samuel Zell
    Title: President and Chief Executive Officer



Accepted and agreed to as of the date hereof:
CREDIT SUISSE FIRST BOSTON LLC



By:
    --------------------------------
    Name:  Niron Stabinsky
    Title: Director