Document:

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                                                                 Exhibit 10.1(v)

                             INTERCREDITOR AGREEMENT

            This INTERCREDITOR AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof, herein
called this "AGREEMENT") is dated as of March 10, 2004 and entered into by and
among COVANTA ENERGY CORPORATION, a Delaware corporation ("Covanta" or
"COMPANY"), and THE SUBSIDIARIES OF COVANTA LISTED ON THE SIGNATURE PAGES HEREOF
AS DETROIT L/C BORROWERS (together with Company and any Additional Detroit L/C
Borrowers (as hereinafter defined; this and other capitalized terms used herein
without definition being used as defined in subsection 1.1), collectively,
"DETROIT L/C BORROWERS" and each a "DETROIT L/C BORROWER") and THE SUBSIDIARIES
OF COVANTA LISTED ON THE SIGNATURE PAGES HEREOF AS NEW L/C BORROWERS (together
with Company and any Additional New L/C Borrowers, collectively, "NEW L/C
BORROWERS" and each a "NEW L/C BORROWER"; the Detroit L/C Borrowers together
with the New L/C Borrowers, collectively, "BORROWERS" and each a "BORROWER");
THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF AS DETROIT L/C
LENDERS (each, in its capacity as a Detroit L/C Lender, together with any other
Person that become a party hereto as a Detroit L/C Lender pursuant to subsection
6.1(f), individually referred to herein as a "DETROIT L/C LENDER" and
collectively as "DETROIT L/C Lenders"); THE ENTITIES LISTED ON THE SIGNATURE
PAGES HEREOF AS NEW L/C LENDERS (each, in its capacity as a New L/C Lender,
together with any other Person that becomes a party hereto as a New L/C Lender
pursuant to subsection 6.1(f), individually referred to herein as "NEW L/C
LENDER" and collectively as "NEW L/C LENDERS"); BANK OF AMERICA, N.A. ("BANK OF
AMERICA"), as administrative agent for Detroit L/C Lenders (and any successor
administrative agent for Detroit L/C Lenders pursuant to the Detroit L/C
Agreement, in such capacity "DETROIT L/C FACILITY AGENT"), as Collateral Agent
and Cash Management Bank, BANK ONE, NA, as administrative agent for New L/C
Lenders (and any successor administrative agent for New L/C Lenders pursuant to
the New L/C Facility Agreement, in such capacity "NEW L/C Agent"); DEUTSCHE BANK
SECURITIES, INC. ("DEUTSCHE BANK"), as Documentation Agent for Detroit L/C
Lenders (and any successor documentation agent for Detroit L/C Lenders pursuant
to the Detroit L/C Agreement in such capacity "DETROIT L/C DOCUMENTATION
AGENT"); DANIELSON HOLDING CORPORATION, a Delaware corporation ("DHC"); U.S.
BANK NATIONAL ASSOCIATION, in its capacity as trustee under the High Yield
Indenture (in such capacity, the "HIGH YIELD TRUSTEE"); THE COMPANIES LISTED ON
THE SIGNATURE PAGES HEREOF AS MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT
BENEFICIARIES (the "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT
BENEFICIARIES"); and the other Persons who may become parties to this Agreement
from time to time pursuant to and in accordance with subsections 6.1(f) and
6.1(l) of this Agreement.
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                                 R E C I T A L S

            WHEREAS, the Borrowers have proposed, their creditors have approved,
and the Bankruptcy Court has confirmed, the Plan of Reorganization;

            WHEREAS, in connection with the Plan of Reorganization,
simultaneously herewith the Borrowers have received financing pursuant to the
Detroit L/C Facility Agreement, New L/C Facility Agreement and High Yield
Indenture;

            WHEREAS, it is a condition precedent to (i) the obligations of the
Detroit L/C Lenders to enter into and extend credit under the Detroit L/C
Facility Agreement, (ii) the obligations of the New L/C Lenders to enter into
and extend credit under the New L/C Facility Agreement, (iii) the obligations of
the holders of the High Yield Notes to accept the High Yield Notes in exchange
for certain pre-existing claims against Loan Parties (other than DHC) and (iv)
the effectiveness of the Plan of Reorganization, as applicable, that each
Creditor Party, High Yield Trustee and each Borrower shall have executed and
delivered this Agreement to the Collateral Agent;

            WHEREAS, on the date hereof Loan Parties have executed and delivered
to Collateral Agent the Collateral Documents pursuant to which Loan Parties
granted a security interest in the Collateral as security for (i) in the case of
Detroit L/C Borrowers, all Obligations of Detroit L/C Borrowers under and in
respect of the Detroit L/C Facility Agreement and all other Detroit L/C Facility
Documents to which Detroit L/C Borrowers are a party to from time to time, in
each case as described therein, (ii) in the case of New L/C Borrowers, all
Obligations of New L/C Borrowers under and in respect of the New L/C Facility
Agreement and all other New L/C Facility Documents to which New L/C Borrowers
are party to from time to time, in each case as described therein, and (iii) in
the case of Company and High Yield Guarantors, all Obligations of Company and
High Yield Guarantors under and in respect of the High Yield Notes and High
Yield Indenture;

            WHEREAS, Creditor Parties and High Yield Trustee desire to set forth
certain provisions regarding the appointment, duties and responsibilities of
Collateral Agent and to set forth certain other provisions concerning the
obligations of Loan Parties to Creditor Parties and High Yield Noteholders under
the agreements referred to in the foregoing recitals; and

            WHEREAS, Creditor Parties and High Yield Trustee wish to set forth
their mutual intentions as to certain matters relating to the exercise of
remedies with respect to the Collateral and payments made by or for the account
of the applicable Loan Parties under the Credit Documents as more fully set
forth herein.

            NOW, THEREFORE, the parties hereto hereby agree as follows:

                                   SECTION I

            1.1 DEFINITIONS. Terms used in the Agreement have the meanings set
forth in the introduction and recitals hereto. In addition, the following terms
shall have the following meanings:

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            "ADDITIONAL DETROIT L/C BORROWER" means any Person that becomes an
"Additional Subsidiary Borrower" after the date hereof pursuant to and as such
term is defined in the Detroit L/C Facility Agreement.

            "ADDITIONAL NEW L/C BORROWER" means any Person that becomes an
"Additional Subsidiary Borrower" after the date hereof pursuant to and as such
term is defined in the New L/C Facility Agreement.

            "AGENTS" means Collateral Agent, Detroit L/C Agents and New L/C
Agent.

            "AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person (other than exclusively as a result of such Person's
role as a senior executive of that Person or Project manager or operator),
whether through the ownership of voting securities or by contract or otherwise.

            "ANNUAL FREE CASH FLOW" shall have the meaning assigned to that term
in the each Facility Agreement as in effect on the Closing Date.

            "BANK OF AMERICA" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.

            "BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Southern District of New York and any other court properly exercising
jurisdiction over any relevant Chapter 11 Case.

            "BANKRUPTCY EVENT" means any of one or more of the following events
regardless of the reason therefor:

            (a) (i) a court having jurisdiction in the premises shall enter a
      decree or order for relief in respect of any Loan Party in an involuntary
      case under the Bankruptcy Code or any applicable bankruptcy, insolvency or
      other similar law now or hereafter in effect, which decree or order is not
      stayed; or any other similar relief shall be granted under any applicable
      federal, or state law; or (ii) an involuntary case shall be commenced
      against any Loan Party under any applicable bankruptcy, insolvency or
      other similar law now or hereafter in effect; or a decree or order of a
      court having jurisdiction in the premises for the appointment of a
      receiver, liquidator, sequestrator, trustee, custodian or other officer
      having similar powers over any Loan Party, or over all or a substantial
      part of its property, shall have been entered; or the involuntary
      appointment of an interim receiver, trustee or other custodian of any Loan
      Party for all or a substantial part of its property; or the issuance of a
      warrant of attachment, execution or similar process against

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      any substantial part of the property of any Loan Party, and the
      continuance of any such event in clause (ii) for 60 days unless dismissed,
      bonded or discharged; or

            (b) (i) any Loan Party shall have an order for relief entered with
      respect to it or commence a voluntary case under the Bankruptcy Code or
      any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, or shall consent to the entry of an order for relief
      in an involuntary case, or to the conversion of an involuntary case to a
      voluntary case, under any such law, or shall consent to the appointment of
      or taking possession by a receiver, trustee or other custodian for all or
      a substantial part of its property, or shall make any assignment for the
      benefit of creditors; or

                  (ii) the inability or failure of any Loan Party, or the
      admission by any Loan Party in writing of its inability, to pay its debts
      as such debts become due; or the Governing Body (or any committee thereof)
      of any Loan Party adopts any resolution or otherwise authorizes action to
      approve any of the actions referred to in clause (i) or this clause (ii);
      or

            (c) any order, judgment or decree shall be entered against any Loan
      Party decreeing the dissolution, winding up or split up of that Loan Party
      and such order shall remain undischarged or unstayed for a period in
      excess of 30 days.

            "BANKRUPTCY PROCEEDING" means any case or proceeding of the type
described in the definition of "Bankruptcy Event" with respect to any Loan
Party.

            "BORROWER" and BORROWERS" shall have the meaning assigned to such
terms in the introduction to this Agreement.

            "BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York, the State of
Texas or the State of California or is a day on which banking institutions
located in any such state are authorized or required by law or other
governmental action to close.

            "CAPITAL STOCK" means the capital stock or other equity interests of
a Person.

            "CASH COLLATERAL ACCOUNTS" means the Detroit L/C Cash Collateral
Account and the New L/C Cash Collateral Account.

            "CASH MANAGEMENT BANK" shall have the meaning assigned to that term
in the definition of "Cash Management System".

            "CASH MANAGEMENT OBLIGATIONS" means the obligations of Borrowers to
the Cash Management Bank arising from or relating to the Cash Management System,
including any liability of Borrower on any claim arising out of or relating to
the Cash Management System, whether or not the right to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed or
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or other similar
proceeding.

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            "CASH MANAGEMENT SYSTEM" means the cash management system of Company
and its Subsidiaries in the United States maintained with Bank of America (in
such capacity, "CASH MANAGEMENT BANK") as described in Schedule 4.1P annexed to
the Detroit L/C Facility Agreement and the New L/C Facility Agreement, as such
Cash Management System may be modified pursuant to subsection 6.10 of the
Detroit L/C Facility Agreement and the New L/C Facility Agreement, and any other
related services provided by Cash Management Bank to Company and its
Subsidiaries, including treasury, depositary and cash management services or in
connection with automated clearing house transfers of funds.

            "CHAPTER 11 CASE" means the chapter 11 cases of Covanta Energy
Corporation, a Delaware corporation, and certain of its Subsidiaries, including
Borrowers, jointly administered under Case Nos. 02-40826 through 02-40949,
02-16322, 03-13679 through 03-13685, and 03-13687 through 03-13709.

            "CLOSING DATE" means March 10, 2004.

            "COLLATERAL" means, collectively, all of the real, personal and
mixed property (including Capital Stock) and interests in property now owned or
hereafter acquired by any Loan Party in or upon which a security interest, Lien
or mortgage is granted or purported to be granted to Collateral Agent pursuant
to the Collateral Documents, including all Proceeds thereof, but in no event
shall Collateral include the Capital Stock of CPIH pledged pursuant to the CPIH
Stock Pledge Agreement (as defined in the Facility Agreements). For the
avoidance of doubt, "Collateral" shall not include any New Investor Assurances.

            "COLLATERAL AGENT" shall have the meaning assigned to that term in
subsection 2.1.

            "COLLATERAL DOCUMENTS" means the Security Agreement, DHC Pledge
Agreement, Control Agreements, Mortgages (as defined in the Facility Agreements)
and all other instruments or documents (pursuant to which a Lien to secure all
or any portion of the Obligations is purported or intended to be created,
granted, evidenced or perfected) delivered from time to time by any Loan Party
pursuant to the Detroit L/C Facility Documents, New L/C Facility Documents or
the High Yield Indenture in each case in order to grant to Collateral Agent a
Lien on any real, personal or mixed property as security for any or all of the
Obligations, as such instruments and documents may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
pursuant to subsection 2.4.

            "COMPANY" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.

            "CONTROL AGREEMENT" means an agreement, satisfactory in form and
substance to Detroit L/C Facility Agent and New L/C Agent and executed by the
financial institution or securities intermediary at which a Deposit Account or a
Securities Account, as the case may be,

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is maintained, pursuant to which such financial institution or securities
intermediary confirms and acknowledges Collateral Agent's security interest in
such account, and agrees that the financial institution or securities
intermediary, as the case may be, will comply with instructions originated by
Collateral Agent as to disposition of funds in such account, without further
consent by Company or any Subsidiary, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted pursuant to subsection 2.4.

            "COUNTERPART" shall have the meaning assigned to that term in
subsection 6.1(l).

            "COVANTA" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "CPIH" means Covanta Power International Holdings, Inc., a
Delaware corporation, and its successors and assigns.

            "CPIH SUBSIDIARIES" means, on and after the Closing Date, CPIH and
its Subsidiaries.

            "CREDIT DOCUMENTS" means, collectively, (i) the New L/C Facility
Agreement and the other New L/C Facility Documents, (ii) the Detroit L/C
Facility Agreement and the other Detroit L/C Facility Documents, and (iii) the
High Yield Notes and the High Yield Indenture, in each case as they may be
amended, restated, supplemented or otherwise modified from time to time to the
extent permitted thereunder and pursuant to subsection 2.5.

            "CREDITOR PARTIES" means Detroit L/C Lenders, New L/C Lenders,
Detroit L/C Agents, New L/C Agent, Cash Management Bank and Collateral Agent.

            "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or similar
account maintained with a Person engaged in the business of banking, including a
savings bank, savings and loan association, credit union or trust company.

            "DETROIT L/C" or "DETROIT L/CS" means letters of credit issued or to
be issued from time to time under the Detroit L/C Facility Agreement, including
amendments thereto.

            "DETROIT L/C AGENTS" means the Detroit L/C Facility Agent and
Detroit L/C Documentation Agent.

            "DETROIT L/C BORROWER" shall have the meaning assigned to that term
in the introduction to this Agreement.

            "DETROIT L/C CASH COLLATERAL ACCOUNT" means the cash collateral
account maintained with Collateral Agent pursuant to the Security Agreement to
secure the obligations of Detroit L/C Borrowers with respect to Detroit L/C
Exposure.

            "DETROIT L/C COMMITMENT" means the commitment of a Detroit L/C
Lender to purchase and fund participations in Detroit L/Cs pursuant to the
Detroit L/C Facility Agreement.

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            "DETROIT L/C DOCUMENTATION AGENT" shall have the meaning assigned to
that term in the introduction to this Agreement.

            "DETROIT L/C EVENT OF DEFAULT" means an "Event of Default" under and
as defined in the Detroit L/C Facility Agreement.

            "DETROIT L/C EXPOSURE" means, with respect to any Detroit L/C Lender
as of any date of determination, the sum of (a) in the event that Detroit L/C
Lender is a Detroit L/C Issuing Lender, the aggregate Detroit L/C Usage in
respect of all Detroit L/Cs issued by that Detroit L/C Lender (in each case net
of any participations purchased by other Detroit L/C Lenders in such Detroit
L/Cs or in any drawings thereunder not theretofore reimbursed by Detroit L/C
Borrowers) plus (b) the aggregate amount of all participations purchased by that
Detroit L/C Lender in any other outstanding Detroit L/Cs or any drawings under
any such other Detroit L/Cs not theretofore reimbursed by Detroit L/C Borrowers.

            "DETROIT L/C FACILITY AGENT" shall have the meaning assigned to that
term in the introduction to this Agreement.

            "DETROIT L/C FACILITY AGREEMENT" means (i) that certain credit
agreement dated as of the date hereof by and among Covanta and the other Detroit
L/C Borrowers, as borrowers, the Detroit L/C Lenders and Detroit L/C Agents, and
(ii) any credit agreement entered into by Detroit L/C Borrowers to refinance,
replace, renew or extend, in whole or in part, the credit agreement referenced
in clause (i) and the indebtedness and letters of credit issued thereunder to
the extent permitted pursuant to the New L/C Facility Agreement and the High
Yield Indenture, in the case of clause (i) or (ii), as such credit agreement may
be amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 2.5.

            "DETROIT L/C FACILITY DOCUMENTS" means the "Credit Documents" as
defined in the Detroit L/C Facility Agreement (or any comparable term with
respect to any replacement Detroit L/C Facility Agreement not prohibited
hereunder).

            "DETROIT L/C ISSUING LENDER" means, with respect to any Detroit L/C,
the Detroit L/C Lender that has issued such Detroit L/C pursuant to the Detroit
L/C Facility Agreement.

            "DETROIT L/C LENDER" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "DETROIT L/C OBLIGATIONS" means any and all Obligations to the
extent arising under or with respect to the Detroit L/C Commitments or the
Detroit L/Cs, including fees and other amounts accruing or otherwise owed with
respect to the Detroit L/C Exposure, and any drawings (and interest accrued
thereon) under Detroit L/Cs not reimbursed by Detroit L/C Borrowers; provided,
however, that Obligations of any Loan Party (other than DHC) for interest or
letter of credit fees with respect to Detroit L/Cs and Detroit L/C Commitments
that accrue or may be incurred under any Detroit L/C Facility Document after the
commencement by or against any Loan Party of a Bankruptcy Proceeding shall be
included in Detroit L/C Obligations solely to the extent recoverable from such
Loan Party or its estate in such proceeding.

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            "DETROIT L/C USAGE" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Detroit L/Cs then outstanding plus (ii)
the aggregate amount of all drawings under Detroit L/Cs honored by the
applicable Detroit L/C Issuing Lender and not theretofore reimbursed by Detroit
L/C Borrowers.

            "DEUTSCHE BANK" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "DHC" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "DHC PLEDGE AGREEMENT" means the pledge agreement executed and
delivered by DHC on the Closing Date, substantially in the form of Exhibit XI
annexed to the Detroit L/C Facility Agreement, as such pledge agreement may
thereafter be amended, restated, supplemented or otherwise modified from time to
time to the extent permitted pursuant to subsection 2.4.

            "DISTRIBUTION" means, with respect to any Secured Obligation, (a)
any payment or distribution by Company or any of its Subsidiaries (including
CPIH Subsidiaries) of cash, securities or other assets and properties of any
kind whatsoever, real or personal, tangible or intangible, or mixed, whether now
owned or existing or hereafter acquired or arising and wheresoever located, by
set-off or otherwise, on account of such Secured Obligation, (b) any redemption,
purchase or other acquisition of such Secured Obligation by Company or any of
its Subsidiaries (including CPIH Subsidiaries) or (c) the granting of any Lien
to or for the benefit of the holders of such Secured Obligation in or upon any
or all assets and properties of any kind whatsoever, real or personal, tangible
or intangible, or mixed, whether now owned or existing or hereafter acquired or
arising and wheresoever located of Company or any of its Subsidiaries (including
CPIH Subsidiaries).

            "ENFORCEMENT ACTION" shall mean the exercise by any Secured Party of
any of the enforcement rights and remedies under, and subject to the provisions
of, the Collateral Documents at any time on or after an Event of Default,
including any or all of the following: any motion to vacate any stay on
enforcement of the Liens on the Collateral, solicitation of bids from third
parties to conduct the liquidation of Collateral, the engagement or retention of
third parties for the purposes of marketing, promoting or selling all or any
Collateral, the commencement of any action to foreclose on the Liens on any of
the Collateral, notification of account debtors to make payments to any Secured
Party or its agents, any action to take possession of any Collateral or the
commencement of any legal proceedings or actions seeking payment of any Secured
Obligations or otherwise in connection with the preservation or protection of
any of the Collateral, its value or any rights or remedies therein or otherwise
or as may be deemed necessary or appropriate to enhance the likelihood or
maximize the repayment of the Secured Obligations.

            "EVENT OF DEFAULT" means a Detroit L/C Event of Default and/or a New
L/C Event of Default and/or a High Yield Event of Default.

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            "FACILITY AGREEMENTS" means the New L/C Facility Agreement and
Detroit L/C Facility Agreement.

            "FISCAL YEAR" means the fiscal year of the Company and its
Subsidiaries ending on December 31st of each calendar year.

            "GOVERNING BODY" means the board of directors or other body having
the power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.

            "HIGH YIELD EVENT OF DEFAULT" means an "Event of Default" under and
as defined in the High Yield Indenture.

            "HIGH YIELD GUARANTORS" means the Subsidiaries of Company party from
time to time to the High Yield Indenture as guarantors thereunder.

            "HIGH YIELD INDENTURE" means (i) the indenture pursuant to which the
High Yield Notes are issued and (ii) any replacement indenture entered into in
connection with a refinancing, defeasance, renewal, replacement or extension of
the High Yield Notes permitted under the Facility Agreements, in the case of
clause (i) or (ii), as such indenture or replacement indenture may be amended,
supplemented or otherwise modified from time to time to the extent permitted
under the Facility Agreements.

            "HIGH YIELD NOTEHOLDERS" means the holders from time to time of the
High Yield Notes.

