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                                                                  EXECUTION COPY

                                                                   EXHIBIT 10.30

                  MANAGEMENT SERVICES & REIMBURSEMENT AGREEMENT

         THIS MANAGEMENT SERVICES & REIMBURSEMENT AGREEMENT (hereinafter, this
"Agreement") is made and entered into as of March 10, 2004, among Covanta Energy
Corporation, a Delaware corporation ("Covanta"), Covanta Energy Group, Inc., a
Delaware corporation ("CEG"), Covanta Projects, Inc., a Delaware corporation
("CPI", and together with Covanta and CEG, the "Covanta Entities"), and Covanta
Power International Holdings, Inc., a Delaware corporation ("CPIH"), and certain
of its domestic subsidiaries listed on Schedule A hereto (together with CPIH,
the "CPIH Entities"). Each of Covanta, the other Covanta Entities, CPIH and the
other CPIH Entities are sometimes referred to herein individually as a "Party"
and collectively as the "Parties".

                                    RECITALS

         WHEREAS, on April 1, 2002, the Parties filed in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court")
voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code
and the Parties currently continue to operate their businesses as
debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code;

         WHEREAS, the Parties have proposed, their creditors have approved, and
the Bankruptcy Court has confirmed a plan of reorganization (the "Plan");

         WHEREAS, pursuant to the Plan, all entities that own or operate
businesses located outside of the United States (the "International Businesses")
will be direct or indirect subsidiaries of CPIH;

         WHEREAS, CPIH will continue to be controlled by the Covanta Entities,
which will be rendering certain management services to CPIH, contingent upon the
covenants set forth herein;

         WHEREAS, Bank One issued the letters of credit listed on Schedule B
(except for the Haripur Letter of Credit, defined below) hereto under the Credit
Agreement dated as of March 10, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Second Lien Credit Facility"), among the
Covanta Entities, certain other domestic subsidiaries of Covanta, the lenders
from time to time party thereto (the "Lenders"), and Bank One, NA, as
administrative agent for the Lenders (the "Credit Agreement Letters of Credit");

         WHEREAS, Citibank, N.A. ("Citibank") has issued the letter of credit
listed on Schedule B hereto dated February 28, 1999 to secure an obligation of
NEPC Consortium, Ltd. ("NEPC") (an entity in which a Covanta subsidiary has an
ownership interest) under certain Haripur power project documents (the "Haripur
Letter of Credit", together with the Credit Agreement Letters of Credit, the
"Letters of Credit"), and Citibank has provided the Haripur Letter of Credit to
Covanta, upon the terms and subject to the conditions specified therein,
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including, but not limited to, Covanta's obligation to repay amounts funded
under the Haripur Letter of Credit;

         WHEREAS, the Covanta Entities have also made certain Parent Guarantees
on behalf of certain subsidiaries of CPIH as listed on Schedule C hereto (the
"Parent Guarantees");

         WHEREAS, during such time as CPIH's financials will be consolidated
with those of Covanta for external financial reporting, Covanta, as a reporting
company under the Securities Exchange Act of 1934, as amended ("Exchange Act"),
will incur certain expenses for or on behalf of the CPIH Entities;

         WHEREAS, the CPIH Entities will enter into the CPIH Credit Agreement
among CPIH, certain of its subsidiaries, the lenders from time to time party
thereto, Bank of America, N.A. as administrative agent thereunder, and Deutsche
Bank Securities, Inc., as documentation agent thereunder (as amended,
supplemented or otherwise modified from time to time, the "CPIH Credit
Agreement") and the CPIH Revolver Credit Agreement as such document is defined
in the CPIH Credit Agreement (together with the CPIH Credit Agreement, the "CPIH
Credit Facilities");

         WHEREAS, the CPIH Entities, the Covanta Entities and certain other
parties have entered into the Intercreditor Agreement as such document is
defined in the CPIH Credit Agreement (the "Intercreditor Agreement");

         WHEREAS, Covanta will be engaging auditors, tax advisors, lawyers and
other such professionals in connection with the performance of obligations under
the Second Lien Credit Facility and other exit financing facilities; and

         WHEREAS, CPIH intends to pay or reimburse the applicable Covanta Entity
for draws of the Letters of Credit, performance under the Parent Guarantees, and
services provided or expenses incurred for or on behalf of the CPIH Entities, in
compliance with the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties agree as follows:

         1.    Management and Services. Covanta shall provide or cause to be
provided, subject to payment as and when due of its invoices, to CPIH and the
other CPIH entities the following administrative and management services
(collectively the "Services") for the duration of this Agreement:

         (a)   The operational services listed and described on Schedule 1(a),
               attached hereto (the "Operational Services");

         (b)   The human resource services listed and described on Schedule
               1(b), attached hereto (the "HR Services");

         (c)   The risk management services listed and described on Schedule
               1(c), attached hereto (the "Risk Management Services");


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         (d)   The legal services listed and described on Schedule 1(d),
               attached hereto (the "Legal Services");

         (e)   The information technology services listed and described on
               Schedule 1(e), attached hereto (the "IT Services");

         (f)   The accounting, treasury and cash management services listed and
               described on Schedule 1(f), attached hereto (the
               "Accounting/Treasury Services");

         (g)   Assisting with the preparation and submission of filings required
               by any applicable regulatory body;

         (h)   At CPIH's request or as reasonably necessary to prevent a draw on
               a Letter of Credit or a call on a Parent Guarantee, obtaining the
               services of and coordinating with professional advisors in
               connection with CPIH's business and any possible asset sales,
               including, without limitation, accountants, auditors, attorneys,
               brokers, advisors, consultants and banks; and

         (i)   Such other functions as may be requested and paid for by CPIH,
               from time to time, and agreed to by Covanta.