            "HIGH YIELD NOTES" means (i) the $230,000,000 in aggregate principal
amount at maturity of 8.25% Senior Notes due 2010 of Company issued pursuant to
the High Yield Indenture, and (ii) any indebtedness incurred to refinance,
renew, replace or extend the High Yield Notes permitted to be incurred under the
Facility Agreements; provided, that the initial principal amount (and issue
price) of such High Yield Notes on the Closing Date shall be $205,000,000.

            "HIGH YIELD OBLIGATIONS" means the obligations of Company and High
Yield Guarantors under the High Yield Indenture and the High Yield Notes, as
applicable.

            "HIGH YIELD TRUSTEE" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "IPP INTERNATIONAL SALES" means one or more sales or dispositions of
(i) the assets and/or operations of CPIH and its Subsidiaries and/or (ii) the
Capital Stock of CPIH or any of its Subsidiaries.

            "JUNIOR CREDITOR" shall have the meaning assigned to that term in
subsection 4.2(f).

            "LENDERS" means New L/C Lenders and Detroit L/C Lenders.

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            "LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.

            "LOAN PARTIES" means Company, the other Borrowers, DHC, and High
Yield Guarantors.

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT" means the
management services and reimbursement agreement entered into by CPIH, Company
and certain of their respective Subsidiaries on the Closing Date, in form and
substance satisfactory to the Detroit L/C Agents and New L/C Agent as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time to the extent permitted thereunder and pursuant to subsection 2.5(c).

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT BENEFICIARIES"
shall have the meaning assigned to that term in the introduction to this
Agreement.

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT OBLIGORS" means the
"CPIH Entities" as such term is defined in the Management Services and
Reimbursement Agreement.

            "MANDATORY PAYMENTS" means any amount described in subsections
2.3A(i)(a)-(f) of the Detroit L/C Facility Agreement or 2.4A(iii)(a)-(g) of the
New L/C Facility Agreement to be applied as a Mandatory Payment (as such term is
defined in each Facility Agreement).

            "NET INSURANCE/CONDEMNATION PROCEEDS" means any cash payments or
Proceeds received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of (a)
income taxes reasonably estimated to be actually payable prior to the earlier of
(1) the date which is eighteen months from the date of such receipt and (2)
March 10, 2009 as a result of the receipt of such payments of proceeds and (b)
any actual, reasonable and documented out-of-pocket fees and expenses (including
reasonable legal fees, reasonable fees to advisors and severance costs that are
due (pursuant to a Contractual Obligation, or written employment policy
applicable to terminated employees generally, of Company or any of its
Subsidiaries in effect prior to the event causing or relating to the payment
referred to in clause (i) or (ii) hereof or pursuant to applicable law) and
payable on or prior to the receipt of such payment or proceeds to employees of
Company and its Subsidiaries that have been terminated as a result of the
relevant loss, taking or sale) paid to Persons other than Company and its
Subsidiaries and their respective Affiliates in connection with the relevant
loss, taking or sale or the adjustment or settlement of any claims of Company or
such Subsidiary in respect thereof; provided, however, that Net
Insurance/Condemnation Proceeds shall be reduced in an amount equal to the
amount of proceeds Subsidiaries of Company are legally bound or required,
pursuant to Contractual Obligations in effect on the

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Closing Date, or which were entered into after the Closing Date with respect to
the financing or acquisition of a Project, to use for purposes other than a
Mandatory Payment.

            "NEW INVESTOR ASSURANCES" means any collateral, insurance policy,
letter of credit or other financial assurances provided by any New Investor or
any of its Affiliates (other than Company or any of its Subsidiaries (including
CPIH Subsidiaries)) to New L/C Lenders in connection with the New L/C Facility
Agreement.

            "NEW INVESTORS" means D.E. Shaw Laminar Portfolios, L.L.C., a
Delaware limited liability company, SZ Investments, L.L.C., a Delaware
limited liability company, and Third Avenue Trust, on behalf of Third Avenue
Value Fund Series.

            "NEW L/C" or "NEW L/CS" means letters of credit issued or to be
issued (or deemed issued) by New L/C Issuing Lender pursuant to the New L/C
Facility Agreement, including amendments thereto.

            "NEW L/C AGENT" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "NEW L/C AGGREGATE COMMITMENT" means one or more of the New
Revolving Loan Commitment or the New L/C Commitment or any combination thereof.

            "NEW L/C AGGREGATE EXPOSURE" means, with respect to any New L/C
Lender as of any date of determination, the sum of (i) that New L/C Lenders' New
Revolving Loan Exposure and (ii) that New L/C Lender's New L/C Exposure.

            "NEW L/C BORROWERS" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "NEW L/C CASH COLLATERAL ACCOUNT" means the cash collateral account
maintained with Collateral Agent pursuant to the Security Agreement to secure
the obligations of New L/C Borrowers with respect to New L/C Exposure.

            "NEW L/C COMMITMENT" means the commitment of a New L/C Lender to
purchase and fund participations in New L/Cs pursuant to the New L/C Facility
Agreement.

            "NEW L/C EVENT OF DEFAULT" means an "Event of Default" under and as
defined in the New L/C Facility Agreement.

            "NEW L/C EXPOSURE" with respect to any New L/C Lender, means, as of
any date of determination, the sum of (a) in the event that New L/C Lender is a
New L/C Issuing Lender, the aggregate New L/C Usage in respect of all New L/Cs
issued by that New L/C Lender (in each case net of any participations purchased
by other New L/C Lenders in such New L/Cs or in any drawings thereunder not
theretofore reimbursed by New L/C Borrowers) plus (b) the aggregate amount of
all participations purchased by that New L/C Lender in any other outstanding New
L/Cs or any drawings under any such other New L/Cs not theretofore reimbursed by
New L/C Borrowers.

                                       11
<PAGE>
            "NEW L/C FACILITY AGREEMENT" means (i) that certain credit agreement
dated as of the date hereof by and among New L/C Borrowers, New L/C Lenders and
New L/C Agent, and (ii) any credit agreement entered into by New L/C Borrowers
to refinance, replace, renew or extend, in whole or in part, the credit
agreement referenced in clause (i) and the indebtedness and letters of credit
issued thereunder to the extent permitted pursuant to the Detroit L/C Facility
Agreement and the High Yield Indenture, in the case of clause (i) or (ii), as
such credit agreement may be amended, restated, supplemented or otherwise
modified from time to time to the extent permitted under subsection 2.5.

            "NEW L/C FACILITY DOCUMENTS" means the "Credit Documents" as defined
in the New L/C Facility Agreement (or any comparable term with respect to any
replacement New L/C Facility Agreement not prohibited hereunder).

            "NEW L/C ISSUING LENDER" means, with respect to any New L/C, the New
L/C Lender that agrees or is otherwise obligated to issue such New L/C,
determined as provided in the New L/C Facility Agreement.

            "NEW L/C LENDER" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "NEW L/C OBLIGATIONS" means any and all Obligations to the extent
arising under or with respect to the New L/C Aggregate Commitments, New
Revolving Loans or the New L/Cs, including principal and interest on any New
Revolving Loans and the fees and other amounts accruing or otherwise owed with
respect to the New L/C Aggregate Exposure, and any drawings (and interest
accrued thereon) under New L/Cs not reimbursed by New L/C Borrowers; provided,
however, that Obligations of any Loan Party (other than DHC) for interest,
commitment fees or letter of credit fees with respect to the New L/Cs, New
Revolving Loans or New L/C Aggregate Commitments and that accrue or may be
incurred under any New L/C Facility Document after the commencement by or
against any Loan Party (other than DHC) of a Bankruptcy Proceeding shall be
included in New L/C Obligations solely to the extent recoverable from such Loan
Party or its estate in such proceeding.

            "NEW L/C USAGE" means, as at any date of determination, the sum of
(i) the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all New L/Cs then outstanding plus (ii) the
aggregate amount of all drawings under New L/Cs honored by Issuing Lenders and
not theretofore reimbursed by New L/C Borrowers.

            "NEW REVOLVING LOAN COMMITMENT" means the commitment of a New L/C
Lender to make New Revolving Loans to the New L/C Borrowers pursuant to the New
L/C Facility Agreement.

            "NEW REVOLVING LOAN EXPOSURE" with respect to any New L/C Lender,
means, as of any date of determination (i) prior to the termination of the New
Revolving Loan Commitments, that New L/C Lender's Revolving Loan Commitment, and
(ii) after the termination of the New Revolving Loan Commitments, the aggregate
outstanding principal amount of the New Revolving Loans of that New L/C Lender.

                                       12
<PAGE>
            "NEW REVOLVING LOANS" means loans made from time to time by New L/C
Lenders to New L/C Borrowers as "Revolving Loans" under and as defined in the
New L/C Facility Agreement.

            "OBLIGATIONS" means all obligations of every nature of Loan Parties
under the Credit Documents, including any liability of such Loan Party on any
claim arising out of or relating to the Credit Documents, whether or not the
right to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed or contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any bankruptcy, insolvency, reorganization or
other similar proceeding. Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Credit Documents include (a) the
obligation to pay principal, interest (including all interest which accrues
after the commencement of any case or proceeding in bankruptcy after the
insolvency of, or for the reorganization of, any Loan Party, whether or not
allowed in such case or proceeding), charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Borrower and any
other Loan Party under any Credit Document and (b) the obligation to reimburse
any amount in respect of any of the foregoing that any Agent or any Lender, in
its sole discretion, may elect to pay or advance on behalf of such Borrower or
other Loan Party; provided, that nothing in this definition shall be construed
as creating any obligations of DHC under the Credit Documents that are not
expressly set forth in such Credit Documents.

            "OFFICER'S CERTIFICATE" means, as applied to any Person that is a
corporation, partnership, trust or limited liability company, a certificate
executed on behalf of such Person by one or more Officers of such Person or one
or more Officers of a general partner or a managing member if such general
partner or managing member is a corporation, partnership, trust or limited
liability company.

            "PAYMENT IN FULL" and "PAID IN FULL" means (a) as to the Detroit L/C
Obligations, the payment and satisfaction in full in immediately available funds
of all of such funded Detroit L/C Obligations and either (i) the termination of
the Detroit L/C Commitments and the receipt by Collateral Agent of cash
collateral in the Detroit L/C Cash Collateral Account in an amount equal to one
hundred five (105%) percent of the aggregate Detroit L/C Usage then outstanding
or (ii) if the Detroit L/C Commitments have not been terminated, the receipt by
Collateral Agent of cash collateral in the Detroit L/C Cash Collateral Account
in an amount equal to 105% of the Detroit L/C Commitments of all Detroit L/C
Lenders, (b) as to the New L/C Obligations, the payment and satisfaction in full
in immediately available funds of all of such funded New L/C Obligations and
either (i) the termination of the New L/C Aggregate Commitments and the receipt
by Collateral Agent of cash collateral in the New L/C Cash Collateral Account in
an amount equal to one hundred five (105%) percent of the aggregate New L/C
Usage then outstanding or (ii) if the New L/C Aggregate Commitments have not
been terminated, the receipt by Collateral Agent of cash collateral in the New
L/C Cash Collateral Account in an amount equal to 105% of the New L/C
Commitments of all New L/C Lenders, (c) as to the High Yield Obligations, the
payment and satisfaction in full in immediately available funds of all of such
High Yield Obligations and the termination or defeasance (whether legally or as
to covenants only) of the financing arrangements provided by any High Yield
Noteholder to the Loan Parties (other than DHC) with respect thereto, and (d) as
to any other Secured

                                       13
<PAGE>
Obligations, the payment and satisfaction in full in immediately available funds
of all such Secured Obligations then due and payable. If after receipt of any
payment of, or Proceeds of Collateral applied to the payment of, any of the
Secured Obligations, Collateral Agent or any other Secured Party, as applicable,
is required to surrender or return such payment or Proceeds to any Person for
any reason, then the Secured Obligations intended to be satisfied by such
payment or Proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or Proceeds had not been
received by Collateral Agent or such other Secured Party, as the case may be.

            "PARTIES" means the High Yield Trustee, Loan Parties, and the
Creditor Parties from time to time party to this Agreement.

            "PERSON" or "PERSONS" means and include natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint Ventures
(as defined in the Facility Agreements), associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments (whether federal, state or local, domestic
or foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.

            "PLAN OF REORGANIZATION" means the Debtors' Second Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code as filed with the
Bankruptcy Court on January 14, 2004 (and as revised and amended through March
2, 2004), together with the Reorganization Plan Supplement to Debtors' Second
Joint Plan of Reorganization filed with the Bankruptcy Court on February 18,
2004 in connection therewith.

            "POTENTIAL EVENT OF DEFAULT" means a "Potential Event of Default"
under and as defined in the Detroit L/C Facility Agreement, a "Potential Event
of Default" under and as defined in the New L/C Facility Agreement or a
"Default" under and as defined in the High Yield Indenture.

            "PROCEEDS" means "proceeds", as such term is defined in the UCC and,
in any event, shall include (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any of the Loan Parties or Collateral
Agent from time to time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to any of the Loan
Parties from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral, by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority), and (iii) any and all other consideration (in any
form whatsoever) or other amounts from time to time paid or payable under or in
connection with any of the Collateral upon disposition or otherwise.

            "PROJECT" means any waste-to-energy facility, electrical generation
plant, cogeneration plant, water treatment facility or other facility for the
generation of electricity or engaged in another line of business in which
Company and its Subsidiaries are permitted to be engaged hereunder for which a
Subsidiary or Subsidiaries of Company (including CPIH Subsidiaries) was, is or
will be (as the case may be) an owner, operator, manager or builder, and

                                       14
<PAGE>
shall also mean any two or more of such plants or facilities in which an
interest has been acquired in a single transaction, so long as such interest
constitutes an existing Investment on the Closing Date permitted under this
Agreement; provided, however, that a Project shall cease to be a Project of
Company and its Subsidiaries at such time that Company or any of its
Subsidiaries ceases to have any existing or future rights or obligations
(whether direct or indirect, contingent or matured) associated therewith.

            "REQUISITE DETROIT L/C LENDERS" means Detroit L/C Lenders having or
holding more than 50% of the Detroit L/C Exposure of all Detroit L/C Lenders;
provided, however, that prior to the Closing Date, for purposes of this
definition the Detroit L/C Exposure of each Detroit L/C Lender shall equal the
original Detroit L/C Commitment of such Detroit L/C Lender on the Closing Date.

            "REQUISITE NEW L/C LENDERS" means New L/C Lenders having or holding
more than 50% of the New L/C Aggregate Exposure of all New L/C Lenders;
provided, however, that prior to the Closing Date, for purposes of this
definition the New L/C Aggregate Exposure of each New L/C Lender shall equal the
original New L/C Commitment of such New L/C Lender on the Closing Date.

            "REQUISITE OBLIGEES" means,

            (i) until such time as all Detroit L/C Obligations are Paid in Full
under clause (a)(i) of the definition thereof and no Detroit L/Cs or other
Detroit L/C Obligations are outstanding, for purposes of any exercise of any
Enforcement Action or other rights with respect to the Detroit L/C Cash
Collateral Account and any Collateral from time to time on deposit therein
(including any application thereof), Requisite Detroit L/C Lenders;

            (ii) until such time as all New L/C Obligations are Paid in Full and
no New L/Cs or other New L/C Obligations are outstanding, for purposes of any
exercise of any Enforcement Action or other rights with respect to the New L/C
Cash Collateral Account and any Collateral from time to time on deposit therein
(including any application thereof), Requisite New L/C Lenders;

            (iii) subject to clauses (i) and (ii) above, until Payment in Full
of all Detroit L/C Obligations, (a) for so long as no drawing has occurred under
any Detroit L/C, no Event of Default has occurred and is continuing under
subsection 8.1 of the Detroit L/C Facility Agreement and no Bankruptcy
Proceeding has been commenced by or against any Loan Party, Lenders having or
holding of more than 50% of the sum of (1) the aggregate Detroit L/C Exposure of
all Detroit L/C Lenders and (2) the aggregate New L/C Aggregate Exposure of all
New L/C Lenders, and (b) from and after the occurrence of any drawing under any
Detroit L/C which is not reimbursed in full by Detroit L/C Borrowers, the
occurrence and continuance of a Detroit L/C Event of Default under subsection
8.1 of the Detroit L/C Facility Agreement or the commencement of a Bankruptcy
Proceeding by or against any Loan Party, Requisite Detroit L/C Lenders;

                                       15
<PAGE>
            (iv) subject to clauses (i) and (ii) above, from and after Payment
in Full of all Detroit L/C Obligations and until Payment in Full of all New L/C
Obligations, Requisite New L/C Lenders; and

            (v) subject to clauses (i) and (ii) above, from and after Payment in
Full of all Detroit L/C Obligations and New L/C Obligations, holders of more
than 50% of the aggregate outstanding principal amount of the High Yield Notes.

            "SECURED PARTIES" means the Creditor Parties, the High Yield
Noteholders and the High Yield Trustee.

            "SECURED OBLIGATIONS" means the collective reference to all Detroit
L/C Obligations, all New L/C Obligations, all High Yield Obligations and all
Obligations owing to Collateral Agent hereunder or under any Collateral
Document, and all Cash Management Obligations.

            "SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated, certificated or uncertificated, or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

            "SECURITIES ACCOUNT" means an account to which a financial asset is
or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the financial asset.

            "SECURITY AGREEMENT" means the Security Agreement executed and
delivered by Borrowers on the Closing Date pursuant to the Detroit L/C Facility
Agreement, New L/C Facility Agreement and High Yield Indenture, as such
agreement may from time to time hereafter be amended, restated, supplemented or
otherwise modified to the extent permitted pursuant to subsection 2.4.

            "SENIOR AGENT" means, (i) until Payment in Full of all Detroit L/C
Obligations, Detroit L/C Facility Agent and (ii) from and after Payment in Full
of all Detroit L/C Obligations and until Payment in Full of all New L/C
Obligations, New L/C Agent, and (iii) after Payment in Full of all Detroit L/C
Obligations and New L/C Obligations, High Yield Trustee.

            "SENIOR CREDITOR" shall have the meaning assigned to that term in
subsection 4.2(f).

            "SUBJECT FISCAL YEAR" shall have the meaning assigned to that term
in subsection 4.1(b).

            "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, trust, limited liability company, association, joint venture or
other business entity of which more

                                       16
<PAGE>
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the members of the Governing Body is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof. Any reference contained
herein to one or more Subsidiaries of Company shall, unless otherwise expressly
indicated, not include CPIH or any of its Subsidiaries.

            "SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to that
term in subsection 6.1(c).

            "THIRD-PARTY GUARANTY" shall have the meaning assigned to that term
in subsection 4.2(i).

            "UCC" means the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, the priority of any Secured
Party's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such priority and
for purposes of definitions related to such provisions.

            "UNITED STATES" means the United States of America.

            1.2 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.

            (a) Any of the terms defined herein may, unless the context
      otherwise requires, be used in the singular or the plural, depending on
      the reference.

            (b) References to "Sections" and "subsections" shall be to Sections
      and subsections, respectively, of this Agreement unless otherwise
      specifically provided.

            (c) The use of the word "include" or "including", when following any
      general statement, term or matter, shall not be construed to limit such
      statement, term or matter to the specific items or matters set forth
      immediately following such word or to similar items or matters, whether or
      not nonlimiting language (such as "without limitation" or "but not limited
      to" or words of similar import) is used with reference thereto, but rather
      shall be deemed to refer to all other items or matters that fall within
      the broadest possible scope of such general statement, term or matter.

            (d) In the event of any refinancing, replacement or extension of any
      Facility Agreement, references in this Agreement to sections or
      subsections of such Facility Agreement shall refer to the functionally
      equivalent sections or subsections in such refinanced, replaced or
      extended agreement as the context requires.

                                   SECTION II

            2.1 APPOINTMENT AS COLLATERAL AGENT. Each Creditor Party executing
this Agreement, and High Yield Trustee and each High Yield Noteholder, by its
acceptance of the

                                       17
<PAGE>
benefits of the Collateral Documents and of this Agreement, (i) appoints Bank of
America to serve as collateral agent and representative of each such Secured
Party (to the extent applicable) under this Agreement and each of the Collateral
Documents (in such capacity, together with its successors in such capacity, the
"COLLATERAL AGENT") and (ii) irrevocably authorizes Collateral Agent to act as
agent for the Secured Parties for the purpose of executing and delivering, on
behalf of all such Secured Parties, the Collateral Documents and, subject to the
provisions of this Agreement, for the purpose of exercising such powers, rights
and remedies hereunder and under the other Collateral Documents as are
specifically delegated or granted to Collateral Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. For the avoidance of doubt, it is understood and agreed that
the Collateral Agent is the "Secured Party" or, as the case may be, the
"Mortgagee" referred to in the Collateral Documents. Each Creditor Party and
Collateral Agent, and High Yield Trustee and each High Yield Noteholder, by its
acceptance of the benefits of the Collateral Documents and this Agreement,
hereby appoint each other Secured Party as agent for the purpose of perfecting
Collateral Agent's security interest in Collateral that, in accordance with the
UCC, can be perfected by possession or control.

            2.2 DECISIONS RELATING TO ENFORCEMENT ACTIONS AND OTHER MATTERS
VESTED IN REQUISITE OBLIGEES.

            (a) Collateral Agent agrees to take such Enforcement Actions and all
      such actions with respect to Collateral which is perfected only by control
      of such Collateral, in each case as may be directed by Requisite Obligees
      (it being understood and agreed that if at any time Collateral Agent
      determines that the requisite percentages constituting Requisite Obligees
      shall have been obtained, the Collateral Agent may and shall be fully
      authorized, as of such time and without the need for further direction
      from any Secured Party, to take or not take such action as the Requisite
      Obligees direct); provided, however, that notwithstanding anything in this
      Agreement to the contrary, Collateral Agent shall not be required to take
      any action that is in its judgment contrary to law or to the terms of this
      Agreement or any or all of the Collateral Documents or which would in its
      opinion subject it or any of its officers, employees or directors to
      liability, and Collateral Agent shall not be required to take any action
      under this Agreement or any or all of the Collateral Documents unless and
      until Collateral Agent shall be indemnified to its satisfaction by the
      relevant Parties against any and all losses, costs, expenses or
      liabilities in connection therewith.

            (b) Each Creditor Party executing this Agreement or an
      acknowledgment hereto, and the High Yield Trustee and each holder of a
      High Yield Note, by its acceptance of the benefits hereof and of the
      Collateral Documents, agree that Collateral Agent may act as Requisite
      Obligees may request (regardless of whether any individual Party or any
      other Secured Party (including the holders of the High Yield Notes)
      agrees, disagrees or abstains with respect to such request), that
      Collateral Agent shall have no liability for acting in accordance with
      such request (provided such action does not conflict with the express
      terms of this Agreement) and that no Secured Party shall have any
      liability to any other Secured Party for any such request, except, in each
      case, liability arising from the gross negligence or willful misconduct of
      such Person. Collateral Agent shall give prompt notice to all Creditor
      Parties and the High Yield

                                       18
<PAGE>
      Trustee of actions taken pursuant to the instructions of Requisite
      Obligees; provided, however, that the failure to give any such notice
      shall not impair the right of Collateral Agent to take any such action or
      the validity or enforceability under this Agreement and the applicable
      Collateral Documents of the action so taken.

            (c) Collateral Agent may at any time request directions from the
      Requisite Obligees with respect to the Collateral Documents as to any
      course of action or other matter relating hereto or to the Collateral
      Documents. Except as otherwise provided in the Collateral Documents,
      directions given by Requisite Obligees to Collateral Agent with respect to
      the Collateral and Collateral Documents shall be binding on all Secured
      Parties for all purposes (provided such directions do not conflict with
      the express terms of this Agreement).

            (d) Each Creditor Party, the High Yield Trustee, and each holder of
      a High Yield Note, by accepting the benefits hereof and of the Collateral
      Documents, agrees not to take any Enforcement Action whatsoever, in each
      case except through Collateral Agent in accordance with this Agreement;
      provided, however, that (i) Detroit L/C Agents and Detroit L/C Lenders may
      apply Collateral on deposit in the Detroit L/C Cash Collateral Account to
      the payment of the Detroit L/C Obligations and otherwise exercise rights
      of setoff with respect thereto, in each case in accordance with the terms
      of the Detroit L/C Facility Agreement and the Security Agreement and (ii)
      New L/C Agent and New L/C Lenders may apply Collateral on deposit in the
      New L/C Cash Collateral Account to the payment of the New L/C Obligations
      and otherwise exercise rights of setoff with respect thereto, in each case
      in accordance with the terms of the New L/C Facility Agreement and the
      Security Agreement.

            2.3 NET INSURANCE/CONDEMNATION PROCEEDS.

            (a) Unless prohibited by contractual or other legal requirement, all
      policies of insurance required to be maintained under any Credit Document
      shall (a) name Collateral Agent, for the benefit of Secured Parties, as an
      additional insured thereunder as its interests may appear and (b) in the
      case of each business interruption and casualty insurance policy, contain
      a loss payable clause or endorsement, satisfactory in form and substance
      to Detroit L/C Facility Agent and New L/C Agent, that names Collateral
      Agent for the benefit of Secured Parties as the loss payee thereunder for
      any covered loss in excess of $1,000,000 and provides for at least 30 days
      prior written notice to Collateral Agent of any modification or
      cancellation of such policy. As soon as practicable after the Closing
      Date, Company shall deliver to Agents a certificate from Borrowers'
      insurance broker(s) or other evidence satisfactory to it that all
      insurance required to be maintained pursuant to this subsection 2.3 is in
      full force and effect and that Collateral Agent on behalf of Secured
      Parties has been named as additional insured and/or loss payee thereunder
      to the extent required under this subsection 2.3.

            (b) Upon receipt by Collateral Agent of any Net
      Insurance/Condemnation Proceeds as loss payee, (a) if and to the extent
      Company would have been required to apply such Net Insurance/Condemnation
      Proceeds (if it had received them directly) pursuant to the Detroit L/C
      Facility Agreement (or, if the Detroit L/C Obligations have

                                       19
<PAGE>
      been Paid in Full, the New L/C Facility Agreement), Collateral Agent
      shall, and Company hereby authorizes Collateral Agent to, apply such Net
      Insurance/Condemnation Proceeds as provided in subsection 4.1(a) or, to
      the extent applicable, subsection 4.2 and (b) to the extent the foregoing
      clause (a) does not apply, Collateral Agent shall deliver such Net
      Insurance/Condemnation Proceeds to Company, and (1) Company and its
      Subsidiaries may retain and apply any portion thereof that is business
      interruption insurance proceeds for working capital purposes or any other
      purposes not prohibited under the Facility Agreements and (2) Company
      shall, or shall cause one or more of its Subsidiaries to, promptly apply
      such Net Insurance/Condemnation Proceeds that are not business
      interruption insurance proceeds to the costs of repairing, restoring, or
      replacing the assets in respect of which such Net Insurance/Condemnation
      Proceeds were received; provided, however that if at any time Senior Agent
      reasonably determines (A) that Company or such Subsidiary is not
      proceeding diligently with such repair, restoration or replacement or that
      such repair, restoration or replacement cannot be completed within 180
      days after the receipt by Collateral Agent of such Net
      Insurance/Condemnation Proceeds, Senior Agent may direct Collateral Agent,
      and Company hereby authorizes Senior Agent and Collateral Agent to apply
      such Net Insurance/Condemnation Proceeds as provided in subsection 4.1(a).

            2.4 AMENDMENTS, MODIFICATIONS, WAIVERS AND RELEASES. Notwithstanding
anything in the Facility Agreements, High Yield Indenture, Collateral Documents
and other Credit Documents to the contrary:

            (a) except in connection with any Enforcement Action or the release
      of any cash on deposit in any Cash Collateral Account, the release of the
      Lien granted in favor of Collateral Agent on all or substantially all of
      the Collateral under the Collateral Documents shall require the prior
      written consent of, until Payment in Full of all Detroit L/C Obligations,
      each Detroit L/C Lender and, until Payment if Full of all New L/C
      Obligations, each New L/C Lender; provided that no such consent shall be
      required in connection with any IPP International Sale provided that the
      consideration received for the assets subject to such IPP International
      Sale shall be in an amount at least equal to the fair market value
      thereof; and

            (b) except as set forth in subsection 2.4(a), any amendment,
      modification, termination or waiver of, any Collateral Documents shall
      require the prior written consent of (i) until Payment in Full of all
      Detroit L/C Obligations, Requisite Detroit L/C Lenders, (ii) until Payment
      in Full of all New L/C Obligations, Requisite New L/C Lenders, and (iii)
      upon Payment in Full of all Detroit L/C Obligations and New L/C
      Obligations, holders of more than 50% of the principal amount of the High
      Yield Notes; provided, however, that (i) no such amendment, modification,
      termination or waiver shall, without the consent of Requisite Detroit L/C
      Lenders, amend, modify, terminate or waive, or have the effect of
      amending, modifying, terminating or waiving, Section 12 (Detroit L/C Cash
      Collateral Account) of the Security Agreement or the rights of Collateral
      Agent and Detroit L/C Lenders under such Section or otherwise with respect
      to the Detroit L/C Cash Collateral Account or the Collateral on deposit
      therein from time to time, and (ii) no such amendment, modification,
      termination or waiver shall, without the consent of Requisite New L/C
      Lenders, amend, modify, terminate or waive, or have the effect of
      amending,

                                       20
<PAGE>
      modifying, terminating or waiving, Section 13 (New L/C Cash Collateral
      Account) of the Security Agreement or the rights of Collateral Agent and
      New L/C Lenders under such Section or otherwise with respect to the New
      L/C Cash Collateral Account or the Collateral on deposit therein from time
      to time.

            2.5 AMENDMENTS, MODIFICATIONS AND WAIVERS WITH RESPECT TO CREDIT
Documents. Any amendment or modification of, or waiver of compliance with the
terms of any Credit Document shall be subject to the following requirements:

            (a) Subject to the provisions of subsection 2.4, and until the
      termination of the Detroit L/C Facility Agreement and the Payment in Full
      of all Detroit L/C Obligations, without the prior written consent of
      Requisite Detroit L/C Lenders, New L/C Lenders may not amend, restate,
      modify or waive (or receive any payment consistent with an amendment,
      restatement, modification or waiver of) any material provision of any of
      the New L/C Facility Documents, unless (i) the terms of the New L/C
      Facility Documents as so amended, restated, modified or waived are not
      more disadvantageous to Company and its Subsidiaries and the Detroit L/C
      Lenders (in a manner deemed material by Detroit L/C Agents) than the New
      L/C Facility Documents in effect on the Closing Date (it being understood
      and agreed that any amendment, restatement, modification or waiver having
      the effect of (1) increasing the maximum amount of any commitment to
      extend loans (as opposed to letters of credit) under the New L/C Facility
      Documents, or (2) reducing, delaying or waiving any otherwise required
      reduction in the amount of any commitment to extend loans or letters of
      credit under the New L/C Facility Documents, shall be deemed to be more
      disadvantageous for purposes of this clause (i) without further notice or
      other action by Detroit L/C Agents), (ii) the aggregate amount of
      indebtedness and letters of credit outstanding, and additional commitments
      to extend credit, if any, under the New L/C Facility Documents as so
      amended, restated, modified or waived, do not exceed the aggregate amount
      of the commitments to extend credit in effect under the New L/C Facility
      Documents on the Closing Date plus ---- $5,000,000, (iii) the obligations
      under (and the Liens securing) such New L/C Facility Documents as so
      amended, restated, modified or waived are subject to this Agreement on
      terms substantively identical to the terms applicable to the obligations
      in effect under the New L/C Facility Documents on the Closing Date , and
      (iv) Company provides to Detroit L/C Agents reasonable prior advance
      written notice of such proposed amendment, restatement, modification or
      waiver and copies of all material contracts or other agreements being
      entered into in connection therewith.

            (b) Subject to the provisions of subsection 2.4, and until the
      termination of the New L/C Facility Agreement and the Payment in Full of
      all New L/C Obligations, without the prior written consent of Requisite
      New L/C Lenders, Detroit L/C Lenders may not amend, restate, modify or
      waive (or receive any payment consistent with an amendment, restatement,
      modification or waiver of) any material provision of any of the Detroit
      L/C Facility Documents, unless (i) the terms of the Detroit L/C Facility
      Documents as so amended, restated, modified or waived are not more
      disadvantageous to Company and its Subsidiaries and the New L/C Lenders
      (in a manner deemed material by New L/C Agent) than the Detroit L/C
      Facility Documents in effect on the Closing Date (it being understood and
      agreed that any amendment, restatement, modification or waiver

                                       21
<PAGE>
      having the effect of (1) increasing the maximum amount of any commitment
      to extend loans (as opposed to letters of credit) under the Detroit L/C
      Facility Documents, or (2) reducing, delaying or waiving any otherwise
      required reduction in the amount of any commitment to extend loans or
      letters of credit under the Detroit L/C Facility Documents, shall be
      deemed to be more disadvantageous for purposes of this clause (i) without
      further notice or other action by New L/C Agent), (ii) the aggregate
      amount of indebtedness and letters of credit outstanding, and additional
      commitments to extend credit, if any, under the Detroit L/C Facility
      Documents as so amended, restated, modified or waived, do not exceed the
      aggregate amount of the commitments to extend credit in effect under the
      Detroit L/C Facility Documents on the Closing Date plus $5,000,000, (iii)
      the obligations under (and the Liens securing) such Detroit L/C Facility
      Documents as so amended, restated, modified or waived are subject to this
      Agreement on terms substantively identical to the terms applicable to the
      obligations in effect under the Detroit L/C Facility Documents on the
      Closing Date, and (iv) Company provides to New L/C Agent reasonable prior
      advance written notice of such proposed amendment, restatement,
      modification or waiver and copies of all material contracts or other
      agreements being entered into in connection therewith.

            (c) Until (i) the termination of the Detroit L/C Facility Agreement
      and the Payment in Full of all Detroit L/C Obligations, without the prior
      written consent of Requisite Detroit L/C Lenders and (ii) the termination
      of the New L/C Facility Agreement and the Payment in Full of all New L/C
      Obligations, without the prior written consent of Requisite New L/C
      Lenders, Company shall not, and shall not permit any of its Subsidiaries
      (including CPIH Subsidiaries) to amend, restate, modify or waive (or make
      any payment consistent with an amendment, restatement, modification or
      waiver of) any material provision of the Management Services and
      Reimbursement Agreement if the effect of such amendment, restatement,
      modification or waiver, together with all other amendments, restatements,
      modifications or waivers made, (a) is to impose additional material
      obligations on, or confer material additional rights to the holders
      thereof (or to other obligees with respect thereto) against, Company or
      any of its Subsidiaries, (b) is otherwise adverse to the interests of the
      Detroit L/C Lenders in a manner deemed material in the judgment of Detroit
      L/C Agents or Requisite Detroit L/C Lenders so notifying Detroit L/C
      Agents or Company, or (c) is otherwise adverse to the interests of the New
      L/C Lenders in a manner deemed material in the judgment of New L/C Agent
      or Requisite New L/C Lenders so notifying New L/C Agents or Company.

            (d) Each Lender acknowledges and agrees that Borrowers have agreed
      to and are bound by the provisions of subsection 6.13 (Most Favored
      Nations Payments) of each Facility Agreement.

                                  SECTION III

            3.1 PRIORITY OF LIENS.

            (a) Notwithstanding the order or time of attachment, or the order,
      time or manner of perfection, or the order or time of filing or
      recordation of any document or instrument, or other method of perfecting a
      security interest in favor of Collateral Agent

                                       22
<PAGE>
      in any Collateral, and notwithstanding any conflicting terms or conditions
      which may be contained in any of the Credit Document, the Secured Parties
      agree that, as among the Secured Parties the following Lien priorities
      shall strictly apply in defining the respective Lien priorities of each
      Secured Party in the Collateral (provided, however that, in the case of
      the Collateral held as cash collateral in the Detroit L/C Cash Collateral
      Account for the Detroit L/C Obligations and in the New L/C Cash Collateral
      Account for New L/C Obligations, such cash collateral shall have the
      priorities set forth in subsection 3.1(b) and 3.1(c), respectively, until
      released pursuant to subsection 4.2(c), in which case the following
      priorities apply):

                  (1) first, the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the Secured Obligations owing from
      time to time to the Collateral Agent, in its capacity as Collateral Agent,
      to the full extent thereof;

                  (2) second: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing, on a pari passu basis, the
      Secured Obligations owing from time to time to the Detroit L/C Agents and
      New L/C Agent, in their capacities as Detroit L/C Agents and New L/C
      Agent, respectively, to the full extent thereof;

                  (3) third: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing, on a pari passu basis, (i) the
      remaining Detroit L/C Obligations, and (ii) the Cash Management
      Obligations, in each case to the full extent thereof;

                  (4) fourth: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the remaining New L/C Obligations
      to the full extent thereof; and

                  (5) fifth: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the High Yield Obligations to the
      full extent thereof.

            (b) Notwithstanding the order or time of attachment, or the order,
      time or manner of perfection, or the order or time of filing or
      recordation of any document or instrument, or other method of perfecting a
      security interest in favor of Collateral Agent in any Collateral, and
      notwithstanding any conflicting terms or conditions which may be contained
      in any of the Credit Document, the Secured Parties agree that, as among
      the Secured Parties the following Lien priorities shall strictly apply in
      defining the respective Lien priorities of each Secured Party in cash
      collateral held in the Detroit L/C Cash Collateral Account:

                  (1) first, the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the Secured Obligations owing from
      time to time to the Collateral Agent, in its capacity as Collateral Agent,
      to the full extent thereof;

                  (2) second: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the Secured Obligations owing from
      time to time to the Detroit L/C Agents, in their capacities as Detroit L/C
      Agents, to the full extent thereof;

                  (3) third: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the remaining Detroit L/C
      Obligations to the full extent thereof; and

                                       23
<PAGE>
                  (4) fourth: the Liens upon the Collateral in favor of
      Collateral Agent in the order of priority provided for in subsection
      3.1(a).

            (c) Notwithstanding the order or time of attachment, or the order,
      time or manner of perfection, or the order or time of filing or
      recordation of any document or instrument, or other method of perfecting a
      security interest in favor of Collateral Agent in any Collateral, and
      notwithstanding any conflicting terms or conditions which may be contained
      in any of the Credit Document, the Secured Parties agree that, as among
      the Secured Parties the following Lien priorities shall strictly apply in
      defining the respective Lien priorities of each Secured Party in cash
      collateral held in the New L/C Cash Collateral Account:

                  (1) first, the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the Secured Obligations owing from
      time to time to the Collateral Agent, in its capacity as Collateral Agent,
      to the full extent thereof;

                  (2) second: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the Secured Obligations owing from
      time to time to the New L/C Agent, in their capacity as New L/C Agent, to
      the full extent thereof;

                  (3) third: the Liens upon the Collateral in favor of
      Collateral Agent to the extent securing the remaining New L/C Obligations
      to the full extent thereof; and

                  (4) fourth: the Liens upon the Collateral in favor of
      Collateral Agent in the order of priority provided for in subsection
      3.1(a).

            3.2 PRIORITIES UNAFFECTED BY ACTION OR INACTION. The Lien priorities
in subsection 3.1 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of any
of the Secured Obligations, nor by any action or inaction which Collateral Agent
or any other Secured Party may take or fail to take in respect of the
Collateral.

                                   SECTION IV

            4.1 APPLICATION OF MANDATORY PREPAYMENTS UNDER FACILITY AGREEMENTS.
Notwithstanding anything in the Credit Documents to the contrary but subject in
all respects to subsection 4.2, so long as any Detroit L/C Obligations and New
L/C Obligations are outstanding any Mandatory Payments made pursuant to
subsections 2.3A(i)(a) - (g) of the Detroit L/C Facility Agreement and
subsections 2.4A(iii)(a) - (g) of the New L/C Facility Agreement shall be
applied as follows:

            (a) Any Mandatory Payments made pursuant to subsections 2.3A(i)(a) -
      (b) of the Detroit L/C Facility Agreement and subsections 2.4A(iii)(a) -
      (b) of the New L/C Facility Agreement shall be applied first, to repay
      funded amounts (if any) under the Detroit L/Cs and then to cash
      collateralize the Detroit L/Cs and the Detroit L/C Commitments under the
      Security Agreement in an amount, taken together with all then existing
      cash collateral on deposit in the Detroit L/C Cash Collateral Account for
      the

                                       24
<PAGE>
      Detroit L/C Commitments, equal to 105% of the Detroit L/C Commitments and
      second, to reduce the New L/C Aggregate Exposure in accordance with
      subsection 4.1(e).

            (b) Any Mandatory Payments made pursuant to subsections 2.3A(i)(c) -
      (e) of the Detroit L/C Facility Agreement and subsections 2.4A(iii)(c) -
      (e) of the New L/C Facility Agreement shall be applied as follows: (i) an
      amount equal to 50% of such Mandatory Payment shall be applied to repay
      funded amounts (if any) under the Detroit L/Cs and then to cash
      collateralize the Detroit L/Cs and the Detroit L/C Commitments under the
      Security Agreement up to an amount, taken together with all then existing
      cash collateral on deposit in the Detroit L/C Cash Collateral Account for
      the Detroit L/C Commitments, equal to 105% of the Detroit L/C Commitments,
      (ii) an amount equal to 50% of such Mandatory Payment shall be applied to
      reduce the New L/C Aggregate Exposure in accordance with subsection 4.1(e)
      and (iii) if any proceeds of a Mandatory Prepayment remain after
      application as set forth in clause (i) or (ii), then such remaining
      proceeds shall be applied as if it were proceeds required to be applied
      pursuant to the other such clause.