         2.    Flat Service Fee. So long as neither the Covanta Entities nor the
CPIH Entities have terminated this Agreement pursuant to Section 10 hereof, CPIH
shall pay a flat service fee of $1,000,000 per annum (the "Flat Fee"), for all
management Services rendered by employees of the Covanta Entities, as identified
in Schedules 1(a) through 1(f) as services covered by the Flat Fee, but
excluding management Services provided by certain excluded employees that are
ex-patriots or that devote 100% of their time to the International Businesses,
as listed on Schedule 2, and excluding certain hourly services described on
Schedule 1(a). Such Flat Fee shall be invoiced to, and payable by, CPIH in
advance, on a monthly basis. To the extent the CPIH Entities' service
requirements are substantially reduced as the result of assets being sold or
otherwise (including, without limitation, as a result of a reduction in overhead
and other needs), or increased as a result of unforeseen conditions, Covanta and
CPIH will negotiate in good faith to adjust the Flat Fee to more accurately
reflect the actual costs of the Covanta Entities.

         3.    Reimbursable Service Expenses of Covanta. Subject to reasonable
documentation (including a reasonable description of the Services provided and
the time spent therefor) and so long as neither the Covanta Entities nor the
CPIH Entities have terminated this Agreement pursuant to Section 10 hereof, CPIH
shall also reimburse Covanta for the actual costs and expenses (including
third-party costs and expenses actually incurred) incurred by Covanta or another
Covanta Entity in providing the Services ("Service Costs") that are not covered
by the Flat Fee, including the costs of the employees on Schedule 2, and the
hourly services listed on Schedule 1(a). Furthermore, CPIH shall reimburse
Covanta for the actual costs of the following operating expenses incurred by
Covanta or another Covanta Entity in connection with its operations for the
benefit of the CPIH Entities or the International Businesses (collectively, with
the Flat Fee and the Service Costs, the "Reimbursable Expenses"):

         (a)   All audit, legal, appraisal, engineering (excluding engineering
               audits), environmental, financial and other professional and/or
               consulting services


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               incurred by Covanta, including third-party costs in the ordinary
               course of business;

         (b)   All audit, legal, appraisal, engineering, environmental,
               financial and other professional and/or consulting services
               incurred by Covanta, including third-party costs, not in the
               ordinary course of business that are incurred only after approval
               from either the CEO or president of CPIH;

         (c)   All cash insurance premiums and related costs, expenses and
               indemnities (including deductibles and self-insured retentions
               incurred by Covanta on behalf of and in consultation with CPIH)
               incurred by Covanta on behalf of and in consultation with CPIH,
               whether originating from Covanta's corporate master programs,
               international project documents, or joint venture partners;

         (d)   Fees and expenses of CPIH meetings and travel of employees,
               directors and officers of Covanta or CPIH, including outside
               directors' fees, when traveling for the International Businesses;

         (e)   Temporary employees or independent contractors engaged to assist
               on CPIH matters, to the extent requested by CPIH, or to the
               extent required in Covanta's reasonable judgment, with consent
               from CPIH;

         (f)   Fees and expenses payable to regulatory agencies or rating
               agencies, if any;

         (g)   Printing fees associated with notices or other communications to
               holders of CPIH's securities and registration statements,
               reports, proxy statements and other reports filed with the
               Securities and Exchange Commission, if any;

         (h)   Income, sales, use, franchise and other taxes paid to Federal,
               state and local governments by Covanta on behalf of CPIH
               following tax deconsolidation from Covanta; and

         (i)   All such other out-of-pocket expenditures directly related to
               CPIH's activities and reasonably determined to be appropriate and
               advisable, and approved in advance, by the CEO or the president
               of CPIH.

         4.    Reimbursement.

         (a)   In exchange for performing the Services for CPIH, CPIH shall pay
               Covanta the Flat Fee monthly in advance, and reimburse Covanta on
               a monthly basis for all other Reimbursable Expenses that the
               Covanta Entities incur during the immediately preceding month.
               Covanta shall submit to CPIH for payment each month an invoice
               for amounts due pursuant to Sections 2 and 3 herein (an
               "Invoice"). All Invoices shall specify the Services provided to
               CPIH under the Agreement and the Reimbursable Expenses incurred
               for the invoiced month and the costs of the Covanta Entities
               therefor. CPIH shall pay all Invoices within thirty (30) Business
               Days of receipt thereof; provided that any amounts subject to


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               reasonable dispute shall be deemed payable only once such dispute
               is resolved pursuant to mutual agreement or section 16.

         (b)   In the event a payment shall be made by a Covanta Entity to
               reimburse any draw of the Letters of Credit or in the event a
               Covanta Entity shall have performed or made a payment under any
               Parent Guarantee, the CPIH Entities shall, subject to the
               Intercreditor Agreement and the CPIH Credit Facilities, reimburse
               such Covanta Entity for such payment and for any costs incurred
               in making such payment or performing under the Parent Guarantee,
               within thirty (30) calendar days after such Covanta Entity's
               first demand.

         (c)   Any payment made to a Covanta Entity for any Reimbursable Expense
               shall be deemed an operating expense of CPIH and thus necessarily
               senior to all other CPIH debt obligations. Any payment to be made
               to a Covanta Entity under this Agreement shall be made in lawful
               currency of the United States of America in immediately available
               funds to such account as such Covanta Entity shall direct by
               reasonable advance written notice to the CPIH Entities. In the
               event that the expiration of any time prior hereunder occurs on a
               day which is not a Business Day, the expiration of such time
               period shall be deemed to occur on the next succeeding Business
               Day with the same force and effect if such time period expired on
               the scheduled expiration date. A "Business Day" shall mean any
               day excluding Saturday, Sunday and any day which is a legal
               holiday under the laws of the State of New York or is a day on
               which banking institutions located in the State of New York are
               authorized or required by law or other governmental action to
               close. Payments to be made to a Covanta Entity under Section 4(b)
               of this Agreement that are not paid when due shall bear interest,
               payable on demand, subject to the terms of the Intercreditor
               Agreement, for each day from and including the day on which such
               payment became due until but not including the day paid at a rate
               per annum equal to the lower of (i) the sum of the prime rate of
               interest publicly announced by Bank of America from time to time
               as its prime rate plus 2.00% in each case for such day and (ii)
               the highest rate permitted by applicable law. Subject to the
               terms of the Intercreditor Agreement, any and all payments and
               other obligations of any CPIH Entity pursuant to this Agreement
               shall be senior and joint and several obligations of all CPIH
               Entities.

         (d)   Subject to the terms of the Intercreditor Agreement, any of the
               reimbursement obligations of the CPIH Entities under this
               Agreement are made without prejudice to any subrogation rights
               that the Covanta Entities may have against the CPIH Entities or
               any of the International Businesses.

         5.    Budget. If so requested by either Covanta or CPIH, Covanta and
CPIH shall convene on a semi-annual basis to consult regarding the scope of
Services to be provided and the costs of such Services. Covanta shall use its
reasonable best efforts to provide CPIH with a non-binding cost budget for such
Services, within fifteen (15) business days prior to such meeting.

         6.    [Intentionally Omitted]


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         7.    Independent Contractor. Covanta shall serve as an independent
contractor and the CPIH Entities shall have no control over the retention, terms
of employment or discharge of Covanta's employees, provided that all third
parties or other outside advisors and consultants shall be reasonably acceptable
to CPIH, and further provided that the persons listed on Schedule 2 hereto shall
not be considered Covanta employees for the purposes of this Section 7.

         8.    Covenants. The Covanta Entities and the CPIH Entities shall at
all times while this Agreement is in effect observe and abide by the covenants
contained in this Section 8, and in particular, any deviation from or waiver of
any CPIH or Covanta negative covenant shall require the written consent of the
other Party.

         (a)   (i) None of the CPIH Entities shall amend, supplement, modify or
               grant any release or relinquishment of any rights under, any
               contract, commitment, undertaking or other binding obligation
               relating to a Parent Guarantee or a Letter of Credit, unless such
               amendment, supplement, modification, release or relinquishment
               grants a full release of the relevant Covanta Entity from its
               Parent Guarantee, or cancels, undrawn, all Letters of Credit
               related to such amended documents or does not, in Covanta's
               reasonable judgment, impose any additional obligations on any of
               the Covanta Entities or otherwise impair their respective rights
               thereunder.

               (ii) None of the Covanta Entities shall amend, supplement, modify
               or grant any release or relinquishment of any rights under, any
               Parent Guarantee or Letters of Credit or any other contracts,
               commitments, undertakings or other binding obligations relating
               thereto unless such amendment, supplement, modification, release
               or relinquishment does not, in CPIH's reasonable judgment, impose
               any additional obligations on any of the CPIH Entities or
               otherwise impair their respective rights.

         (b)   The CPIH Entities shall provide periodic reports no less often
               than monthly with respect to the plans and process proposed to be
               undertaken to sell the International Businesses of CPIH
               subsidiaries, individually or as a whole.

         (c)   The CPIH Entities shall not voluntarily sell, liquidate or
               otherwise transfer all or any significant or material portion of
               any International Business or subsidiary that is the primary
               obligor of an undertaking which is the subject of a Parent
               Guarantee or Letter of Credit unless the terms of any such sale,
               liquidation or transfer provide that (i) the applicable Covanta
               Entities be fully released from all existing and future liability
               and obligations under all applicable Parent Guarantees directly
               related to the assets being sold, liquidated or otherwise
               transferred, (ii) all Letters of Credit directly related to the
               assets being sold, liquidated or otherwise transferred be
               returned, undrawn, and (iii) all amounts due Covanta pursuant to
               Section 4(b) of this Agreement (subject to the terms of the
               Intercreditor Agreement) shall be paid by the closing or
               completion of such sale, liquidation or transfer.


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         (d)   The CPIH Entities shall notify Covanta, promptly upon receiving
               notice or otherwise becoming aware of an imminent draw upon a
               Letter of Credit or a payment under a Parent Guarantee.