            (c) Any Mandatory Payments made pursuant to subsections 2.3A(i)(f)
      of the Detroit L/C Facility Agreement and subsections 2.4A(iii)(f) of the
      New L/C Facility Agreement shall be applied as follows (i) an amount equal
      to 50% of such Mandatory Payment shall be applied to repay funded amounts
      (if any) under the Detroit L/Cs and then to cash collateralize the Detroit
      L/Cs and the Detroit L/C Commitments under the Security Agreement up to an
      amount, taken together with all then existing cash collateral on deposit
      in the Detroit L/C Cash Collateral Account for the Detroit L/C
      Commitments, equal to 105% of the Detroit L/C Commitments, (ii) an amount
      equal to 50% of such Mandatory Payment shall be applied to reduce the New
      L/C Aggregate Exposure in the following manner: first, to New L/C
      Exposure, with the amount applied to New L/C Exposure being applied to
      repay all funded amounts, if any, under the New L/Cs and then to cash
      collateralize the New L/C Exposure outstanding (after giving effect to the
      foregoing repayment) in an amount, taken together with all then existing
      cash collateral for such New L/C Exposure, equal to 105% of such New L/C
      Exposure; and second, to repay outstanding New Revolving Loans to the full
      extent thereof, and (iii) if any proceeds of a Mandatory Prepayment remain
      after application as set forth in clause (i) or (ii), then such remaining
      proceeds shall be applied as if it were proceeds required to be applied
      pursuant to the other such clause. Notwithstanding the foregoing,
      Borrowers and Lenders hereby agree that any cash applied to cash
      collateralize Detroit L/C Exposure or New L/C Exposure pursuant to this
      subsection 4.1(c) with respect to a cash balance on June 30 or December 31
      of any Fiscal Year (the "SUBJECT FISCAL YEAR") shall, in the event that
      the amount of such cash applied to cash collateralize Detroit L/C Exposure
      and New L/C Exposure exceeds 50% of the Annual Free Cash Flow for the
      Subject Fiscal Year, be released to Borrowers to the extent of such
      excess, with the amount of cash so released being released pro rata from
      the amounts on deposit in the Detroit L/C Cash Collateral Account and New
      L/C Cash Collateral Account based on the amount of such excess applied to
      cash collateralize Detroit L/C Exposure and New L/C Exposure (but in no
      event shall more cash be so released from any Collateral Account than the
      aggregate amount applied pursuant to this subsection 4.1(c) with respect
      to the Subject Fiscal Year and deposited to such Collateral Account) after
      the 60th day of the following Fiscal Year,

                                       25
<PAGE>
      promptly following Borrowers' certification of such excess; provided,
      however, that such release shall not be required if, at the time such
      release would otherwise be required, a Detroit L/C Event of Default or New
      L/C Event of Default shall have occurred and be continuing.

            (d) Any Mandatory Payments made pursuant to subsection 2.3A(i)(g) of
      the Detroit L/C Facility Agreement and subsection 2.4A(iii)(g) of the New
      L/C Facility Agreement shall be applied pursuant to subsection 4.2(a).

            (e) All Mandatory Prepayments of the New L/C Aggregate Exposure
      referenced in subsections 4.1(a) and 4.1(b) shall be applied in the
      following manner: first, to New L/C Exposure, with the amount applied to
      New L/C Exposure being applied to repay all funded amounts, if any, under
      the New L/Cs and then to cash collateralize the New L/C Exposure
      outstanding (after giving effect to the foregoing repayment) in an amount,
      taken together with all then existing cash collateral for such New L/C
      Exposure, equal to 105% of such New L/C Exposure, and, concurrently with
      any such repayment or cash collateralization of New L/C Exposure,
      effecting a permanent reduction in the New L/C Commitment by the amount of
      such repayment or cash collateralization of New L/C Exposure; second, to
      repay outstanding New Revolving Loans to the full extent thereof and to
      concurrently permanently reduce (x) the New L/C Commitments and (y) to the
      extent that any such reduction in New L/C Commitments would cause the New
      L/C Commitments to be less than the Revolver Loan Commitments then in
      effect, the Revolver Commitments by the amount of such difference; and
      third, to permanently reduce the unutilized New L/C Commitments and, to
      the extent that any reduction in New L/C Commitments would cause the New
      L/C Commitments to be less than the Revolver Loan Commitments then in
      effect, to permanently and concurrently reduce the Revolver Commitments by
      the amount of such difference.

            4.2 APPLICATION OF PROCEEDS OF COLLATERAL, ETC.

            (a) Except as provided in subsection 4.2(c) and 4.2(d) below, upon
      the occurrence and during the continuation of an Event of Default or upon
      the termination of either the Detroit L/C Commitments or the New L/C
      Aggregate Commitments, if requested by Requisite Detroit L/C Lenders with
      respect to any Detroit L/C Event of Default or termination of Detroit L/C
      Commitments, or if requested by Requisite New L/C Lenders with respect to
      any New L/C Event of Default and termination of New L/C Aggregate
      Commitments, or holders of more than 50% of the High Yield Notes with
      respect to a High Yield Event of Default, (1) all Mandatory Payments or
      other payments received by any Agent or other Secured Party on account of
      the Obligations, whether from any Loan Party or otherwise, shall promptly
      be delivered to Collateral Agent and upon receipt by Collateral Agent,
      applied by Collateral Agent against the Secured Obligations and (2) all
      Proceeds received by Collateral Agent in respect of any sale of,
      collection from, or other realization upon all or any part of the
      Collateral or other Enforcement Action may, in the discretion of Senior
      Agent upon written direction to Collateral Agent, be held by Collateral
      Agent as Collateral for, and/or (then or at any time thereafter) applied
      in full or in part by Collateral Agent against, the applicable

                                       26
<PAGE>
      Secured Obligations, in each case under clauses (1) and (2) in the
      following order of priority:

                  (i) First, to the payment of the costs and expenses of the
      exercise of rights and remedies and such sale, collection or other
      realization or Enforcement Action, including reimbursement of all
      expenses, liabilities and advances made or incurred by Collateral Agent in
      connection therewith (including, for reasonable cost, fees and expenses of
      counsel and other professionals and agents retained by the Collateral
      Agent) and all amounts for which Collateral Agent is entitled to
      compensation, reimbursement and indemnification under any Credit Document
      and any other amounts then owing to Collateral Agent, in its capacity as
      Collateral Agent, pursuant to the Collateral Documents;

                  (ii) Second, to the extent proceeds remain after application
      as described in clause (i) above, pro rata among the following, based on
      the amounts outstanding as of any date of determination: all Secured
      Obligations owing to Detroit L/C Agents and New L/C Agent, in their
      capacities as Detroit L/C Agents and New L/C Agent, respectively;

                  (iii) Third, to the extent proceeds remain after application
      as described in clauses (i) and (ii) above, pro rata among the following,
      based on the amounts outstanding as of any date of determination: (i) all
      remaining Detroit L/C Obligations, and (ii) all Cash Management
      Obligations until all Detroit L/C Obligations and Cash Management
      Obligations have been Paid in Full;

                  (iv) Fourth, to the extent proceeds remain after application
      as described in clauses (i) through (iii) above, to the payment of the
      remaining New L/C Obligations until all New L/C Obligations have been Paid
      in Full;

                  (v) Fifth, to the extent proceeds remain after application as
      described in clauses (i) through (iv) above, to the payment of the High
      Yield Note Obligations, until all such High Yield Note Obligations have
      been Paid in Full; and

                  (vi) Sixth, after Payment in Full of all Secured Obligations
      under clauses (i) through (v) above, to Loan Parties (other than DHC) or
      their successors or assigns, or to whosoever may be lawfully entitled to
      receive the same or as a court of competent jurisdiction may direct, of
      any surplus then remaining from such Proceeds.

            (b) Notwithstanding anything in subsection 4.2(a) to the contrary,
      (i) in the event that no Detroit L/C Event of Default has occurred and is
      continuing under subsection 8.1 of the Detroit L/C Facility Agreement and
      no Bankruptcy Proceeding has been commenced by or against any Loan Party,
      the New L/C Lenders and New L/C Agent shall be entitled to receive
      payments of current interest and fees when due under the New L/C Facility
      Agreement; (ii) in the event that no Detroit L/C Event of Default has
      occurred and is continuing under subsection 8.1 of the Detroit L/C
      Facility Agreement and no New L/C Event of Default has occurred and is
      continuing under subsection 8.1 of the New L/C Facility Agreement and no
      Bankruptcy Proceeding has

                                       27
<PAGE>
      been commenced by or against any Loan Party and subsection 8.1 of the
      Detroit L/C Facility Agreement and New L/C Facility Agreement, the High
      Yield Trustee, on behalf of the High Yield Noteholders, shall be entitled
      to receive payments of current interest and fees when due under the High
      Yield Indenture and High Yield Note; and (iii) in the event any Management
      Services Reimbursement Agreement Beneficiary receives any payment from any
      Management Services Agreement Obligors pursuant to subsection 4(b) of the
      Management Services Reimbursement Agreement with respect to any drawing of
      any New L/C that is honored by the New L/C Issuing Lender, then such
      Management Services Agreement Beneficiaries shall apply such payment to
      reimburse New L/C Issuing Lender (and any New L/C Lender that has funded
      its participation therein) for such honored drawing.

            (c) Cash collateral held by Collateral Agent pursuant to the
      Security Agreement shall be held for the purposes set forth therein.
      Notwithstanding anything in the other Credit Documents to the Company, if
      during any period in which the provisions of subsection 4.2(a) are
      applicable, (i) the Detroit L/C Commitments and the obligation of the
      Detroit L/C Lenders to issue and maintain Detroit L/Cs have terminated and
      all Detroit L/C Obligations have been fully satisfied in cash and no
      Detroit L/Cs are then outstanding, then any cash collateral held by
      Collateral Agent to cash collateralize Detroit L/C Obligations shall be
      applied in accordance with subsection 4.2(a); and (ii) the New L/C
      Aggregate Commitments and the obligation of the Issuing Lenders to issue
      or maintain New L/Cs have terminated and all New L/C Obligations have been
      fully satisfied in cash and no New L/Cs are then outstanding, then any
      cash collateral held by Collateral Agent to cash collateralize New L/C
      Obligations shall be applied in accordance with subsection 4.2(a).

            (d) Until Proceeds are applied as set forth in this subsection 4.2,
      Collateral Agent shall hold such Proceeds in its custody in accordance
      with its regular procedures for handling deposited funds.

            (e) Payments by Collateral Agent to the Detroit L/C Lenders in
      respect of the Detroit L/C Obligations shall be made to the Detroit L/C
      Facility Agent for distribution to the Detroit L/C Lenders in accordance
      with the Detroit L/C Facility Agreement and this Agreement; payments by
      Collateral Agent to the New L/C Lenders in respect of the New L/C
      Obligations shall be made to the New L/C Agent for distribution to the New
      L/C Lenders in accordance with the New L/C Facility Agreement and this
      Agreement; payments in respect of any High Yield Obligations shall be paid
      to the High Yield Trustee for the benefit of the holders of such High
      Yield Obligations; and payments in respect of the Cash Management
      Obligations shall be made to Cash Management Bank for the benefit of Cash
      Management Bank.

            (f) In the event that any Secured Party shall receive any
      Distribution that such Secured Party is not entitled to receive or retain
      under the provisions of this Agreement (in such capacity, each, a "JUNIOR
      CREDITOR"), such Junior Creditor shall hold any such Distribution so
      received in trust for the benefit of the holders of other Secured
      Obligations with the right to receive such Distribution under the
      provisions of this Agreement (in such capacity, each, a "SENIOR CREDITOR")
      and shall segregate such

                                       28
<PAGE>
      Distribution from other assets held by such Junior Creditor; and shall
      forthwith turn over such Distribution (without liability for interest
      thereon, but with any appropriate endorsements or assignments, if
      necessary) to the holders of, or to Collateral Agent for the benefit of
      the holders of, such Secured Obligations in the form received (with any
      appropriate endorsement or assignment, if necessary) to be distributed in
      accordance with subsection 4.1 or 4.2, as applicable, and applied to such
      Secured Obligations. In the event of a failure of any Junior Creditor to
      make any such endorsement or assignment to Collateral Agent or Senior
      Creditors, as the case may be, Collateral Agent and such Senior Creditors
      are hereby irrevocably authorized on behalf of such Junior Creditor to
      make such endorsement or assignment, as applicable.

            (g) No payment or distribution to any Senior Creditor pursuant to
      the provisions of this Agreement shall entitle the applicable Junior
      Creditor or Junior Creditors to exercise any right of subrogation in
      respect thereof until (i) all Secured Obligations of such Senior Creditors
      (including with respect to any outstanding letters of credit) shall have
      been indefeasibly Paid in Full, or (ii) all of such Senior Creditors have
      consented in writing to the taking of such action. With respect to any
      subrogation claims, each Junior Creditor hereby (to the extent permitted
      by applicable law) waives, releases and discharges any and all rights,
      claims, causes of action, liabilities, claims and demands, in law or
      equity, which such Junior Creditor has had, now has, or may in the future
      have, arising out of or relating directly or indirectly to the taking or
      not taking of any act or proceeding or not proceeding with any action
      which the Senior Creditors (or that representatives) may take in an effort
      to collect in respect of the Secured Obligations owed to such Senior
      Creditors.

            (h) In furtherance of, and without limiting, the priority provisions
      set forth in this subsection 4.2, but subject to the applicable voting
      provisions set forth in subsection 2.2, each Creditor Party and High Yield
      Trustee (and, by their acceptance of the benefits hereof and of the
      Collateral Documents, each High Yield Noteholder) agrees that, in order to
      enable Collateral Agent to enforce its rights hereunder in any Bankruptcy
      Proceeding, Collateral Agent is hereby irrevocably authorized and
      empowered in its sole and absolute discretion to receive and collect any
      and all dividends or other payments or disbursements made on account of
      Collateral Agent's Lien on the Collateral in whatever form the same may be
      paid or issued and to apply the same on account of any such Secured
      Obligations in accordance with the provisions of the Credit Documents and
      this Agreement. At any time, including but not limited to during any
      Bankruptcy Proceeding, Collateral Agent and each other Secured Party will
      refrain from taking any action which would contest or challenge in any
      administrative, legal or equitable action or otherwise the validity or
      enforceability of the terms of this Agreement, including the priority
      provisions contained in this subsection 4.2 and the Lien priority
      provisions contained in subsection 3.1.

            (i) Each Secured Party hereby covenants and agrees that (i) except
      for the guaranty of the High Yield Obligations by High Yield Guarantors
      pursuant to the High Yield Indenture and any New Investor Assurances, such
      Secured Party will not accept from any Person on behalf of the Borrowers
      any guarantee (a "THIRD-PARTY GUARANTY") of any Secured Obligations unless
      such guarantor simultaneously guarantees the payment

                                       29
<PAGE>
      all Secured Obligations owed to each of the other Secured Parties (or, if
      such Third-Party Guaranty guarantees only a portion of the Obligations
      owing to such Secured Party, such Secured Party will not accept such
      Third-Party Guaranty unless such guarantor simultaneously guarantees the
      same proportion of Secured Obligations owing to the other Secured
      Parties), and (ii) such Secured Party will not take, accept or obtain any
      security interest in, or lien or encumbrance upon, any assets of any of
      the Borrowers or any Subsidiary (including any CPIH Subsidiary) or
      Affiliate thereof or any other Person to secure the payment and
      performance of the Obligations unless the Collateral Agent, for the
      benefit of all Secured Parties, is granted a pari passu security interest
      in, or lien upon, such assets, in either case, pursuant to documents in
      form and substance satisfactory to Detroit L/C Facility Agent and New L/C
      Agent.

            (j) Each Junior Creditor hereby waives any rights it may have under
      applicable law to assert the doctrine of marshalling or to otherwise
      require Collateral Agent or any Senior Creditors to marshal any property
      of the Loan Parties or any of their respective Affiliates for the benefit
      of such Junior Creditors.

                                    SECTION V

            5.1 INFORMATION. From time to time, upon the request of Collateral
Agent, each of the following Parties agrees to promptly provide to Collateral
Agent the information described below:

            (a) Detroit L/C Facility Agent agrees promptly from time to time to
      (i) deliver to Collateral Agent a true, correct and complete copy of any
      amendment, waiver or modification of or supplement to any Detroit L/C
      Facility Documents upon execution and delivery to Detroit L/C Facility
      Agent thereof by the relevant parties thereto and (ii) notify Collateral
      Agent of: (A) the aggregate amount of principal of and interest on the
      relevant Detroit L/C Obligations (including the aggregate Detroit L/C
      Usage) as at such date as Collateral Agent may specify, (B) the current
      Detroit L/C Commitment under the Detroit L/C Facility Agreement, and (C)
      any payment received by Detroit L/C Facility Agent to be applied to the
      principal of or interest on the Obligations and (iv) the amount of any
      other fees or expenses outstanding under the Detroit L/C Facility
      Agreement (including fees and expenses of Detroit L/C Agents) and, in each
      case, Collateral Agent shall be entitled to rely conclusively upon such
      information.

            (b) New L/C Agent agrees promptly from time to time to (i) deliver
      to Collateral Agent a true, correct and complete copy of any amendment,
      waiver or modification of or supplement to any New L/C Facility Documents
      upon execution and delivery to New L/C Facility Agent thereof by the
      relevant parties thereto and (ii) notify Collateral Agent of: (A) the
      aggregate amount of principal of and interest on the New L/C Obligations
      (including the aggregate New L/C Usage) as at such date as Collateral
      Agent may specify, (B) the current New L/C Commitment under the New L/C
      Facility Agreement, (C) any payment received by New L/C Agent to be
      applied to the principal of or interest on the Obligations, and (D) the
      amount of any other fees or expenses outstanding under the New L/C
      Facility Agreement (including fees and expenses of New

                                       30
<PAGE>
      L/C Agent) and, in each case, Collateral Agent shall be entitled to rely
      conclusively upon such information.

            (c) The High Yield Trustee agrees promptly from time to time to (i)
      deliver to Collateral Agent a true, correct and complete copy of any
      amendment, waiver or modification of or supplement to any High Yield Note
      or the High Yield Indenture upon execution thereof and (ii) notify
      Collateral Agent of: (A) the outstanding principal amount of the High
      Yield Notes and the amount of accrued but unpaid interest thereon, and (B)
      the amount of any other fees or expenses outstanding under the High Yield
      Indenture (including fees and expenses of High Yield Trustee) at such date
      as Collateral Agent may specify. The High Yield Trustee shall, or shall
      cause the registrar for the High Yield Notes to, provide a statement of
      such amount as reflected in the register maintained for such purpose by
      the High Yield Trustee or such registrar, as the case may be, and
      Collateral Agent shall be entitled to rely conclusively upon such
      statement.

                                   SECTION VI

            6.1 DISCLAIMERS, SUPPLEMENTAL COLLATERAL AGENT, INDEMNITY, ETC.

            (a) Collateral Agent shall have no duties or responsibilities except
      those expressly set forth in this Agreement and the Collateral Documents
      and Collateral Agent shall not by reason of this Agreement or the
      Collateral Documents be a trustee for any Secured Party or have any other
      fiduciary obligation to any Secured Party (including any obligation under
      the Trust Indenture Act of 1939, as amended). Collateral Agent shall not
      be responsible to any Secured Party for any recitals, statements,
      representations or warranties contained in this Agreement or any other
      Credit Document or in any certificate or other document referred to or
      provided for in, or received by any of them under, this Agreement or any
      Credit Document, or for the value, validity, effectiveness, genuineness,
      enforceability or sufficiency of this Agreement or any other Credit
      Document or any other document referred to or provided for therein or any
      Lien under the Collateral Documents or the perfection or priority of any
      such Lien or for any failure by any Loan Party to perform any of its
      respective obligations under this Agreement or any other Credit Document.
      Collateral Agent may exercise such powers, rights and remedies and perform
      such duties by or through its Affiliates, agents or employees.

            (b) Neither Collateral Agent nor any of its officers, directors,
      employees or agents shall be liable to any Secured Parties for any action
      taken or omitted by Collateral Agent under or in connection with this
      Agreement or any of the Collateral Documents or other Credit Documents
      except to the extent caused by Collateral Agent's gross negligence or
      willful misconduct. Collateral Agent shall be entitled to refrain from any
      act or the taking of any action (including the failure to take an action)
      in connection with this Agreement or any of the Collateral Documents or
      other Credit Documents or from the exercise of any power, discretion or
      authority vested in it hereunder or thereunder unless and until Collateral
      Agent shall have received instructions in respect thereof from Requisite
      Obligees (or such other Secured Parties as may be required to give such
      instructions under subsection 2.4(a)) and, upon receipt of such
      instructions from Requisite Obligees (or such other Secured Parties, as
      the case may be), Collateral Agent

                                       31
<PAGE>
      shall be entitled to act or (where so instructed) refrain from acting, or
      to exercise such power, discretion or authority, in accordance with such
      instructions. Without prejudice to the generality of the foregoing, (i)
      Collateral Agent shall be entitled to rely, and shall be fully protected
      in relying, upon any communication, instrument or document believed by it
      to be genuine and correct and to have been signed or sent by the proper
      person or persons, and shall be entitled to rely and shall be protected in
      relying on opinions and judgments of attorneys (who may be attorneys for
      Company and its Subsidiaries), accountants, experts and other professional
      advisors selected by it; and (ii) no Secured Party shall have any right of
      action whatsoever against an Agent as a result of Collateral Agent acting
      or (where so instructed) refraining from acting under this Agreement or
      any of the other Collateral Documents or other Credit Documents in
      accordance with the instructions of Requisite Obligees (or such other
      Secured Parties as may be required to give such instructions under
      subsection 2.4(a)).