         (e)   The CPIH Entities shall adhere to and comply with Covanta's
               policy of business conduct as in effect from time to time as
               interpreted by Covanta and administered by its General Counsel
               (the "Business Conduct Policy"), including (at Covanta's sole
               expense) performing such training of their respective officers,
               directors, employees and agents as is reasonably directed by
               Covanta or is reasonably necessary to assure such adherence and
               compliance. The CPIH Entities shall refer to Covanta all matters
               relating to enforcement of the Business Conduct Policy by their
               officers, directors, employees and agents and Covanta shall have
               the sole right to determine and administer any disciplinary
               actions to be taken under the Business Conduct Policy with
               respect to such officers, directors, employees and agents;
               provided that the termination of any CPIH officer or director as
               a result of such officer breaching this Section 8(e) or Section
               8(f) shall require the affirmative vote of a majority of
               Covanta's then-existing board members.

         (f)   The CPIH Entities shall adhere to and comply with all other
               applicable policies of Covanta as in effect from time to time (so
               long as such policies are set forth in writing and made available
               to CPIH, with reasonable prior notice in order to permit adequate
               implementation by CPIH), including, without limitation:

               (1)    Covanta Disclosure Controls and Policies (and in
                      furtherance of such policies, CPIH's Chief Executive,
                      Chief Financial and Chief Legal Officers shall be
                      disclosure principals and shall conform to the rules and
                      deadlines imposed on individuals so designated);

               (2)    Covanta's policy regarding the anonymous reporting of
                      complaints to its Audit Committee;

               (3)    Covanta's policy regarding the retention of auditors to
                      perform non-audit services;

               (4)    Covanta's policy on the Foreign Corrupt Practices Act of
                      1977 (as modified by The Omnibus Trade and Competitiveness
                      Act of 1988);

               (5)    Covanta's policies regarding financial reporting and
                      controls;

               (6)    Covanta's policies pursuant to 15 C.F.R. 205 (or any
                      successor provision thereto) regarding up-the-ladder
                      reporting by internal and external attorneys and the
                      recognition that (i) the general counsel of Covanta is the
                      relevant chief legal officer for the purposes of any
                      provision of such policies involving reporting to (or
                      action by) a chief legal officer; (ii) the chief executive
                      officer of Covanta is the relevant chief executive officer
                      for the purposes of any provision of such policies
                      involving reporting to (or action by) a chief executive
                      officer, and (iii) that if Covanta creates a


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                      Qualified Legal Compliance Committee ("QLCC"), as defined
                      in and pursuant to 15 C.F.R. 205.2 (or any successor
                      provision thereto), that QLCC shall be the relevant QLCC
                      of CPIH for the purposes of any provision of such policies
                      involving reporting to (or action by) a QLCC; and

               (7)    such other policies of general application to Covanta as
                      Covanta's Board of Directors determines to implement from
                      time to time, so long as such policies are applicable to
                      Covanta and are made available in writing to CPIH.

         (g)   No CPIH Entity shall change its accounting policies, fiscal year
               or auditors without Covanta's written consent. Furthermore,
               Covanta shall select and manage the auditor of the CPIH Entities,
               as part of the Services provided under this Agreement, to
               facilitate consolidated financial reporting.

         (h)   CPIH shall ensure that its Chief Executive Officer and Chief
               Financial Officer are subject to Covanta's senior executive code
               of ethics.

         (i)   At Covanta's sole cost, CPIH's executive officers shall attend
               meetings of Covanta's Board of Directors and Audit Committee as
               reasonably requested by such Board of Directors or Audit
               Committee, as the case may be, and promptly provide such
               materials as such Board or Directors or Audit Committee may
               request.

         (j)   No CPIH Entity shall take any action that binds, or purports to
               bind, any Covanta Entity under any contract, commitment,
               undertaking or other binding obligation.

         (k)   No Covanta Entity shall take any action that binds, or purports
               to bind, any CPIH Entity under any contract, commitment,
               undertaking or other binding obligation.

         (l)   Each CPIH Entity shall timely file its own forms, reports and
               documents with any governmental entities as required by
               applicable laws and regulations and shall timely provide all
               information that is reasonably requested in advance by Covanta in
               order for the Covanta Entities to complete their financial
               statements and complete and file, in a timely manner, any forms,
               reports and documents with the Securities and Exchange Commission
               and any other governmental entities as required by applicable
               laws and regulations.

         (m)   CPIH shall take all actions reasonably necessary or as may be
               reasonably requested by Covanta to preserve CPIH's and Covanta's
               respective status as exempt from utility regulations such as the
               Public Utility Holding Company Act.

         (n)   Each of the CPIH Entities shall comply in all material respects
               with laws and regulations applicable to it, including without
               limitation regulation FD under the Exchange Act of 1934 and the
               Sarbanes-Oxley Act of 2002, as applicable. In furtherance of this
               covenant, CPIH recognizes that Covanta's Audit Committee is and
               shall be CPIH's audit committee, and that CPIH must comply with
               Covanta


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               internal control requirements, so long as such requirements are
               set forth in writing and provided to CPIH with reasonable advance
               notice.

         (o)   CPIH shall take all reasonable actions so as not to violate any
               law, regulation, contract, commitment, undertaking or other
               binding obligation would reasonably be expected to have a
               material negative impact on any of the Covanta Entities.

         In the event of a breach of the covenants contained in this Section 8,
and in addition to the rights contained in Sections 9 and 10 herein, the Covanta
Entities shall have the right, as applicable, to take any and all actions
necessary to cause the CPIH Entities to comply with the covenants set forth in
Sections 8(e), (f), (l), (m) and (n).

         9.    Release - Indemnification.

         (a)   Covanta shall provide CPIH the benefit of the same standard of
               judgment and effort in rendering the Services hereunder as
               Covanta applies to its own corporate functions and operations.
               However, the Covanta Entities and their affiliates and their
               respective officers, directors, members, affiliates, agents and
               employees (collectively, the "Covanta Indemnified Parties") shall
               not be liable to the CPIH Entities or to any other person for any
               act or omission in the course of performance of their duties
               hereunder except for their gross negligence or willful
               misconduct. In addition to all such rights of indemnity as the
               Covanta Indemnified Parties may have under applicable law, CPIH
               shall indemnify the Covanta Indemnified Parties from and against
               any and all liabilities, claims, damages, costs and expenses
               (including reasonable attorney's fees and amounts reasonably paid
               in settlement) (collectively, "Covanta Losses") incurred by
               reason of or arising out of the performance or nonperformance of
               its duties under or by reason of this Agreement; provided,
               however, there shall be no such indemnification for Covanta
               Losses incurred by any such person or entity by reason of their
               gross negligence or willful misconduct in the conduct of their
               duties under or by reason of this Agreement.

         (b)   The CPIH Entities and their affiliates and their respective
               officers, directors, members, affiliates, agents and employees
               (collectively, the "CPIH Indemnified Parties") shall not be
               liable to the Covanta Entities or to any other person for any act
               or omission in the course of performance of their duties
               hereunder except for their gross negligence or willful
               misconduct. In addition to all such rights of indemnity as the
               CPIH Indemnified Parties may have under applicable law, Covanta
               shall defend, indemnify and save harmless the CPIH Indemnified
               Parties from and against any and all liabilities, claims,
               damages, costs and expenses (including reasonable attorney's fees
               and amounts reasonably paid in settlement) (collectively, "CPIH
               Losses") incurred by reason of or arising out of the performance
               or nonperformance of its duties under or by reason of this
               Agreement; provided, however, there shall be no such
               indemnification for CPIH Losses incurred by any such person or
               entity by reason of their gross negligence or willful misconduct
               in the conduct of their duties under or by reason of this
               Agreement.


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         (c)   In addition to all such rights of indemnity and subrogation as
               the Covanta Entities may have under applicable law, the CPIH
               Entities shall defend, indemnify and save harmless the Covanta
               Indemnified Parties from and against any and all Covanta Losses
               incurred by a Covanta Indemnified Party in connection with:

               (1)    such Covanta Indemnified Party's role as account party
                      under any of the Letters of Credit, to the extent CPIH
                      controls any litigation;

               (2)    such Covanta Indemnified Party's role as guarantor under
                      any Parent Guarantee, to the extent CPIH controls any
                      litigation; and

               (3)    the material breach by CPIH of a covenant contained in
                      Section 8 herein.

         (d)   In addition to all such rights of indemnity and subrogation as
               the CPIH Entities may have under applicable law, the Covanta
               Entities shall defend, indemnify and save harmless the CPIH
               Indemnified Parties from and against any and all CPIH Losses
               incurred by a CPIH Indemnified Party in connection with the
               material breach by Covanta of a covenant contained in Section 8.

         (e)   The Covanta Entities' and the CPIH Entities' indemnification and
               advancement of expenses obligations hereunder shall survive any
               termination of this Agreement, Section 10 notwithstanding.

         10.   Default and Termination. In the event of a material breach of a
covenant contained in Section 8 or any other material default (hereinafter a
"Default") under this Agreement, by Covanta or CPIH, the Party suffering from
such Default (hereinafter the "Non-Defaulting Party") shall serve written notice
to the Party in Default (hereinafter the "Defaulting Party") setting forth with
reasonable particularity the nature of the alleged Default, and the specific
remedy or performance sought by the Non-Defaulting Party (hereinafter the
"Default Notice") of the Defaulting Party to cure the Default. The Defaulting
Party shall have sixty (60) Business Days from its receipt of the Default
Notice, other than a payment default, to either cure the Default or, if the
Default is not capable of being cured within sixty (60) Business Days, to make
substantial efforts and progress towards curing the Default. In the event that
the Defaulting Party does not cure the Default or make substantial efforts and
progress towards curing the Default within sixty (60) Business Days of its
receipt of the Default Notice, then the Non-Defaulting Party may deliver a
second notice (hereinafter the "Notice of Service Termination") to the
Defaulting Party informing the Defaulting Party that this Agreement has been
terminated as of the Date of the Notice of Termination. Any notice served under
this section 10 shall require the approval of the Board of Directors of CPIH or
Covanta, as the applicable Non-Defaulting Party, and such approval shall be
attached to such notice. Notwithstanding the foregoing, in the event of a
payment default by the CPIH Entities, Covanta shall have the right to terminate
this Agreement in the event such payment default is not cured within fifteen
(15) days following delivery of the Default Notice to CPIH; provided that it is
expressly understood and agreed that CPIH's failure to reimburse any amounts
pursuant to this Agreement as a result of the proviso in Section 4(a) hereof, or
the provisions of the CPIH Credit Facilities and/or the Intercreditor Agreement
as in effect on the Effective Date shall not be deemed a Default


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hereunder. In the event of the termination of this Agreement pursuant to Section
10 hereof, none of the Parties shall have any further rights, obligations or
liabilities under this Agreement.