            (c) It is the purpose of this Agreement and the Collateral Documents
      and other Credit Documents that there shall be no violation of any law of
      any jurisdiction denying or restricting the right of banking corporations
      or associations to transact business as agent or trustee in such
      jurisdiction. It is recognized that in case of litigation under this
      Agreement or any of the other Collateral Documents, and in particular in
      case of the enforcement of any of the Collateral Documents, or in case
      Collateral Agent deems that by reason of any present or future law of any
      jurisdiction it may not exercise any of the rights, powers or remedies
      granted herein or in any of the Collateral Documents or other Credit
      Documents or take any other action which may be desirable or necessary in
      connection therewith, it may be necessary that Collateral Agent appoint an
      additional individual or institution as a separate trustee, co-trustee,
      collateral agent or collateral co-agent (any such additional individual or
      institution being referred to herein individually as a "SUPPLEMENTAL
      COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL AGENTS").

            In the event that Collateral Agent appoints a Supplemental
      Collateral Agent with respect to any Collateral, (i) each and every right,
      power, privilege or duty expressed or intended by this Agreement or any of
      the other Collateral Documents to be exercised by or vested in or conveyed
      to Collateral Agent with respect to such Collateral shall be exercisable
      by and vest in such Supplemental Collateral Agent to the extent, and only
      to the extent, necessary to enable such Supplemental Collateral Agent to
      exercise such rights, powers and privileges with respect to such
      Collateral and to perform such duties with respect to such Collateral, and
      every covenant and obligation contained in the Collateral Documents and
      necessary to the exercise or performance thereof by such Supplemental
      Collateral Agent shall run to and be enforceable by either Collateral
      Agent or such Supplemental Collateral Agent, and (ii) the provisions of
      this Agreement that refer to Collateral Agent shall inure to the benefit
      of such Supplemental Collateral Agent and all references herein to
      Collateral Agent shall be deemed to be references to Collateral Agent
      and/or such Supplemental Collateral Agent, as the context may require.

            Should any instrument in writing from any Loan Party be required by
      any Supplemental Collateral Agent so appointed by Collateral Agent for
      more fully and certainly vesting in and confirming to him or it such
      rights, powers, privileges and duties,

                                       32
<PAGE>
      such Loan Party shall execute, acknowledge and deliver any and all such
      instruments promptly upon request by Collateral Agent. In case any
      Supplemental Collateral Agent, or a successor thereto, shall die, become
      incapable of acting, resign or be removed, all the rights, powers,
      privileges and duties of such Supplemental Collateral Agent, to the extent
      permitted by law, shall vest in and be exercised by Collateral Agent until
      the appointment of a new Supplemental Collateral Agent.

            (d) Each Detroit L/C Lender and New L/C Lender (other than New L/C
      Issuing Lender for so long as New L/C Issuing Lender does not have any New
      L/C Aggregate Commitments), ratably in accordance with the amount of the
      Secured Obligations of such Detroit L/C Lenders and all New L/C Lenders,
      secured by the Collateral Documents, severally agrees that it shall
      indemnify Collateral Agent and the officers, directors, employees, agents,
      attorneys, professional advisors and affiliates of Collateral Agent to the
      extent that any such Person is neither reimbursed by any Loan Party under
      any Loan Document nor reimbursed out of any Proceeds pursuant to clause
      First of subsection 4.2(a), for and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses (including counsel fees and disbursements and fees and fees and
      disbursements of any advisor engaged by Collateral Agent) or disbursements
      of any kind and nature whatsoever which may be imposed on, incurred by or
      asserted against Collateral Agent or any such Person exercising the
      powers, rights and remedies of a Collateral Agent or performing duties of
      a Collateral Agent hereunder or under the other Collateral Documents or in
      any way relating to or arising out of this Agreement, any Collateral
      Document or any other Credit Document or any other documents contemplated
      hereby or thereby or referred to therein or the transactions contemplated
      hereby or thereby or the enforcement of any of the terms of any thereof;
      provided, however, that no Detroit L/C Lender nor New L/C Lender shall be
      liable for any of the foregoing to the extent they arise from the gross
      negligence or willful misconduct of Collateral Agent as determined by a
      final judgment of a court of competent jurisdiction. If for any reason a
      New L/C Lender shall fail to make any payment to Collateral Agent when due
      hereunder, then, without in anyway limiting any right or remedy Collateral
      Agent may have against such New L/C Lender with respect thereto, such New
      L/C Lender agrees that, as provided in subsection 4.2, deductions from
      distributions otherwise due with respect to the New L/C Obligations will
      be made so that all New L/C Lenders shall share with the Detroit L/C
      Lenders, ratably in accordance with the amount (without duplication) of
      such New L/C Obligations secured by the Collateral Documents, the payment
      of the amounts due under the preceding sentence. The High Yield Trustee,
      on behalf of the holders of the High Yield Obligations, agrees, by its
      acceptance of the benefits hereof, that, as provided in subsection 4.2,
      deductions from distributions otherwise due such holders of High Yield
      Obligations will be made so that such holders of High Yield Obligations
      shall share with the Detroit L/C Lenders and New L/C Lenders, ratably in
      accordance with the amount (without duplication) of such High Yield
      Obligations secured by the Collateral Documents, the payment of the
      amounts due under the first sentence of this subsection 6.1(d). No Detroit
      L/C Agent nor New L/C Agent, in their respective capacities as Detroit L/C
      Agents and New L/C Agent, shall have any liability to any Party under this
      subsection 6.1(d).

                                       33
<PAGE>
            (e) The agency hereby created shall in no way impair or affect any
      of the rights and powers of, or impose any duties or obligations upon,
      Collateral Agent in its individual capacity as a Detroit L/C Agent,
      Detroit L/C Lender, New L/C Lender or High Yield Noteholder, as the case
      may be, hereunder or under any Credit Document. With respect to its
      participation in the Detroit L/C Obligations, New L/C Obligations and High
      Yield Obligations, Collateral Agent shall have the same rights and powers
      hereunder as any other Secured Party and may exercise the same as though
      it were not performing the duties and functions delegated to it hereunder.
      Collateral Agent and its Affiliates may accept deposits from, lend money
      to, acquire equity interests in and generally engage in any kind of
      commercial banking, investment banking, trust, financial advisory or other
      business with Company or any of its Affiliates as if it were not
      performing the duties specified herein, and may accept fees and other
      consideration from any Loan Party for services in connection with this
      Agreement and otherwise without having to account for the same to Secured
      Parties.

            (f) Collateral Agent may deem and treat the payee of any promissory
      note or other evidence of indebtedness relating to the Secured Obligations
      as the owner thereof for all purposes hereof unless and until a written
      notice of the assignment or transfer thereof, signed by such payee and in
      form satisfactory to Collateral Agent, shall have been filed with
      Collateral Agent. Any request, authority or consent of any Person who at
      the time of making such request or giving such authority or consent is the
      holder of any such note or other evidence of indebtedness shall be
      conclusive and binding on any subsequent holder, transferee or assignee of
      such note or other evidence of indebtedness and of any note or notes or
      other evidences of indebtedness issued in exchange therefor.
      Notwithstanding anything to the contrary contained in the Detroit L/C
      Facility Documents or the New L/C Facility Documents, (i) no assignment or
      transfer of any interest of any (A) Detroit L/C Lender in the Detroit L/C
      Exposure or Detroit L/Cs (including pursuant to any refinancing,
      restatement, replacement or extension of the Detroit L/C Facility
      Agreement not prohibited hereunder), and (B) no transfer of any interest
      of any New L/C Lender in the New L/C Aggregate Exposure or the New L/Cs
      (including pursuant to any refinancing, restatement, replacement or
      extension of the New L/C Facility Agreement not prohibited hereunder) and
      (ii) no appointment (A) of any successor Detroit L/C Facility Agent or
      Detroit L/C Document Agent under the Detroit L/C Facility Agreement
      (including pursuant to any refinancing, restatement, replacement or
      extension of the Detroit L/C Facility Agreement not prohibited hereunder),
      (B) any successor New L/C Agent under the New L/C Facility Agreement
      (including pursuant to any refinancing, restatement, replacement or
      extension of the New L/C Facility Agreement not prohibited hereunder); or
      (C) any successor High Yield Trustee pursuant to the High Yield Indenture
      may in any case be made unless such successor, transferee, assignee or any
      Person who became a lender pursuant to a refinancing, restatement,
      replacement or extension of the Detroit L/C Facility Agreement, New L/C
      Facility Agreement, or High Yield Indenture, as the case may be, executes
      an Assumption Agreement in the form of Annex 1 hereto shall be made unless
      the transferee executes an Assumption Agreement in the form of Annex 1
      hereto.

            (g) Except as expressly provided herein and in the Collateral
      Documents, Collateral Agent shall have no duty to take any affirmative
      steps with respect to the

                                       34
<PAGE>
      collection of amounts payable in respect of the Collateral. Collateral
      Agent shall incur no liability to any Secured Party as a result of any
      sale of any Collateral at any private sale.

            (h) Collateral Agent may resign at any time by giving at least 30
      days' notice thereof to the Parties and Collateral Agent may be removed as
      Collateral Agent at any time by Requisite Obligees. In the event of such
      resignation or removal of Collateral Agent, Requisite Obligees shall
      thereupon have the right to appoint a successor Collateral Agent. If no
      successor Collateral Agent shall have been so appointed by Requisite
      Obligees within 30 days after the resigning Collateral Agent's giving
      notice of its intention to resign, then the resigning Collateral Agent may
      appoint, on behalf of Secured Parties, a successor Collateral Agent and
      Company hereby agrees to pay to such successor Collateral Agent, in
      addition to any other amounts payable to Collateral Agent hereunder and
      under the Collateral Documents, such reasonable annual fees in such
      amounts and at such times as may be requested by such successor Collateral
      Agent.

            (i) Upon the acceptance of any appointment as Collateral Agent
      hereunder by a successor Collateral Agent, such successor Collateral Agent
      shall thereupon succeed to and become vested with all the rights, powers,
      privileges and duties of the retiring or removed Collateral Agent under
      this Agreement and under the Collateral Documents. After any retiring or
      removed Collateral Agent's resignation or removal hereunder as Collateral
      Agent, the provisions of this subsection 6.1 shall continue in effect for
      its benefit in respect of any actions taken or omitted to be taken by it
      while it was acting as Collateral Agent.

            (j) In no event shall Collateral Agent or any Secured Party be
      liable or responsible for any funds or investments of funds held by any
      Loan Party.

            (k) Upon the proposed sale or other disposition of any Collateral
      that is permitted by the Facility Agreements and not prohibited by
      subsection 2.4(a) or to which Requisite Obligees have otherwise consented
      pursuant to an Enforcement Action, for which a Loan Party desires to
      obtain a security interest release from Collateral Agent, such Loan Party
      shall deliver an Officer's Certificate to Collateral Agent, Detroit L/C
      Agent and New L/C Agent (i) stating that the Collateral or the Capital
      Stock subject to such disposition is being sold or otherwise disposed of
      in compliance with the terms hereof and of the Facility Agreements and
      (ii) specifying the Collateral or Capital Stock being sold or otherwise
      disposed of in the proposed transaction. Upon the receipt of such
      Officer's Certificate, Collateral Agent shall, at Loan Parties' (other
      than DHC's), joint and several expense, so long as Senior Agent has not
      informed Collateral Agent that it (a) has reason to believe that the facts
      stated in such Officer's Certificate are not true and correct and (b) if
      the sale or other disposition of such item of Collateral or Capital Stock
      constitutes an Asset Sale (as defined in each Facility Agreement), has not
      received evidence satisfactory to it that arrangements satisfactory to it
      have been made for delivery of the Net Asset Sale Proceeds (as defined in
      each Facility Agreement) if and as required by subsection 2.3 of the
      respective Facility Agreement, execute and deliver such releases of its
      security interest in such Collateral as may be reasonably requested by
      such Loan Party. In the event of any conflict or inconsistency between
      this subsection 6.1(k) and the terms of any other Credit Document, the
      terms of this Agreement shall prevail.

                                       35
<PAGE>
            (l) Concurrently with any Subsidiary of Company becoming Additional
      Detroit L/C Borrower or Additional New L/C Borrower, such Subsidiary shall
      execute and deliver to Collateral Agent a counterpart to this Agreement in
      the form attached hereto as Annex 2 ("COUNTERPART"). Upon delivery of any
      such Counterpart to Collateral Agent, each such Additional Detroit L/C
      Borrower or Additional New L/C Borrower shall be a Detroit L/C Borrower or
      New L/C Borrower, as applicable, and shall be as fully a party hereto as
      if such Additional Detroit L/C Borrower or Additional New L/C Borrower
      were an original signatory hereto. Each Borrower expressly agrees that its
      obligations arising hereunder shall not be affected or diminished by the
      addition or release of any other Borrower hereunder, nor by any election
      of Collateral Agent or Secured Party not to cause any Subsidiary of
      Company to become an Additional Detroit L/C Borrower or Additional New L/C
      Borrower, as applicable, hereunder. This Agreement shall be fully
      effective as to any Borrower that is or becomes a party hereto regardless
      of whether any other Person becomes or fails to become or ceases to be a
      Borrower hereunder.

                                   SECTION VII

            7.1 MISCELLANEOUS.

            (a) All notices and other communications provided for herein shall
      be in writing and may be personally served, or sent by telefacsimile or
      United States mail or courier service or electronic mail (as further
      provided in this clause (a)) and shall be deemed to have been given (i)
      when delivered in person or by courier service, (ii) upon receipt of
      telefacsimile in complete and legible form, (iii) three Business Days
      after deposit in the United States mail with postage prepaid and properly
      addressed, or (iv) in the case of electronic mail to the extent provided
      in this clause (a); provided that notices to Collateral Agent shall not be
      effective until received. For the purposes hereof, the addresses of the
      parties hereto (until notice of a change thereof is delivered as provided
      in this subsection 7.1(a)) shall be as set forth under each party's name
      on the signature pages (including acknowledgments) hereof. Notices and
      other communications to the Lenders, Detroit L/C Agents and New L/C Agent
      hereunder may be delivered or furnished by electronic communication
      (including e-mail and Internet or intranet websites) pursuant to
      procedures approved by Collateral Agent. Collateral Agent or any Borrower
      may, in its discretion, agree to accept notices and other communications
      to it hereunder by electronic communications pursuant to procedures
      approved by it, provided that approval of such procedures may be limited
      to particular notices or communications.

            (b) No amendment, modification, termination or waiver of any
      provision of this Agreement, and no consent to any departure by any Party
      therefrom, shall in any event be effective without the written concurrence
      of Requisite Detroit L/C Lenders and Requisite New L/C Lenders; provided
      that (i) no such amendment, modification, termination or waiver shall,
      without the consent of each Lender with Secured Obligations directly
      affected thereby, amend,

                                       36
<PAGE>
      modify, terminate or waive, or have the effect of amending, modifying,
      terminating or waiving, the definition of "Requisite Obligees", (ii) no
      such amendment, modification, termination or waiver shall, without the
      consent of each Lender and Agent with Secured Obligations directly
      affected thereby, amend, modify, terminate or waive, or have the effect of
      amending, modifying, terminating or waiving (A) subsection 3.1 or 4.2 or
      this subsection 7.1(a), or (B) any other provision of this Agreement in a
      manner that would impose any additional material obligations on any Lender
      or Agent or prejudice any material rights or remedies of such Lender or
      Agent, (iii) no amendment, modification, termination or waiver of any
      provision of subsection 2.1 or 2.2 or Section 5 or 6 or of any other
      provision of this Agreement which, by its terms, expressly requires the
      approval or concurrence of Collateral Agent shall be effective without the
      written concurrence of Collateral Agent; or (iv) no such amendment,
      modification, termination or waiver of this Agreement shall materially
      increase or materially adversely affect obligations of any Loan Party or
      adversely affect any rights of Loan Party under the other Credit Documents
      in each case without such loan party's prior consent; provided, further,
      that no amendment, modification, termination or waiver shall (1) reduce or
      otherwise adversely affect the right of the High Yield Trustee to request
      or direct Collateral Agent to take action on the terms set forth in
      subsection 2.1(a), or (2) subordinate in right of payment the High Yield
      Obligations, or (3) modify or otherwise alter in any manner adverse to the
      holders of the High Yield Notes the priority of such holders' Lien in the
      Collateral as provided in subsection 3.1 as in effect on the date hereof
      or the right of such holders to receive Proceeds in the amount and order
      of priority and under the circumstances described in subsections 4.1(a)
      and 4.2(a), as in effect on the date hereof. To the extent (if any) the
      provisions of this Agreement are inconsistent with the provisions set
      forth in any Facility Agreement or the High Yield Indenture in any
      particular circumstance, then the provisions set forth in this Agreement
      shall prevail to the extent necessary to eliminate or avoid such
      inconsistency in such circumstance.

            (c) Subject to the provisions of subsection 6.1(f), this Agreement
      shall be binding upon and inure to the benefit of Collateral Agent, each
      other Party and each Secured Party and their respective successors and
      assigns, including, subject to compliance with the provisions of
      subsection 6.1(f), successors to Detroit L/C Agents, New L/C Agent and any
      Lenders and High Yield Trustee under the Detroit L/C Facility Agreement,
      New L/C Facility, and High Yield Indenture, as applicable.

            (d) This Agreement may be executed in any number of counterparts,
      all of which taken together shall constitute one and the same instrument,
      and any of the parties hereto may execute this Agreement by signing any
      such counterpart.

            (e) This Agreement shall become effective on the Closing Date and
      upon the execution of this Agreement by each Loan Party, New L/C Lender
      and Detroit L/C Lender and New L/C Agent, Detroit L/C Agents, High Yield
      Trustee and Collateral Agent.

            (f) The Collateral Agent may deem and treat the Secured Parties
      executing and delivering this Agreement and the High Yield Noteholders as
      the "Secured Parties" for all purposes hereof unless and until a notice of
      the assignment or transfer of any interest held by such Party shall have
      been filed with the Collateral Agent in accordance with subsection 6.1(f).
      The Company agrees that it will advise the Collateral Agent of any
      transfer by any Creditor Party of any Detroit L/C Exposure or New L/C
      Aggregate

                                       37
<PAGE>
      Exposure held by such Creditor Party and will, from time to time upon
      request of the Collateral Agent, deliver a list to the Collateral Agent
      (which shall be distributed by the Collateral Agent to each Creditor
      Party) setting forth, for the Detroit L/C Exposure and New L/C Aggregate
      Exposure, the unpaid principal amount (or outstanding undrawn letters of
      credit with respect thereto) and holder thereof. The Collateral Agent may
      rely on such list unless, after the distribution thereof, the Collateral
      Agent is notified by a Secured Party that such information as set forth on
      such list is inaccurate.

            (g) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OF THE PARTIES
      ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
      OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
      EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY
      (I) ACCEPTS FOR ITSELF, IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
      UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS,
      (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, (III) AGREES THAT SERVICE
      OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
      REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PARTY
      HERETO AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 7.1(a)
      HEREOF, (IV) AGREES THAT SERVICE OF PROCESS AS PROVIDED IN CLAUSE (III) IS
      SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PERSON IN ANY SUCH
      PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
      BINDING SERVICE IN EVERY RESPECT, (V) AGREES THAT THE PARTIES HERETO
      RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
      TO BRING PROCEEDINGS AGAINST SUCH PARTY IN THE COURTS OF ANY OTHER
      JURISDICTION, AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION
      7.1(g) RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE
      TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
      SECTION 5-1402 OR OTHERWISE.

            (h) 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 OR ANY DEALINGS BETWEEN THEM
      RELATING TO THE SUBJECT MATTER OF THE INTERCREDITOR RELATIONSHIP THAT IS
      BEING ESTABLISHED. The scope of this waiver is intended to be
      all-encompassing of any and all disputes that may be filed in any court
      and that relate to the subject matter of this transaction, including
      contract claims, tort claims, breach of duty claims, and all other common
      law and statutory claims. Each party hereto acknowledges that this waiver
      is a material inducement to enter into a business relationship, that each
      has already relied on the waiver in entering into this Agreement, and that
      each will continue to rely on the waiver in their related future dealings.
      Each party hereto further warrants and represents that each has reviewed
      this waiver with its legal counsel, and that each knowingly and
      voluntarily waives its jury trial rights following consultation with legal
      counsel. THIS

                                       38
<PAGE>
      WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
      OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS, REPLACEMENTS, 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.

            (i) NO CLAIM MAY BE MADE BY ANY SECURED PARTY OR ANY OF THEIR
      RESPECTIVE AFFILIATES, PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES, OR
      ATTORNEYS AGAINST ANY OTHER SECURED PARTY OR THEIR RESPECTIVE AFFILIATES,
      DIRECTORS, OFFICERS, EMPLOYEES, OR ATTORNEYS FOR ANY SPECIAL, INDIRECT OR
      CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT
      (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY
      LAW) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE
      TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS AGREEMENT,
      OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND EACH
      SECURED PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH
      CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT
      KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

            (j) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
      HEREUNDER OR ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
      GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
      CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER
      LAW.