         11.   Binding Agreement; Assignments.

         (a)   Whenever in this Agreement any of the Parties hereto is referred
               to, such reference shall be deemed to include the successors and
               permitted assigns of such Party; and all covenants, promises and
               agreements by or on behalf of the Parties that are contained in
               this Agreement shall bind and inure to the benefit of their
               respective successors and permitted assigns.

         (b)   None of the Covanta Entities nor any of the CPIH Entities may
               assign or transfer any of its rights or obligations hereunder
               (and any such attempted assignment or transfer shall be void)
               without the prior written consent of CPIH or Covanta,
               respectively, provided that Covanta may assign this Agreement for
               purposes of granting a security interest and may subcontract to
               affiliated and unaffiliated entities, firms and organizations
               (subject to the consent of CPIH for unaffiliated entities, firms
               and organizations, which consent shall not be unreasonably
               withheld), for those services Covanta reasonably deems necessary
               or advisable to accomplish the Services specified above.

         12.   Severability. In case any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, no Party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The Parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

         13.   Notice. Whenever, under the terms of this Agreement, any notice
is required or permitted to be served upon a Party, said notice may be served
upon such Party by personal service, overnight carrier, or by certified mail.
Any such notice shall be deemed given when personally received by the Party to
whom the notice is directed; provided, however, in the event notice is mailed,
such notice shall be deemed given when deposited in the United States Mail with
postage prepaid. Notices shall be in writing and, until further notification in
writing, shall be delivered to the following addresses:

               To Covanta or any other Covanta Entity:

               Covanta Energy Corporation
               Attn: Timothy J. Simpson
               40 Lane Road
               Fairfield, New Jersey  07004


                                       11
<PAGE>
                To CPIH or any other CPIH Entity:

                Covanta Power International Holdings, Inc.
                Attn: Ashish Sarkar/Walter Heiser
                40 Lane Road
                Fairfield, New Jersey  07004


         14.   GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.

         15.   WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 15
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.

         16.   Arbitration. Any disputes arising under this Agreement shall be
submitted exclusively to arbitration and such dispute shall be resolved fully
and finally in New York, New York by an arbitration governed by the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration panel
shall be composed of three arbitrators, with one arbitrator being selected by
the Covanta Entities, one arbitrator being selected by the CPIH Entities and the
third arbitrator being selected by the other two arbitrators. The arbitration
panel shall resolve the dispute within 30 days after selection and judgment upon
the award rendered by such arbitration panel shall be deemed final and binding
on the parties and may be entered in any court of competent jurisdiction. The
costs and expenses of such arbitration, the fees and expenses of the arbitration
panel and all out-of-pocket costs and expenses shall be shared equally by the
Covanta Entities and the CPIH Entities.

         17.   Validity. This Agreement sets forth the entire understanding of
the Parties and has been duly executed and delivered on behalf of each of the
Parties and constitutes the legal, valid, binding and enforceable obligation of
each such Party.

         18.   Headings. The paragraph headings contained herein are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope or intent of this Agreement or in any way affect the terms
and provisions hereof.

         19.   Counterparts. This Agreement may be executed in counterparts (and
by different Parties hereto on different counterparts), each of which shall
constitute an original, but all of which together shall constitute one and the
same Agreement. Delivery of an executed signature


                                       12
<PAGE>
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement.

         20.   Entire Agreement; Amendments. This Agreement contains the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings in
connection therewith. There are no agreements, understandings, conditions,
warranties, or representations, oral or written, express or implied, with
reference to the subject matter hereof that are not merged herein or superseded
by this Agreement. This Agreement may not be changed orally, and neither this
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement entered into between the Covanta Entities and
the CPIH Entities.

         21.   No Waiver. No failure on the part of a Party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the a Party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.


                         [SIGNATURES ON FOLLOWING PAGE]


                                       13
<PAGE>
                  IN WITNESS WHEREOF, each of the Parties hereto, intending to
be legally bound hereby, have caused this Agreement to be executed by their duly
authorized officers, on the day and year first above written.

                                     COVANTA ENERGY CORPORATION


                                         By
                                            ---------------------------------
                                            Name:  Anthony Orlando
                                            Title: President and CEO



                                     COVANTA ENERGY GROUP, INC.


                                         By
                                            ---------------------------------
                                            Name:  Anthony Orlando
                                            Title: President and CEO



                                     COVANTA PROJECTS, INC.


                                         By
                                            ---------------------------------
                                            Name:  Anthony Orlando
                                            Title: President and CEO



                                     COVANTA POWER INTERNATIONAL HOLDINGS, INC.