            (k) All undertakings and agreements contained in this Agreement are
      solely for the benefit of the Secured Parties and there are no other
      Persons (other than Loan Parties to the extent expressly provided herein)
      who are intended to be benefited in any way by this Agreement. Each Loan
      Party agrees that no Secured Party shall have any liability to any of the
      Loan Parties for performing its obligations and responsibilities under
      this Agreement with respect to the other Secured Parties.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       39
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

            LOAN PARTIES:

                                 COVANTA ENERGY CORPORATION

                                 By:
                                    --------------------------------------------
                                    Name:  Anthony Orlando
                                    Title:  Authorized Officer

                                 Notice Address:
                                    c/o Covanta Energy Corporation
                                    40 Lane Road
                                    Fairfield, NJ 07007
                                    Attn:  Timothy J. Simpson

                                 EACH OF THE ENTITIES NAMED ON SCHEDULE A
                                 ANNEXED HERETO, AS DETROIT L/C BORROWERS, NEW
                                 L/C BORROWERS AND HIGH YIELD GUARANTORS

                                 By:
                                    --------------------------------------------
                                    Name: Anthony Orlando
                                          Authorized Officer

                                 Notice Address:
                                    c/o Covanta Energy Corporation
                                    40 Lane Road
                                    Fairfield, NJ 07007
                                    Attn:  Timothy J. Simpson
<PAGE>
                                   Schedule A

1.    AMOR 14 Corporation
2.    Burney Mountain Power
3.    Covanta Acquisition, Inc.
4.    Covanta Alexandria/Arlington, Inc.
5.    Covanta Bessemer, Inc.
6.    Covanta Bristol, Inc.
7.    Covanta Cunningham Environmental Support, Inc.
8.    Covanta Energy Americas, Inc.
9.    Covanta Energy Construction, Inc.
10.   Covanta Energy Group, Inc.
11.   Covanta Energy International, Inc.
12.   Covanta Energy Resource Corp.
13.   Covanta Energy Services, Inc.
14.   Covanta Energy West, Inc.
15.   Covanta Engineering Services, Inc.
16.   Covanta Fairfax, Inc.
17.   Covanta Geothermal Operations Holdings, Inc.
18.   Covanta Geothermal Operations, Inc.
19.   Covanta Haverhill Properties, Inc.
20.   Covanta Haverhill, Inc.
21.   Covanta Heber Field Energy, Inc.
22.   Covanta Hennepin Energy Resource Co., Limited Partnership
23.   Covanta Hillsborough, Inc.
24.   Covanta Honolulu Resource Recovery Venture
25.   Covanta Huntsville, Inc.
26.   Covanta Hydro Energy, Inc.
27.   Covanta Hydro Operations West, Inc.
28.   Covanta Hydro Operations, Inc.
29.   Covanta Imperial Power Services, Inc.
30.   Covanta Indianapolis, Inc.
31.   Covanta Kent, Inc.
32.   Covanta Lancaster, Inc.
33.   Covanta Lee, Inc.
34.   Covanta Long Island, Inc.
35.   Covanta Marion Land Corp.
36.   Covanta Marion, Inc.
37.   Covanta Mid-Conn., Inc.
38.   Covanta Montgomery, Inc.
39.   Covanta New Martinsville Hydroelectric Corporation
40.   Covanta New Martinsville Hydro-Operations Corporation
41.   Covanta Oahu Waste Energy Recovery, Inc.
42.   Covanta Omega Lease, Inc.
43.   Covanta Onondaga Operations, Inc.
44.   Covanta Operations of Union, LLC
<PAGE>
45.   Covanta OPW Associates, Inc.
46.   Covanta OPWH, Inc.
47.   Covanta Pasco, Inc.
48.   Covanta Plant Services of New Jersey, Inc.
49.   Covanta Power Equity Corporation
50.   Covanta Power Pacific, Inc.
51.   Covanta Power Plant Operations
52.   Covanta Projects of Hawaii, Inc.
53.   Covanta Projects, Inc.
54.   Covanta RRS Holdings, Inc.
55.   Covanta Secure Services, Inc.
56.   Covanta SIGC Energy, Inc.
57.   Covanta SIGC Energy II, Inc.
58.   Covanta SIGC Geothermal Operations, Inc.
59.   Covanta Stanislaus, Inc.
60.   Covanta Systems, LLC
61.   Covanta Wallingford Associates, Inc.
62.   Covanta Waste to Energy , LLC
63.   Covanta Water Holdings, Inc.
64.   Covanta Water Systems, Inc.
65.   Covanta Water Treatment Services, Inc.
66.   DSS Environmental, Inc.
67.   ERC Energy II, Inc.
68.   ERC Energy, Inc.
69.   Haverhill Power, LLC
70.   Heber Field Energy II, Inc.
71.   Heber Loan Partners
72.   LMI, Inc.
73.   Mammoth Geothermal Company
74.   Mammoth Power Company
75.   Michigan Waste Energy, Inc.
76.   Mt. Lassen Power
77.   Pacific Geothermal Company
78.   Pacific Oroville Power, Inc.
79.   Pacific Wood Fuels Company
80.   Pacific Wood Services Company
81.   Three Mountain Operations, Inc.
82.   Three Mountain Power, LLC
<PAGE>
            MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT BENEFICIARIES:

                                 COVANTA ENERGY CORPORATION

                                 By:
                                    --------------------------------------------
                                    Name:
                                    Title:

                                 Notice Address:
                                       c/o Covanta Energy Group, Inc.
                                       40 Lane Road
                                       Fairfield, NJ 07007
                                       Attn:  Timothy J. Simpson

                                 EACH OF THE ENTITIES NAMED ON SCHEDULE B
                                 ANNEXED HERETO, AS MANAGEMENT SERVICES
                                 AND REIMBURSEMENT AGREEMENT BENEFICIARIES

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

                                 Notice Address for each Management
                                 Services Agreement Beneficiary:
                                       c/o Covanta Energy Group, Inc.
                                       40 Lane Road
                                       Fairfield, NJ 07007
                                       Attn:  Timothy J. Simpson
<PAGE>
                                   Schedule B

1. Covanta Energy Group, Inc.
2. Covanta Projects, Inc.

<PAGE>

         DANIELSON:

                                        DANIELSON HOLDING CORPORATION

                                        By: __________________________
                                        Name:  Philip G. Tinkler
                                        Title:  Chief Financial Officer

                                        Notice Address:

                                        Danielson Holding Corporation
                                        2 North Riverside Plaza
                                        Suite 600
                                        Chicago, Illinois 60606
                                        Attention: Philip G. Tinkler
                                        Telephone:  (312) 466-3842
                                        Facsimile:  (312) 470-1126

                                        with copies to:

                                        Neal, Gerber & Eisenberg LLP
                                        Two North LaSalle Street
                                        Suite 2200
                                        Chicago, Illinois 60602
                                        Attention: David S. Stone
                                        Telephone: (312) 269-8000
                                        Facsimile:  (312) 269-1747

                                        and

                                        Skadden, Arps, Slate, Meagher & Flom LLP
                                        333 W. Wacker Drive, Suite 2100
                                        Chicago, Illinois 60606
                                        Attention:  Peter C. Krupp
                                        Telephone:  (312) 407-0855
                                        Facsimile:  (312) 407-0411
<PAGE>
         AGENTS AND LENDERS:

                                        BANK OF AMERICA, N.A.,
                                        as Collateral Agent and Detroit L/C
                                        Facility Agent

                                        By:
                                             -----------------------------------
                                             Name:  Henry Y. Yu
                                             Title:  Managing Director

                                             Notice Address:
                                             Bank of America, N.A., as
                                             Administrative Agent
                                             555 So. Flower Street, 17th Floor
                                             CA9-706-17-54
                                             Los Angeles, California 90071
                                             Attention:  David Price, Vice
                                             President
                                             Voice: (213) 345-1300
                                             Fax: (415) 503-5011
                                             email:
                                             david.price@bankofamerica.com

                                        BANK OF AMERICA, N.A.,
                                        as Cash Management Bank

                                        By:
                                             -----------------------------------
                                             Name:  Henry Y. Yu
                                             Title:  Managing Director

                                             Notice Address:
<PAGE>
                                        DEUTSCHE BANK SECURITIES, INC.,
                                        as Detroit L/C Documentation Agent

                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                             Notice Address:
                                                  Attention:
                                                  Deutsche Bank Securities, Inc.
                                                  60 Wall Street
                                                  New York, NY 10005
<PAGE>
                                        BANK ONE, NA,
                                        as New L/C Agent and a New L/C Lender

                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                             Notice Address:
<PAGE>
                                        SZ INVESTMENTS, L.L.C.,
                                        as a New L/C Lender

                                        By:  ___________________________________
                                             Name:  Philip G. Tinkler
                                             Title:  Treasurer

                                        Notice Address:
                                                 Two North Riverside Plaza,
                                                 Suite 600,
                                                 Chicago, Illinois 60606
                                                 Attn: Donald J. Liebentritt
<PAGE>
                                        THIRD AVENUE TRUST, ON BEHALF OF
                                        THIRD AVENUE VALUE FUND SERIES, as a
                                        New L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        Notice Address:

                                        622 Third Avenue
                                        New York, NY 10017
                                        Attn: General Counsel
                                        Facsimile: (212) 735-0003

                                        with a copy to Pillsbury Winthrop LLP
                                        One Battery Park Plaza
                                        New York, NY 10004
                                        Attn: Richard Epling, Esq.
                                        Facsimile: (212) 858-1500
<PAGE>
                                        D.E. SHAW LAMINAR PORTFOLIOS, L.L.C.,
                                        as a New L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        Notice Address:
<PAGE>
                                        BANC OF AMERICA SECURITIES LLC,
                                        as Agent for BANK OF AMERICA, N.A., as
                                        a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        BAYERISCHE HYPO-UND VEREINSBANK AG,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        BEAR STEARNS & CO. INC.,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        DEUTSCHE BANK AG, NEW YORK BRANCH,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name: Keith Braun
                                             Title: Director

                                        By:  ___________________________________
                                             Name: Patrick Dowling
                                             Title: Vice President
<PAGE>
                                        IIB BANK LIMITED,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        KBC BANK,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        Notice Address:
                                              Attention: Rose Pagan
                                              KBC Bank NV, New York Branch
                                              125 West 55th Street
                                              New York, NY 10019
                                              Telephone No.: (212) 541-0657
                                              Fax No.: (212) 956-5581
<PAGE>
                                        LANDESBANK HESSEN-THURINGEN
                                        GIROZENTRALE,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        Notice Address:
                                        420 Fifth Avenue
                                        New York, New York 10018
                                        Attention: Structured Finance
                                        Telephone: 212-703-5303
                                        Telecopier: 212-703-5262
<PAGE>
                                        MERRILL LYNCH, PIERCE, FENNER & SMITH,
                                        INCORPORATED,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        THE BANK OF NEW YORK,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        UBS AG, STAMFORD BRANCH,
                                        as issuer of Detroit L/Cs

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        UBS LOAN FINANCE LLC,
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        U.S. BANK NATIONAL ASSOCIATION
                                        (FORMERLY KNOWN AS FIRSTAR BANK, N.A.),
                                        as a Detroit L/C Lender

                                        By:  ___________________________________
                                             Name: Alan R. Milster
                                             Title: Vice President
<PAGE>
                                        WESTLB AG (FORMERLY KNOWN
                                        AS WESTDEUTSCHE LANDESBANK
                                        GIROZENTRALE), NEW YORK
                                        BRANCH, as a Detroit L/C
                                        Lender

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        By:  ___________________________________
                                             Name:
                                             Title:
<PAGE>
                                        HIGH YIELD TRUSTEE:

                                        U.S. BANK NATIONAL ASSOCIATION, as
                                        Trustee

                                        By:  ___________________________________
                                             Name:
                                             Title:

                                        Notice Address:
<PAGE>
                                                                      Annex 1 to
                                                         Intercreditor Agreement

         ASSUMPTION AGREEMENT, dated as of __________, 200_, made by
_________________ (the "ADDITIONAL SECURED PARTY").

                              W I T N E S S E T H :

                  WHEREAS, Covanta Energy Corporation ("COVANTA") and the
Subsidiaries of Covanta listed on the signature pages thereof (together with any
other borrowers that subsequently become party thereto); certain entities listed
on the signature pages thereof as New L/C Lenders ("NEW L/C LENDERS"); certain
financial institutions listed on the signature pages thereof as Detroit L/C
Lenders ("DETROIT L/C LENDERS"); Bank of America, N.A., as administrative agent
for Detroit L/C Lenders and as collateral agent, and Deutsche Bank Securities,
Inc., as documentation agent for and Detroit L/C Lenders, Bank One, NA, as
administrative agent for the New L/C Lenders, Danielson Holding Corporation, the
companies listed on the signature pages thereof as Management Services and
Reimbursement Agreement Beneficiaries and U.S. Bank National Association, in its
capacity as trustee under the High Yield Indenture are parties to that certain
Intercreditor Agreement dated as of March 10, 2004 (as amended, supplemented or
otherwise modified from time to time, the "INTERCREDITOR AGREEMENT");

                  WHEREAS, the Loan Parties have executed the Collateral
Documents pursuant to which the Loan Parties party to each such document have
granted to the Collateral Agent, for the benefit of the Secured Parties, a
security interest in the Collateral to secure their respective obligations
arising in connection with the Credit Document;

                  WHEREAS, subsection 6.1(f) of the Intercreditor Agreement
requires the Additional Secured Party to become a party to the Intercreditor
Agreement; and

                  WHEREAS, the Additional Secured Party has agreed to execute
and deliver this Assumption Agreement in order to become a party to the
Intercreditor Agreement;

                  NOW, THEREFORE, IT IS AGREED:

                  1. Defined Terms. Unless otherwise defined herein, terms
defined in the Intercreditor Agreement and used herein shall have the meanings
given to them in the Intercreditor Agreement.

                  2. Intercreditor Agreement. By executing and delivering this
Assumption Agreement, the Additional Secured Party hereby becomes a party to the
Intercreditor Agreement as [New L/C Agent] [Detroit L/C Facility Agent] [Detroit
L/C Documentation Agent] [High Yield Trustee] [a Detroit L/C Lender]

                                     A-1-1
<PAGE>
[a New L/C Lender] and Secured Party thereunder with the same force and effect
as if originally named therein as [New L/C Agent] [Detroit L/C Facility Agent]
[Detroit L/C Documentation Agent] [High Yield Trustee] [a Detroit L/C Lender] [a
New L/C Lender] and Secured Party and, without limiting the generality of the
foregoing, hereby expressly assumes all obligations and liabilities of [New L/C
Agent] [Detroit L/C Facility Agent] [Detroit L/C Documentation Agent] [High
Yield Trustee] [a Detroit L/C Lender] [a New L/C Lender] and a Secured Party
thereunder and agrees to be bound by the terms thereof.

                  2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

                  IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.

                                                [ADDITIONAL SECURED PARTY]

                                                By:___________________________
                                                     Name:
                                                     Title:
                                      A-1-2
<PAGE>
                                                                      Annex 2 to
                                                      Intercreditor Agreement v1

                                   COUNTERPART

         COUNTERPART (this "COUNTERPART"), dated as of _______, is delivered
pursuant to subsection 6.1(l) of the Intercreditor Agreement referred to below.
The undersigned hereby agrees that this Counterpart may be attached to the
Intercreditor Agreement, dated as of March 10, 2004 (said Intercreditor
Agreement, as it may heretofore have been and as it may hereafter be further
amended, restated, supplemented or otherwise modified from time to time being
the "INTERCREDITOR AGREEMENT"; capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed therein), among Covanta Energy
Corporation ("COVANTA") and the subsidiaries of Covanta listed on the signature
pages thereof (together with any other borrowers that subsequently become party
thereto); certain entities listed on the signature pages thereof as New L/C
Lenders ("NEW L/C LENDERS"); certain financial institutions listed on the
signature pages thereof as Detroit L/C Lenders ("DETROIT L/C LENDERS"); Bank of
America, N.A., as administrative agent for Detroit L/C Lenders and as collateral
agent, and Deutsche Bank Securities, Inc., as documentation agent for Detroit
L/C Lenders, Bank One, NA, as administrative agent for the New L/C Lenders,
Danielson Holding Corporation, the companies listed on the signature pages
thereof as Management Services and Reimbursement Agreement Beneficiaries and
U.S. Bank National Association, in its capacity as trustee under the High Yield
Indenture. The undersigned by executing and delivering this Counterpart hereby
becomes a [New L/C Borrower][Detroit L/C Borrower] under the Intercreditor
Agreement in accordance with subsection 6.1(l) thereof and agrees to be bound by
all of the terms thereof.

                                              [NAME OF ADDITIONAL DETROIT L/C
                                               BORROWER/NEW L/C BORROWER]

                                              By: ___________________________
                                              Name:
                                              Title:

                                     A-2-1<PAGE>
                                                                 Exhibit 10.1(w)

                             INTERCREDITOR AGREEMENT

            This INTERCREDITOR AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof, herein
called this "AGREEMENT") is dated as of March 10, 2004 and entered into by and
among COVANTA POWER INTERNATIONAL HOLDINGS, INC., a Delaware corporation ("CPIH"
or "COMPANY"), and THE SUBSIDIARIES OF CPIH LISTED ON THE SIGNATURE PAGES HEREOF
AS REVOLVER BORROWERS (together with Company, collectively, "REVOLVER BORROWERS"
and each a "REVOLVER BORROWER") and THE SUBSIDIARIES OF CPIH LISTED ON THE
SIGNATURE PAGES HEREOF AS TERM LOAN BORROWERS (together with Company,
collectively, "TERM LOAN BORROWERS" and each a "TERM LOAN BORROWER"; the
Revolver Borrowers together with the Term Loan Borrowers, collectively,
"BORROWERS" and each a "BORROWER"); COVANTA ENERGY AMERICAS, INC., a Delaware
corporation ("CEA"); THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES
HEREOF AS REVOLVER LENDERS (each, in its capacity as a Revolver Lender, together
with any other Person (this and other capitalized terms used herein without
definition being used as defined in subsection 1.1) that becomes a party hereto
as a Revolver Lender pursuant to subsection 6.1(f), individually referred to
herein as a "REVOLVER LENDER" and collectively as "REVOLVER LENDERS"); THE
PERSONS IDENTIFIED AS TERM LOAN LENDERS ON THE SIGNATURE PAGES HEREOF (each, in
its capacity as a Term Loan Lender, together with any other Person that becomes
a party hereto as a Term Loan Lender pursuant to subsection 6.1(f) or subsection
7.1(c), individually referred to herein as a "TERM LOAN LENDER" and collectively
as "TERM LOAN LENDERS"); BANK OF AMERICA, N.A. ("BANK OF AMERICA"), as
administrative agent for Term Loan Lenders (and any successor, administrative
agent for Term Loan Lenders pursuant to the Term Loan Agreement, in such
capacity "TERM LOAN AGENT"), as Collateral Agent and as Cash Management Bank;
DEUTSCHE BANK SECURITIES, INC., as documentation agent for Term Loan Lenders
(and any successor documentation agent for the Term Loan Lenders pursuant to the
Term Loan Agreement, in such capacity "TERM LOAN DOCUMENTATION AGENT"); DEUTSCHE
BANK AG, NEW YORK BRANCH, as administrative agent for Revolver Lenders (and any
successor administrative agent for Revolver Lenders pursuant to the Revolver
Credit Agreement, in such capacity "REVOLVER AGENT"); U.S. BANK NATIONAL
ASSOCIATION, in its capacity as agent for the holders of the Prepetition
Unsecured Claims Participation Interest pursuant to the Plan of Reorganization
(in such capacity, the "PREPETITION UNSECURED CLAIMS Agent"); THE COMPANIES
LISTED ON THE SIGNATURE PAGES HEREOF AS MANAGEMENT SERVICES AND REIMBURSEMENT
AGREEMENT BENEFICIARIES (the "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT
BENEFICIARIES"); THE COMPANIES LISTED ON THE SIGNATURE PAGES HEREOF AS
MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT OBLIGORS (the "MANAGEMENT
SERVICES AND REIMBURSEMENT AGREEMENT OBLIGORS") and the other Persons who may
become parties to this Agreement from time to time pursuant to and in accordance
with subsections 6.1(f) of this Agreement; WELLS FARGO BANK, N.A., as Debenture
Disbursing Agent; and U.S. BANK NATIONAL ASSOCIATION, as Allowed Class 6
Disbursing Agent.
<PAGE>
                                 R E C I T A L S

            WHEREAS, the Borrowers have proposed, their creditors have approved,
and the Bankruptcy Court has confirmed, the Plan of Reorganization;

            WHEREAS, in connection with the Plan of Reorganization,
simultaneously herewith the Borrowers have received financing pursuant to the
Term Loan Agreement and Revolver Credit Agreement;

            WHEREAS, it is a condition precedent to (i) the obligations of
Revolver Lenders to enter into and extend credit under the Revolver Credit
Agreement, (ii) the obligations of Term Loan Lenders to enter into and extend
credit under the Term Loan Agreement, (iii) the obligations of Management
Services and Reimbursement Agreement Beneficiaries to enter into the Management
Services and Reimbursement Agreement and (iv) the effectiveness of the Plan of
Reorganization, as applicable, that each Party shall have executed and delivered
this Agreement to the Collateral Agent;

            WHEREAS, on the date hereof Loan Parties have executed and delivered
to Collateral Agent the Collateral Documents pursuant to which Loan Parties
granted a security interest in the Collateral as security for (i) in the case of
Revolver Borrowers, all Obligations of Revolver Borrowers under and in respect
of the Revolver Credit Agreement and all other Revolver Documents to which
Revolver Borrowers are a party to from time to time, in each case as described
therein, and (ii) in the case of Term Loan Borrowers, all Obligations of Term
Loan Borrowers under and in respect of the Term Loan Agreement and all other
Term Loan Documents to which Term Loan Borrowers are party to from time to time,
in each case as described therein;

            WHEREAS, Creditor Parties desire to set forth certain provisions
regarding the appointment, duties and responsibilities of Collateral Agent and
to set forth certain other provisions concerning the obligations of Loan Parties
to Creditor Parties under the agreements referred to in the foregoing recitals;
and

            WHEREAS, Creditor Parties wish to set forth their mutual intentions
as to certain matters relating to the exercise of remedies with respect to the
Collateral and payments made by or for the account of the applicable Loan
Parties under the Credit Documents as more fully set forth herein.