                                         By
                                            ---------------------------------
                                            Name:  Ashish Sarkar
                                            Title: Chief Executive Officer



                                     Each of the SUBSIDIARIES listed on
                                     Schedule A hereto:


                                         By
                                            ---------------------------------
                                            Name:  Timothy J. Simpson
                                            Title: Authorized Officer


                                       14
<PAGE>
                                                               Schedule A to the
                                   Management Services & Reimbursement Agreement


                           CPIH DOMESTIC SUBSIDIARIES


        1.  Covanta Waste To Energy of Italy, Inc.
        2.  Covanta Power Development, Inc.
        3.  Covanta Power Development of Bolivia, Inc.
        4.  OPI Quezon, Inc.
<PAGE>
                                                               Schedule B to the
                                   Management Services & Reimbursement Agreement

                                LETTERS OF CREDIT

<TABLE>
<CAPTION>
               Entity/Project                              Issuer                  Amount
               --------------                              ------                  ------
<S>                                                    <C>                       <C>
     Covanta Energy Corporation (Haripur
     Letter of Credit)                                 Citibank, N.A.            $2,630,232(1)
     Quezon Debt Service Reserve Fund                  Bank One, N.A.            $11,802,039
     Haripur Performance Bond (2nd Letter
     of Credit)                                        Bank One, N.A.            $676,500
</TABLE>



----------
(1)  Represents Covanta's proportionate share (45.1%) of full LC amount,
     $5,832,000.
<PAGE>
                                                               Schedule C to the
                                   Management Services & Reimbursement Agreement

                                PARENT GUARANTEE

<TABLE>
<CAPTION>
Project                               Title of Parent Guarantee                               Guarantor
-------                               -------------------------                               ---------
<S>                 <C>                                                                <C>
Haripur             Guarantee of Plant Operation and Maintenance Agreement             Covanta Energy Group
Haripur             Guarantee of Participation Agreement, Shareholders Agreement
                    & Put-Call Agreement                                               Covanta Energy Group
Quezon              Operator Guarantee of Plant Operation and Maintenance
                    Agrement                                                           Covanta Projects, Inc.
Madurai             Guarantee of Operation and Maintenance Agreement                   Covanta Energy Corporation
Madurai             Share Retention & Financial Support Agreement                      Covanta Energy Corporation
Samalpatti          Operation and Maintenance Guarantee                                Covanta Energy Group
Trezzo              Ogden Equity Contribution Agreement                                Covanta Energy Group
Trezzo              Ogden Guarantee of Services and Maintenance Agreement              Covanta Energy Group
</TABLE>
<PAGE>
                                                            Schedule 1(a) to the
                                   Management Services & Reimbursement Agreement

                              OPERATIONAL SERVICES

Flat Fee Services/Personnel:

        B.     Services provided:

               Senior Management support relating to:

               1.   Maintenance repair and outages.

               2.   the Maximo system (maintenance management system)

               3.   Vendor support for US based suppliers (when needed).

               4.   Turbine outage.

               5.   Provide technical WTE expertise as required by Trezzo
                    contract

               6.   Direct technical audits

        C.     Key Personnel:

               1.   Senior Managers:

                    (a)   EVP of Operations

                    (b)   Sr. VP of Engineering and Environmental

                    (c)   Sr. VP of Technical Operations

                    (d)   Sr. VP of Environmental Testing

Hourly Rate Services (it being understood that all non-ordinary course hourly
fee expenditures shall be requested and approved in advance by CPIH):

        A.     Services Provided:

               1.   All operational services, technical services, engineering
                    services, and environmental services.

               2.   All non-ordinary course expenditures, including, but not
                    limited to:

                    (a)   Repairs and outages.

                    (b)   The Maximo system.

                    (c)   Turbine outages.

        B.     Personnel:

               1.   Operational, Environmental and Technical Support Managers
                    and Staff that respond to support requests from Projects
                    (paid at hourly rates, as a Reimbursable Expense)

               2.   Personnel employed for flat-fee services performing
                    non-ordinary course services.

               3.   Any necessary third party personnel.
<PAGE>
                                                            Schedule 1(b) to the
                                   Management Services & Reimbursement Agreement

                                   HR SERVICES

Flat Fee Services/Personnel:

        C.     Services Provided:

        Includes oversight of HR activities, as has been customarily provided,
        primarily related to the following:

               1.   Payroll for Ex-Pats

               2.   Support services to Ex-Pats

               3.   Provide benefits and administer employee contracts for
                    Ex-Pats (actual benefit costs will be allocated to CPIH
                    and are excluded from the Flat Fee)

               4.   Monitor employee litigation

               5.   Administration of US based benefit Plans

        D.     Key Personnel included in Flat Fee:

               1.   SVP HR to oversee HR activities

               Note: Any external/third-party HR expense, or non-ordinary
               course expense relating to CPIH that is requested and approved
               in advance by CPIH shall be reimbursed hourly or at cost, as
               applicable.
<PAGE>
                                                            Schedule 1(c) to the
                                   Management Services & Reimbursement Agreement

                            RISK MANAGEMENT SERVICES

Flat Fee Services/Personnel

        E.     Services Provided:

               As part of Flat Fee, the VP of Risk Management will:

               1.   Place Political Risk Insurance Policies for China,
                    Bangladesh and Quezon.

               2.   Place property insurance for MCI, Bataan and in-country
                    liability insurance policies as required by local statute
                    for all international facilities in which Covanta has a
                    controlling interest.

               3.   Obtain certificates of insurance on all of the facilities
                    where our partners place the insurance and assist in placing
                    the insurance for Bangladesh, Trezzo and Quezon.

               4.   Review insurance for adequacy and compliance with contracts.

               5.   Settle property and business interruption losses when they
                    occur.

               6.   Support property loss control efforts.

               7.   Place the Kidnap and Ransom policy; place and maintain D&O
                    Policy for CPIH Board and executives.