            NOW, THEREFORE, the parties hereto hereby agree as follows:

                                   SECTION I

            1.1 DEFINITIONS. Terms used in the Agreement have the meanings set
forth in the introduction and recitals hereto. In addition, the following terms
shall have the following meanings:

            "ADDITIONAL INTEREST LOANS" means "Additional Interest Loans" as
such term is defined in the Term Loan Agreement.

                                       2
<PAGE>
            "AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person (other than exclusively as a result of such Person's
role as a senior executive of that Person or Project manager or operator),
whether through the ownership of voting securities or by contract or otherwise.

            "AGENTS" means Collateral Agent, Term Loan Agents and Revolver
Agent.

            "AGGREGATE NET SALES PROCEEDS" means (i) Net Asset Sales Proceeds
and (ii) Proceeds received by Collateral Agent in connection with the
foreclosure or other disposition of Collateral in connection with any
Enforcement Action.

            "ALLOWED CLASS 6 CLAIMS" means "Allowed Class 6 Claims" as such term
is defined in the Approved Plan of Reorganization.

            "ALLOWED CLASS 6 CLOSING DATE" means the date on which the
Bankruptcy Court shall have entered the Allowed Class 6 Disbursing Agent
Authorization Order.

            "ALLOWED CLASS 6 DISBURSING AGENT" means U.S. Bank National
Association, in its capacity as disbursing agent for the holders of the Allowed
Class 6 Claims, and each of its successors, under the Approved Plan of
Reorganization, Confirmation Order, the Allowed Class 6 Disbursing Agent
Authorization Order, and the agency agreement relating thereto to be entered
into on or after the Closing Date.

            "ALLOWED CLASS 6 DISBURSING AGENT AUTHORIZATION ORDER" means an
order or orders of the Bankruptcy Court authorizing U.S. Bank National
Association to enter into this Agreement as a Term Loan Lender and to serve as
the Allowed Class 6 Disbursing Agent with respect to Term Loans allocable to the
Allowed Class 6 Disbursing Agent as described in the first sentence of
subsection 9.25A(i) of the Term Loan Agreement.

            "ALLOWED CLASS 6 INTEREST" means, with respect to any Non-Confirming
Holder, (i) prior to the Closing Date, an Allowed Class 6 Claim of such
Non-Confirming Holder, and (ii) on and after the Closing Date, the interest held
by such Non-Confirming Holder in any Term Loan distributed on the Allowed 6
Closing Date or the Determination Date to the Allowed Class 6 Disbursing Agent.

            "APPROVED OPERATING EXPENSES" means, as at any date of
determination, the following operating expenses of Company and its Domestic
Subsidiaries: (i) payments then due and payable by Company to Covanta pursuant
Sections 2, 3, and 4(a) of the Management Services and Reimbursement Agreement,
(ii) amounts then due and payable to DHC pursuant to Section 6 of the DHC Tax
Sharing Agreement, and (iii) fees and expenses then due and payable to senior
executive management of Company (including any success-based fees). "Approved
Operating Expenses" shall not include any Management Services and Reimbursement
Agreement Obligations or operating expenses directly related to any Project
(other than

                                       3
<PAGE>
operating expenses related to a Project and payable to Management Services and
Reimbursement Agreement Beneficiaries pursuant to the Management Services and
Reimbursement Agreement).

            "APPROVED PLAN OF REORGANIZATION" means the Plan of Reorganization
and all amendments, modifications, revisions and restatements thereof, if any,
approved by the creditors of Borrowers in requisite number and percentage, and
confirmed by the Bankruptcy Court pursuant to the Confirmation Order and
delivered to Revolver Agents and Term Loan Agents.

            "ASSET SALE" means (A) the sale by CEA of any of the Capital Stock
of Company to any Person or (B) the sale by Company or any of its Subsidiaries
to any Person of (i) any of the Capital Stock of any of Company's Subsidiaries,
(ii) substantially all of the assets of any division or line of business of
Company or any of its Subsidiaries, or (iii) any other assets (whether tangible
or intangible) of Company or any of its Subsidiaries (other than (a) inventory
sold in the ordinary course of business and (b) any such other assets to the
extent that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $250,000 or less and the aggregate
value of all such other assets since the Closing Date is equal to $1,000,000 or
less, in each case so long as not less than 90% of the consideration received
for such assets shall be cash); provided, however, that Asset Sales shall not
include (1) any sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof (provided, that sales and discounts of
not more than $2,000,000 in the aggregate in face value of accounts receivable
may be excluded from Asset Sales pursuant to this clause (1), and the sole
consideration received in connection with any such sale of accounts receivable
shall be cash), (2) any sale or exchange of specific items of equipment, so long
as the purpose of each such sale or exchange is to acquire (and results within
120 days of such sale or exchange in the acquisition of) replacement items of
equipment which are the functional equivalent of the item of equipment so sold
or exchanged (provided, that any cash received in connection with any such sale
or exchange, to the extent in excess of the amounts set forth in clause (b) of
this definition, shall be deemed cash proceeds of an Asset Sale), (3) disposals
of obsolete, worn out or surplus property in the ordinary course of business
(provided, that not less than 75% of the consideration, if any, received in
connection with any such disposal shall be cash, and any such cash received, to
the extent in excess of the amounts set forth in clause (b) of this definition,
shall be deemed cash proceeds of an Asset Sale), or (4) any discount or
compromise of notes or accounts receivable for less than the face value thereof,
to the extent Company deems necessary in order to resolve disputes that occur in
the ordinary course of business or (5) any sale of shares in the Madurai Project
Entity permitted under subsection 6.7(vi) of each Credit Agreement.

            "BANK OF AMERICA" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.

            "BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Southern District of New York and any other court properly exercising
jurisdiction over any relevant Chapter 11 Case.

                                       4
<PAGE>
            "BANKRUPTCY EVENT" means any of one or more of the following events
regardless of the reason therefor:

            (a) (i) a court having jurisdiction in the premises shall enter a
      decree or order for relief in respect of any Loan Party in an involuntary
      case under the Bankruptcy Code or any applicable bankruptcy, insolvency or
      other similar law now or hereafter in effect, which decree or order is not
      stayed; or any other similar relief shall be granted under any applicable
      federal, or state law; or (ii) an involuntary case shall be commenced
      against any Loan Party under any applicable bankruptcy, insolvency or
      other similar law now or hereafter in effect; or a decree or order of a
      court having jurisdiction in the premises for the appointment of a
      receiver, liquidator, sequestrator, trustee, custodian or other officer
      having similar powers over any Loan Party, or over all or a substantial
      part of its property, shall have been entered; or the involuntary
      appointment of an interim receiver, trustee or other custodian of any Loan
      Party for all or a substantial part of its property; or the issuance of a
      warrant of attachment, execution or similar process against any
      substantial part of the property of any Loan Party, and the continuance of
      any such event in clause (ii) for 60 days unless dismissed, bonded or
      discharged; or

            (b) (i) any Loan Party shall have an order for relief entered with
      respect to it or commence a voluntary case under the Bankruptcy Code or
      any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, or shall consent to the entry of an order for relief
      in an involuntary case, or to the conversion of an involuntary case to a
      voluntary case, under any such law, or shall consent to the appointment of
      or taking possession by a receiver, trustee or other custodian for all or
      a substantial part of its property, or shall make any assignment for the
      benefit of creditors; or

            (ii) the inability or failure of any Loan Party, or the admission by
      any Loan Party in writing of its inability, to pay its debts as such debts
      become due; or the Governing Body (or any committee thereof) of any Loan
      Party adopts any resolution or otherwise authorizes action to approve any
      of the actions referred to in clause (i) or this clause (ii); or

            (c) any order, judgment or decree shall be entered against any Loan
      Party decreeing the dissolution, winding up or split up of that Loan Party
      and such order shall remain undischarged or unstayed for a period in
      excess of 30 days.

            "BANKRUPTCY PROCEEDING" means any case or proceeding of the type
described in the definition of "Bankruptcy Event" with respect to any Loan
Party.

            "BORROWER" and "BORROWERS" shall have the meaning assigned to such
terms in the introduction to this Agreement.

            "BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York, the State of
Texas or the State of California or is a day on which banking institutions
located in any such state are authorized or required by law or other
governmental action to close.

                                       5
<PAGE>
            "CAPITAL STOCK" means the capital stock or other equity interests of
a Person.

            "CASH MANAGEMENT BANK" shall have the meaning assigned to that term
in the definition of "Cash Management System".

            "CASH MANAGEMENT OBLIGATIONS" means the obligations of Borrowers to
the Cash Management Bank arising from or relating to the Cash Management System
including any liability of Borrower on any claim arising out of or relating to
the Cash Management System, whether or not the right to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed or
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or other similar
proceeding.

            "CASH MANAGEMENT SYSTEM" means the cash management system of Company
and its Subsidiaries in the United States maintained with Bank of America (in
such capacity, "CASH MANAGEMENT BANK") as described in Schedule 3.1P annexed to
each Credit Agreement, as such Cash Management System may be modified pursuant
to subsection 5.10 of each Credit Agreement, and any other related services
provided by Cash Management Bank to Company and its Subsidiaries, including
treasury, depositary and cash management services or in connection with
automated clearing house transfers of funds.

            "CASH ON HAND" means, as of any date of determination, the aggregate
amounts on deposit in the Cash Management System in the United States as of the
close of business on the preceding Business Day.

            "CEA" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "CEA STOCK PLEDGE AGREEMENT" means the Pledge Agreement executed and
delivered by CEA on the Closing Date, substantially in the form of Exhibit VIII
annexed to the Term Loan Agreement (it being understood that such Pledge
Agreement shall contain a covenant requiring CEA to pay to Collateral Agent any
proceeds received by it from or in connection with the sale of any of the common
stock of Company to any Person), as such Pledge Agreement may thereafter be
amended, restated, supplemented or otherwise modified from time to time to the
extent permitted pursuant to subsection 2.4.

            "CLOSING DATE" means March 10, 2004.

            "COLLATERAL" means, collectively, all of the real, personal and
mixed property (including Capital Stock) and interests in property now owned or
hereafter acquired by any Loan Party in or upon which a security interest, Lien
or mortgage is granted or purported to be granted to Collateral Agent pursuant
to the Collateral Documents, including Proceeds thereof.

            "COLLATERAL AGENT" shall have the meaning assigned to that term in
subsection 2.1.

            "COLLATERAL DOCUMENTS" means the Security Agreement, any foreign
pledge agreements, Control Agreements, Mortgages (as defined in the Credit
Agreements), CEA Stock

                                       6
<PAGE>
Pledge Agreement and all other instruments or documents (pursuant to which a
Lien to secure all or any portion of the Secured Obligations is purported or
intended to be created, granted, evidenced or perfected) delivered from time to
time by any Loan Party pursuant to the Credit Agreements or any other Revolver
Document or Term Loan Document, in each case in order to grant to Collateral
Agent a Lien on any real, personal or mixed property as security for any or all
of the Secured Obligations, as such instruments and documents may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted pursuant to subsection 2.4.

            "COMPANY" shall have the meaning assigned to that term in the
introduction to this Agreement.

            "CONFIRMATION ORDER" means the Findings of Fact, Conclusions of Law
and Order under 11 U.S.C. Section 1129 and Rule 3020 of the Federal Rules of
Bankruptcy Procedure Confirming Debtors' Second Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code entered by the Bankruptcy Court on March
5, 2004 in the Chapter 11 Cases, without modification, revision or amendment.

            "CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.

            "CONTROL AGREEMENT" means an agreement, satisfactory in form and
substance to Revolver Agent and Term Loan Agent and executed by the financial
institution or securities intermediary at which a Deposit Account or a
Securities Account, as the case may be, is maintained, pursuant to which such
financial institution or securities intermediary confirms and acknowledges
Collateral Agent's security interest in such account, and agrees that the
financial institution or securities intermediary, as the case may be, will
comply with instructions originated by Collateral Agent as to disposition of
funds in such account, without further consent by Company or any Subsidiary, as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted pursuant to subsection 2.4.

            "COVANTA" means Covanta Energy Corporation, a Delaware
corporation.

            "CREDIT AGREEMENTS" means the Term Loan Agreement and Revolver
Credit Agreement.

            "CREDIT DOCUMENTS" means, collectively, (i) the Term Loan Agreement
and the other Term Loan Documents, (ii) the Revolver Credit Agreement and the
other Revolver Documents, and (iii) the Management Services and Reimbursement
Agreement, in each case as they may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted thereunder and
pursuant to subsection 2.5.

            "CREDITOR OBLIGATIONS" means, collectively, the Approved Operating
Expenses, Revolver Loan Obligations, Term Loan Obligations, Management Services
and Reimbursement Agreement Obligations, Cash Management Obligations, and
Prepetition Unsecured Claims Participation Interest.

                                       7
<PAGE>
            "CREDITOR PARTIES" means Collateral Agent, Revolver Agent, Term Loan
Agents, Revolver Lenders, Term Loan Lenders, Cash Management Bank, Prepetition
Unsecured Claims Agent and Management Services and Reimbursement Agreement
Beneficiaries.

            "DEBENTURE CLOSING DATE" means the date on which the Bankruptcy
Court shall have entered the Debenture Disbursing Agent Authorization Order.

            "DEBENTURE DISBURSING AGENT" means Wells Fargo Bank, N.A., in its
capacity as disbursing agent for the holders of the 9.25% Debentures, and each
of its successors, under the Approved Plan of Reorganization, the Confirmation
Order, the Debenture Disbursing Agent Authorization Order and the disbursing
agreement relating thereto to be entered into on or after the Closing Date.

            "DEBENTURE DISBURSING AGENT AUTHORIZATION ORDER" means an order or
orders of the Bankruptcy Court authorizing Wells Fargo Bank, N.A. to enter into
this Agreement as a Term Loan Lender and to serve as the Debenture Disbursing
Agent with respect to Term Loans allocable to the Debenture Disbursing Agent as
described in the first sentence of subsection 9.25A(i) of the Term Loan
Agreement.

            "DEBENTURE INTEREST" means, with respect to any Non-Confirming
Holder, (i) prior to the Debenture Closing Date, the claim in respect of the
9.25% Debentures held by such Non-Confirming Holder, and (ii) on and after the
Debenture Closing Date, the interest held by such Non-Confirming Holder in any
Term Loan distributed on the Debenture Closing Date or the Determination Date to
the Debenture Disbursing Agent; provided, however, that any Debenture Interest
shall cease to be a Debenture Interest at such time that the Non-Confirming
Holder with respect thereto shall become a Lender in accordance with subsection
9.25 of the Term Loan Agreement.

            "DETERMINATION DATE" means the "Determination Date" as defined in
the Approved Plan of Reorganization.

            "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or similar
account maintained with a Person engaged in the business of banking, including a
savings bank, savings and loan association, credit union or trust company.

            "DHC" means Danielson Holding Corporation, a Delaware corporation.

            "DHC TAX SHARING AGREEMENT" means the tax sharing agreement entered
into by DHC, Company and Covanta on the Closing Date, as such agreement may be
amended, restated supplemented or otherwise modified from time to time to the
extent permitted thereunder and pursuant to subsection 2.5(a).

            "DISBURSING AGENT" means either Debenture Disbursing Agent or
Allowed Class 6 Disbursing Agent, and "DISBURSING AGENTS" means each of them.

            "DISTRIBUTION" means, with respect to any Creditor Obligation, (a)
any payment or distribution by Covanta or any of its Subsidiaries of cash,
securities or other assets and properties of any kind whatsoever, real or
personal, tangible or intangible, or mixed, whether

                                       8
<PAGE>
now owned or existing or hereafter acquired or arising and wheresoever located,
by set-off or otherwise, on account of such Creditor Obligation, (b) any
redemption, purchase or other acquisition of such Creditor Obligation by Covanta
or any of its Subsidiaries or (c) the granting of any Lien to or for the benefit
of the holders of such Creditor Obligation in or upon any or all assets and
properties of any kind whatsoever, real or personal, tangible or intangible, or
mixed, whether now owned or existing or hereafter acquired or arising and
wheresoever located of Covanta or any of its Subsidiaries.

            "DOMESTIC SUBSIDIARY" means any Subsidiary of any Borrower that is
incorporated or organized under the laws of the United States, any state thereof
or in the District of Columbia.

            "ENFORCEMENT ACTION" shall mean the exercise by any Secured Party of
any of the enforcement rights and remedies under, and subject to the provisions
of, the Collateral Documents at any time on or after an Event of Default,
including any or all of the following: any motion to vacate any stay on
enforcement of the Liens on the Collateral, solicitation of bids from third
parties to conduct the liquidation of Collateral, the engagement or retention of
third parties for the purposes of marketing, promoting or selling all or any
Collateral, the commencement of any action to foreclose on the Liens on any of
the Collateral, notification of account debtors to make payments to any Secured
Party or its agents, any action to take possession of any Collateral or
otherwise in connection with the preservation or protection of any of the
Collateral, its value or any rights or remedies therein or otherwise or as may
be deemed necessary or appropriate to enhance the likelihood or maximize the
repayment of the Secured Obligations.

            "EVENT OF DEFAULT" means a Revolver Event of Default and/or a Term
Loan Event of Default.

            "EXISTING IPP INTERNATIONAL PROJECT GUARANTIES" means, collectively,
(i) the existing guaranty by Covanta Energy Group of the obligations of certain
Subsidiaries of Company under certain agreements relating to the Haripur
Project, the Samalpatti Project and the Trezzo Project, (ii) the existing
guaranty by Covanta Projects, Inc. of the obligations of certain Subsidiaries of
Company under certain agreements relating to the Quezon Project, and (iii) the
existing guaranty by Covanta of the obligations certain Subsidiaries of Company
under certain agreements relating to the Balaji/Madurai Project and the LICA
Project, as each such guaranty may be amended, restated, supplemented or
otherwise modified to the extent permitted pursuant to subsection 2.5(a).

            "GOVERNING BODY" means the board of directors or other body having
the power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.

            "GROSS RECEIPTS" means, in respect of any Asset Sale, the total cash
payments (including any cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale minus any repayment of debt related to
the assets sold in such Asset Sale which is made in connection with such Asset
Sale and is not prohibited under the Revolver Credit Agreement and Term Loan
Agreement.

                                       9
<PAGE>
            "JUNIOR CREDITOR" shall have the meaning assigned to that term in
subsection 4.2(e).

            "LENDERS" means Term Loan Lenders and Revolver Lenders.

            "LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.

            "LOAN PARTIES" means Company, the other Borrowers, CEA, and
Management Services and Reimbursement Agreement Obligors.

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT" means the
management services and reimbursement agreement entered into by Company and
Covanta and certain of their respective Subsidiaries on the Closing Date, in
form and substance satisfactory to Revolver Agent and Term Loan Agents as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time to the extent permitted thereunder and pursuant to subsection 2.5(a).

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT Beneficiaries"
shall have the meaning assigned to that term in the introduction to this
Agreement.

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT OBLIGATIONS" means,
as at any date of determination, the obligations of Management Services and
Reimbursement Agreement Obligors then due and payable under Section 4(b) of the
Management Services and Reimbursement Agreement; provided, however, that no such
obligations shall be included in "Management Services and Reimbursement
Agreement Obligations" if such obligation arises as a result of (i) any action
or inaction by Covanta or any of its Subsidiaries (other than Company and its
Subsidiaries), not triggered by a failure to perform by Company or any of its
Subsidiaries or (ii) the failure of any Management Services and Reimbursement
Agreement Beneficiary to renew, replace or extend, or cause the renewal,
replacement or extension of, a Letter of Credit (as defined in the Management
Services and Reimbursement Agreement); provided, however that the letter of
credit dated February 28, 1999 issued by Citibank, N.A. to secure an obligation
of NEPC Consortium Ltd. under certain Haripur project documents, and any
renewal, replacement or extension of such letter of credit, shall in each case
be excluded under this clause (ii) to the extent such letter of credit is not
renewed, replaced or extended as a result of (x) the refusal of the issuer
thereof (or any other proposed issuer acceptable to the beneficiary thereof) to
so renew, replace or extend such letter of credit on an unsecured basis or (y)
the failure of any other account party thereunder to satisfy any condition
precedent imposed by the issuer thereof (or any other proposed issuer acceptable
to the beneficiary thereof) to such renewal, replacement or extension.

            "MANAGEMENT SERVICES AND REIMBURSEMENT AGREEMENT OBLIGORS" shall
have the meaning assigned to that term in the introduction to this Agreement.