               8.   Manage Control Risk Groups call-in instructions and
                    contract. (Crisis Management).

               9.   Provide risk advice and insurance evaluations as requested.

               10.  Place insurance policies described above and as may
                    be required under international project documents, to
                    the extent coverage is commercially reasonable and
                    available, and within Covanta's control, contingent
                    upon full cost reimbursement.

        F.     Key Personnel included in Flat Fee:

               1.   VP of Risk Management

               Note: Any external/third-party Risk Management personnel
               expenses and non-ordinary course personnel expenses relating
               to CPIH as requested and approved by CPIH shall be reimbursed
               hourly or at cost.
<PAGE>
                                                            Schedule 1(d) to the
                                   Management Services & Reimbursement Agreement

                                 LEGAL SERVICES

Flat Fee Services/Personnel:

        G.     Services Provided:

               All of Covanta's in-house legal staff are included in the Flat
        Fee with the following services anticipated to require a modest time
        commitment by the staff:

               1.   Contract administration oversight with respect to
                    transactions in which Covanta has an ongoing role either
                    as guarantor or L/C provider.

               2.   Administration of policy of business conduct, compliance
                    issues.

               3.   Monitoring of environmental matters, and litigation, which
                    may have long-term legal or reputational impact on Covanta.

               4.   Issue review as requested by the projects.

        H.     Key Personnel included in Flat Fee:

               1.   General Counsel

               2.   Other in-house lawyers as required

Hourly Rate/At-cost Services:

        I.     Services:

               1.   Any external/third-party legal services as requested and
                    approved by CPIH.

               2.   Due diligence review of materials submitted for inclusion
                    in Covanta's SEC reports or preparation of same, if CPIH
                    fails to do so.

               Note: Non-ordinary course legal services relating to CPIH shall
               be hired by CPIH.
<PAGE>
                                                            Schedule 1(e) to the
                                   Management Services & Reimbursement Agreement

                                   IT SERVICES

Flat Fee:

        J.     Services Provided:

               1.   MIS Standards - Information such as technology, best
                    practices, policies, procedures, performance thresholds,
                    and protocols.

               2.   Maintenance of existing domestic software and hardware to
                    be compatible with existing international hardware and
                    software.

               3.   Maintenance and support for integrated financial systems
                    (PeopleSoft) to allow efficient consolidated financial
                    reporting, and provision of any updated standard PeopleSoft
                    reports.

               4.   Assistance with procurement of equipment for international
                    facilities and offices.

        K.     Key Personnel:

               1.   VP MIS

               2.   Other MIS Staff as required

Hourly Rate/At-cost Services:

        L.     Services Provided, as requested and approved by CPIH:

               1.   Project management support as requested

               2.   International Server hardware and software configuration

               3.   International Network configuration and support

               4.   Customize PeopleSoft report generation


               5.   Any troubleshooting of international hardware or software,
                    if requested

               6.   CPIH to pay directly for any software licenses, consistent
                    with past practice.

               7.   Any outside services or non-ordinary course services
                    requested by CPIH.

        M.     Key Personnel:

               1.    VP MIS

               2.    Other MIS Staff as required
<PAGE>
                                                            Schedule 1(f) to the
                                   Management Services & Reimbursement Agreement

                          ACCOUNTING/TREASURY SERVICES

Flat Fee Services/Personnel:

        N.     Services Provided:

               1.    Accounting, Tax and Treasury oversight.

               2.    Maintain accounting system for consolidation.

               3.    Oversight of Tax Preparation.

               4.    Management or oversight of bank accounts and investment
                     balances.

               5.    Maintain or obtain Lender-approved Letter of Credits.

               6.    Manage and supervise Internal and External Audits.

               7.    Assist in preparation of External Financials, as may be
                     required.

               8.    Management of Sarbanes/Oxley process, if any, as required.

               9.    Any additional requirements required to comply with
                     Covanta's audit and corporate governance policies.

        O.     Key Personnel included in Flat Fee:

               1.    SVP, Chief Accounting Officer

               2.    Treasury Staff

               3.    Accounting Staff

Hourly Rate/At-Cost Services:

        P.     Services:

               1.    All external tax advice and tax preparation

               2.    All consultants and advisors relating to internal and
                     external audits

               3.    Any external/third-party Accounting/Treasury expense, or
                     non-ordinary course expense relating to CPIH, as requested
                     and approved by CPIH.
<PAGE>
                                                               Schedule 2 to the
                                   Management Services & Reimbursement Agreement

                        EMPLOYEES EXCLUDED FROM FLAT FEE

ALL COSTS RELATING TO THESE EMPLOYEES WILL BE CHARGED DIRECTLY TO CPIH OVERHEAD
AND CPIH WILL REIMBURSE THE COVANTA ENTITIES ACCORDINGLY.

1.   CPIH Chief Executive Officer

2.   CPIH President

3.   CPIH General Counsel

4.   CPIH Chief Financial Officer

5.   CPIH Senior Vice President of Operations

6.   CPIH Vice President

7.   CPIH Vice President of Operations

8.   General Manager - Quezon

9.   Plant Manager - Quezon

10.  Chief Engineer/Maintenance Manager - Quezon

11.  Vice President Philippines Country Manager

12.  Vice President Business Manager