            "MANDATORY PAYMENTS" means any amount described in subsections
2.4A(iii)(a)-(e) of the Revolver Credit Agreement and subsections
2.4A(ii)(a)-(e) of

                                       10
<PAGE>
the Term Loan Agreement to be applied as a prepayment of the Term Loans and/or
the Revolver Loans and/or a permanent reduction of the Revolver Loan
Commitments.

            "NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
Gross Receipts received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable prior to the earlier of (a) the date
which is eighteen months from the date of such Asset Sale and (b) the Maturity
Date as a result of any gain recognized in connection with such Asset Sale, (ii)
additional Taxes actually payable upon the closing of such Asset Sale (including
any transfer Taxes or Taxes on gross receipts), (iii) actual, reasonable and
documented out-of-pocket fees and expenses (including reasonable legal fees,
reasonable fees to advisors and severance costs that are due (pursuant to a
Contractual Obligation of Company or any of its Subsidiaries in effect prior to
such Asset Sale or pursuant to applicable law) and payable immediately upon
consummation of such Asset Sale to employees of Company and its Subsidiaries
that are terminated as a result thereof) paid to Persons other than Company and
its Subsidiaries and their respective Affiliates in connection with such Asset
Sale (including fees necessary to obtain any required consents of such Persons
to such Asset Sale), and (iv) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on any indebtedness (other than
Revolver Loans and Term Loans) that is (x) secured by a valid, enforceable and
perfected Lien on the stock or assets in question that is permitted under
subsection 6.2 of each Credit Agreement and (y) required to be repaid under the
terms of such indebtedness as a result of such Asset Sale (without duplication
of amounts deducted in calculating the Gross Receipts from such Asset Sale) and
is permitted to be paid under the Credit Documents.

            "NET INSURANCE/CONDEMNATION PROCEEDS" means any cash payments or
Proceeds received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of (a)
income taxes reasonably estimated to be actually payable prior to the earlier of
(1) the date which is eighteen months from the date of such receipt and (2)
March 10, 2007 as a result of the receipt of such payments of proceeds and (b)
any actual, reasonable and documented out-of-pocket fees and expenses (including
reasonable legal fees, reasonable fees to advisors and severance costs that are
due (pursuant to a Contractual Obligation, or written employment policy
applicable to terminated employees generally, of Company or any of its
Subsidiaries in effect prior to the event causing or relating to the payment
referred to in clause (i) or (ii) hereof or pursuant to applicable law) and
payable on or prior to the receipt of such payment or proceeds to employees of
Company and its Subsidiaries that have been terminated as a result of the
relevant loss, taking or sale) paid to Persons other than Company and its
Subsidiaries and their respective Affiliates in connection with the relevant
loss, taking or sale or the adjustment or settlement of any claims of Company or
such Subsidiary in respect thereof; provided, however, that Net
Insurance/Condemnation Proceeds shall be reduced in an amount equal to the
amount of proceeds Subsidiaries of Company are legally bound or required,
pursuant to Contractual Obligations in effect on the Closing Date, or which were
entered into after the Closing Date with respect to the financing or acquisition
of a Project, to use for purposes other than application pursuant to subsection
4.1(b).

                                       11
<PAGE>
            "9.25% DEBENTURES" means the "9.25% Debenture Claims" as such term
is defined in the Approved Plan of Reorganization.

            "NON-CONFIRMING HOLDER" means, on any date of determination, a
Person that holds on such date a Debenture Interest or an Allowed Class 6
Interest in Term Loans initially allocable in accordance with subsection
9.25A(i) of the Term Loan Agreement to the Debenture Disbursing Agent or the
Allowed Class 6 Disbursing Agent, respectively.

            "OBLIGATIONS" means all obligations of every nature of Loan Parties
under the Credit Documents, including any liability of such Loan Party on any
claim arising out of or relating to the Credit Documents, whether or not the
right to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed or contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any bankruptcy, insolvency, reorganization or
other similar proceeding. Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Credit Documents include (a) the
obligation to pay principal, interest (including all interest which accrues
after the commencement of any case or proceeding in bankruptcy after the
insolvency of, or for the reorganization of, any Loan Party, whether or not
allowed in such case or proceeding), charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Borrower and any
other Loan Party under any Credit Document and (b) the obligation to reimburse
any amount in respect of any of the foregoing that any Agent or any Lender, in
its sole discretion, may elect to pay or advance on behalf of such Borrower or
other Loan Party; provided, that nothing in this definition shall be construed
as creating any obligations of DHC under the Credit Documents that are not
expressly set forth in such Credit Documents.

            "OFFICER'S CERTIFICATE" means, as applied to any Person that is a
corporation, partnership, trust or limited liability company, a certificate
executed on behalf of such Person by one or more Officers of such Person or one
or more Officers of a general partner or a managing member if such general
partner or managing member is a corporation, partnership, trust or limited
liability company.

            "PAYMENT IN FULL" and "PAID IN FULL" means (i) as to the Revolver
Loan Obligations, the payment and satisfaction in full in immediately available
funds of all of such Revolver Loan Obligations and, other than for purposes of
subsection 4.2(a), the termination of all Revolver Loan Commitments, (ii) as to
the Term Loan Obligations, the payment and satisfaction in full in immediately
available funds of all of such Term Loan Obligations and the termination of the
Term Loan Commitments, (iii) as to the Approved Operating Expenses, the payment
in full in immediately available funds of all such Approved Operating Expenses
to the extent then due and payable, (iv) as to the Management Services and
Reimbursement Agreement Obligations, the payment and satisfaction in full in
immediately available funds of all of such Management Services and Reimbursement
Agreement Obligations to the extent then due and payable pursuant to the
Management Services and Reimbursement Agreement, (v) as to any amounts payable
hereunder with respect to the Prepetition Unsecured Claims Participation
Interest, the payment to Prepetition Unsecured Claims Agent of 5% of the
aggregate cumulative amount of Aggregate Net Sales Proceeds not to exceed
$4,000,000 and (vi) as to any other Secured Obligations, the payment and
satisfaction in full in immediately available funds of all

                                       12
<PAGE>
such Secured Obligations then outstanding. If after receipt of any payment of,
or Proceeds of Collateral applied to the payment of, any of the Creditor
Obligations, Collateral Agent or any other Creditor Party, as applicable, is
required to surrender or return such payment or Proceeds to any Person for any
reason, then the Creditor Obligations intended to be satisfied by such payment
or Proceeds shall be reinstated and continue and this Agreement shall continue
in full force and effect as if such payment or Proceeds had not been received by
Collateral Agent or such other Creditor Party, as the case may be.

            "PARTIES" means the Loan Parties, Secured Parties and Creditor
Parties from time to time party to this Agreement.

            "PERMITTED ENCUMBRANCES" shall have the meaning assigned to that
term in both the Term Loan Agreement and Revolver Credit Agreement as in effect
on the date hereof.

            "PERSON" or "PERSONS" means and include natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint Ventures
(as defined in the Credit Agreements), associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments (whether federal, state or local, domestic
or foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.

            "PETITION DATE" means April 1, 2002.

            "PLAN OF REORGANIZATION" means the Debtors' Second Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code as filed with the
Bankruptcy Court on January 14, 2004 (and as revised and amended through March
2, 2004), together with the Reorganization Plan Supplement to Debtors' Second
Joint Plan of Reorganization filed with the Bankruptcy Court on February 18,
2004 in connection therewith.

            "PREPETITION UNSECURED CLAIMS" means "Parent and Holding Company
Unsecured Claims" that are "Allowed," as such terms are defined in the Approved
Plan of Reorganization.

            "PREPETITION UNSECURED CLAIMS AGENT" shall have the meaning assigned
to that term in the introduction to this Agreement.

            "PREPETITION UNSECURED CLAIMS PARTICIPATION INTEREST" means the
right of holders of Allowed Class 6 Claims to receive 5% of the amount of
Aggregate Net Sale Proceeds up to but not exceeding the total sum of $4,000,000
in the aggregate.

            "PROCEEDS" means "proceeds", as such term is defined in the UCC and,
in any event, shall include (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any of the Loan Parties or Collateral
Agent from time to time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to any of the Loan
Parties from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral, by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority),

                                       13
<PAGE>
and (iii) any and all other consideration (in any form whatsoever) or other
amounts from time to time paid or payable under or in connection with any of the
Collateral upon disposition or otherwise.

            "PROJECT" means any waste-to-energy facility, electrical generation
plant, cogeneration plant, water treatment facility or other facility for the
generation of electricity or engaged in another line of business in which
Company and its Subsidiaries are permitted to be engaged hereunder for which a
Subsidiary or Subsidiaries of Company was, is or will be (as the case may be) an
owner, operator, manager or builder, and shall also mean any two or more of such
plants or facilities in which an interest has been acquired in a single
transaction, so long as such interest constitutes an existing Investment on the
Closing Date permitted under this Agreement; provided, however, that a Project
shall cease to be a Project of Company and its Subsidiaries at such time that
Company or any of its Subsidiaries ceases to have any existing or future rights
or obligations (whether direct or indirect, contingent or matured) associated
therewith.

            "REQUISITE OBLIGEES" means (i) until Payment in Full of all Revolver
Loan Obligations, Requisite Revolver Lenders; and (ii) from and after Payment in
Full of all Revolver Loan Obligations, Requisite Term Loan Lenders.

            "REQUISITE REVOLVER LENDERS" means Lenders having or holding more
than 50% of the aggregate Revolver Loan Exposure of all Revolver Lenders;
provided, however, that prior to the Closing Date, for purposes of this
definition the Revolver Loan Exposure of each Revolver Loan Lender shall equal
the original Revolver Loan Commitment of such Revolver Loan Lender on the
Closing Date.

            "REQUISITE TERM LOAN LENDERS" means Lenders having or holding more
than 50% of the aggregate Term Loan Exposure of all Term Loan Lenders; provided,
however, that prior to the Closing Date, for purposes of this definition the
Term Loan Exposure of each Term Loan Lender shall equal the original Term Loan
Commitment of such Term Loan Lender on the Closing Date.

            "REVOLVER AGENT" shall have the meaning assigned to that term in the
introduction hereto.

            "REVOLVER BORROWER" shall have the meaning assigned to that term in
the introduction hereto.

            "REVOLVER CREDIT AGREEMENT" means that (i) certain credit agreement
dated as of the date hereof by and among Company and the other Revolver
Borrowers, Revolver Lenders and Revolver Agent, (ii) any credit agreement
entered into by Revolver Borrowers to refinance, replace, renew or extend, in
whole or in party, the credit agreement referenced in clause (i) and the
indebtedness issued thereunder to the extent permitted pursuant to the Term Loan
Agreement, in the case of clause (i) or (ii), as such credit agreement may be
amended, restated, supplemented or otherwise modified from time to time to the
extent permitted thereunder and pursuant to subsection 2.5(b).

                                       14
<PAGE>
            "REVOLVER DOCUMENTS" means the "Loan Documents" as such term is
defined in the Revolver Credit Agreement (or any comparable term with respect to
any replacement Revolver Credit Agreement not prohibited hereunder).

            "REVOLVER EVENT OF DEFAULT" means an "Event of Default" under and as
defined in the Revolver Credit Agreement.

            "REVOLVER LENDER" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "REVOLVER LOAN" or "REVOLVER LOANS" means the loans made (or deemed
made) by Revolver Lenders to Revolver Borrowers under the Revolver Credit
Agreement.

            "REVOLVER LOAN COMMITMENT" means, as at any date of determination,
the commitment of a Revolver Lender to make Revolver Loans to Revolver Borrowers
pursuant to the Revolver Credit Agreement.

            "REVOLVER LOAN EXPOSURE" with respect to any Revolver Lender, means,
as of any date of determination (i) prior to the termination of the Revolver
Loan Commitments, that Revolver Lender's Revolver Loan Commitment, and (ii)
after the termination of the Revolver Loan Commitments, the aggregate
outstanding principal amount of the Revolver Loans of that Revolver Lender.

            "REVOLVER LOAN OBLIGATIONS" means any and all Obligations to the
extent arising under or with respect to the Revolver Loan Commitments or the
Revolver Loans, including principal and interest on any Revolver Loans and the
fees and other amounts accruing or otherwise owed with respect to the Revolver
Loan Exposure and all other Obligations of a Loan Party with respect to Revolver
Loans; provided, however, that Obligations of any Loan Party for interest or
commitment fees with respect to any Revolver Loan Document and Revolver Loan
Commitments that accrue or may be incurred under any Revolver Loan Document
after the commencement by or against any Loan Party of a Bankruptcy Proceeding
shall be included in the Revolver Loan Obligations solely to the extent
recoverable from such Loan Party or its estate in such proceeding.

            "SECURED PARTIES" means Term Loan Lenders, Revolver Lenders, Term
Loan Agents, Revolver Agent, Cash Management Bank and Collateral Agent.

            "SECURED OBLIGATIONS" means all Obligations of Loan Parties from
time to time under the Credit Agreements and the other Revolver Documents and
Term Loan Documents and all obligations owing to Collateral Agent hereunder or
under each Collateral Document, and all Cash Management Obligations.

            "SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated, certificated or uncertificated, or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or

                                       15
<PAGE>
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

            "SECURITIES ACCOUNT" means an account to which a financial asset is
or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the financial asset.

            "SECURITY AGREEMENT" means the Security Agreement executed and
delivered by Borrowers on the Closing Date pursuant to the Revolver Credit
Agreement and Term Loan Agreement, as such agreement may from time to time
hereafter be amended, restated, supplemented or otherwise modified to the extent
permitted pursuant to subsection 2.4.

            "SENIOR AGENT" means, (i) until Payment in Full of all Revolver Loan
Obligations, Revolver Loan Agent and (ii) from and after Payment in Full of all
Revolver Loan Obligations and until Payment in Full of all Term Loan
Obligations, Term Loan Agent.

            "SENIOR CREDITOR" shall have the meaning assigned to that term in
subsection 4.2(e).

            "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, trust, limited liability company, association, joint venture or
other business entity of which more than 50% of the total voting power of shares
of stock or other ownership interests entitled (without regard to the occurrence
of any contingency) to vote in the election of the members of the Governing Body
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof.

            "SUPERPRIORITY TERM LOAN OBLIGATIONS" means all Term Loan
Obligations in respect of accrued and unpaid interest on the Term Loans
(including, for the avoidance of doubt, accrued and unpaid interest on
Additional Interest Loans; it being understood and agreed that, to the extent
interest on the Term Loans is paid through the issuance of Additional Interest
Loans pursuant to subsection 2.2B(ii) of the Term Loan Agreement, such interest
shall be deemed paid for purposes of this definition).

            "SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to that
term in subsection 6.1(c).

            "TAX" or "TAXES" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed, including interest, penalties, additions to tax and any similar
liabilities with respect thereto.

            "TERM LOAN" or "TERM LOANS" means the loans made (or deemed made) by
Term Loan Lenders to Term Loan Borrowers pursuant to the Term Loan Agreement,
including any Additional Interest Loans (as defined in the Term Loan Agreement)
and loans deemed made after the Closing Date pursuant to subsection 2.1 of the
Term Loan Agreement.

                                       16
<PAGE>
            "TERM LOAN AGENT" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "TERM LOAN AGENTS" means Term Loan Agent and Term Loan
Documentation Agent.

            "TERM LOAN AGREEMENT" means that (i) certain credit agreement dated
as of the date hereof by and among Company and the other Term Loan Borrowers,
Term Loan Lenders and the Term Loan Agents, (ii) any credit agreement entered
into by the Term Loan Borrowers to refinance, replace, renew or extend, in whole
or in part, the credit agreement referenced in clause (i) and the indebtedness
thereunder to the extent permitted pursuant to the Revolver Credit Agreement, in
the case of clause (i) or (ii), as such credit agreement may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted thereunder and pursuant to subsection 2.5(c).

            "TERM LOAN BORROWERS" shall have the meaning assigned to that term
in the introduction to this Agreement.

            "TERM LOAN COMMITMENT" means, as at any date of determination, the
commitment of a Term Loan Lender to make Term Loans to Term Loan Borrowers
pursuant to the Term Loan Agreement.

            "TERM LOAN DOCUMENTATION AGENT" shall have the meaning assigned to
that term in the introduction to this Agreement.

            "TERM LOAN DOCUMENTS" means the "Loan Documents" as such term is
defined in the Term Loan Agreement (or any comparable term with respect to any
replacement Term Loan Agreement not prohibited hereunder).

            "TERM LOAN EVENT OF DEFAULT" means an "Event of Default" under and
as defined in the Term Loan Agreement.

            "TERM LOAN EXPOSURE" with respect to any Term Loan Lender, means, as
of any date of determination the aggregate outstanding principal amount of the
Term Loans of that Term Loan Lender.

            "TERM LOAN LENDER" shall have the meaning assigned to that term in
the introduction to this Agreement.

            "TERM LOAN OBLIGATIONS" means any and all Obligations to the extent
arising under or with respect to the Term Loan Commitments or the Term Loans,
including principal and interest on any Terms Loans and fees and other amounts
accruing or otherwise owed with respect to the Term Loan Exposure; provided,
however, that Obligations of any Loan Party for interest with respect to any
Term Loan Document and Term Loan Commitments that accrue or may be incurred
under any Term Loan Document after the commencement by or against any Loan Party
of a Bankruptcy Proceeding shall be included in the Term Loan Obligations solely
to the extent recoverable from such Loan Party or its estate in such proceeding.

                                       17
<PAGE>
            "THIRD-PARTY GUARANTY" shall have the meaning assigned to that term
in subsection 4.2(h).

            "UCC" means the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, the priority of any Secured
Party's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such priority and
for purposes of definitions related to such provisions.

            "UNITED STATES" means the United States of America.

            1.2 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.

            (a) Any of the terms defined herein may, unless the context
      otherwise requires, be used in the singular or the plural, depending on
      the reference.

            (b) References to "Sections" and "subsections" shall be to Sections
      and subsections, respectively, of this Agreement unless otherwise
      specifically provided.

            (c) The use of the word "include" or "including", when following any
      general statement, term or matter, shall not be construed to limit such
      statement, term or matter to the specific items or matters set forth
      immediately following such word or to similar items or matters, whether or
      not nonlimiting language (such as "without limitation" or "but not limited
      to" or words of similar import) is used with reference thereto, but rather
      shall be deemed to refer to all other items or matters that fall within
      the broadest possible scope of such general statement, term or matter.

            (d) In the event of any refinancing, replacement or extension of any
      Credit Agreement, references in this Agreement to sections or subsections
      of such Credit Agreement shall refer to the functionally equivalent
      sections or subsections in such refinanced, replaced or extended agreement
      as the context requires.

                                   SECTION II

            2.1 APPOINTMENT AS COLLATERAL AGENT. Each Secured Party (i) appoints
Bank of America to serve as collateral agent and representative of each such
Secured Party (to the extent applicable) under this Agreement and each of the
Collateral Documents (in such capacity, together with its successors in such
capacity, the "COLLATERAL AGENT") and (ii) irrevocably authorizes Collateral
Agent to act as agent for the Secured Parties for the purpose of executing and
delivering, on behalf of all such Secured Parties, the Collateral Documents and,
subject to the provisions of this Agreement, for the purpose of exercising such
powers, rights and remedies hereunder and under the other Collateral Documents
as are specifically delegated or granted to Collateral Agent by the terms hereof
and thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. For the avoidance of doubt, it is understood and agreed that
the Collateral Agent is the "Secured Party" or, as the case may be, the
"Mortgagee" referred to in the Collateral Documents. Each Secured Party and
Collateral Agent hereby appoints each other

                                       18
<PAGE>
Secured Party as agent for the purpose of perfecting Collateral Agent's security
interest in Collateral that, in accordance with the UCC, can be perfected by
possession or control.

            2.2 DECISIONS RELATING TO ENFORCEMENT ACTIONS AND OTHER MATTERS
VESTED IN REQUISITE OBLIGEES.

            (a) Collateral Agent agrees to take such Enforcement Actions and all
      such actions with respect to Collateral which is perfected only by control
      of such Collateral, in each case as may be directed by Requisite Obligees
      (it being understood and agreed that if, at any time Collateral Agent
      determines that the requisite percentages constituting Requisite Obligees
      shall have been obtained, the Collateral Agent may and shall be fully
      authorized, as of such time and without the need for further direction
      from any Secured Party, to take or not take such action as the Requisite
      Obligees direct); provided, however, that notwithstanding anything in this
      Agreement to the contrary, Collateral Agent shall not be required to take
      any action that is in its judgment contrary to law or to the terms of this
      Agreement or any or all of the Collateral Documents or which would in its
      opinion subject it or any of its officers, employees or directors to
      liability, and Collateral Agent shall not be required to take any action
      under this Agreement or any or all of the Collateral Documents unless and
      until Collateral Agent shall be indemnified to its satisfaction by the
      relevant Parties against any and all losses, costs, expenses or
      liabilities in connection therewith.

            (b) Each Secured Party agrees that Collateral Agent may act as
      Requisite Obligees may request (regardless of whether any individual Party
      or any other Secured Party agrees, disagrees or abstains with respect to
      such request), that Collateral Agent shall have no liability for acting in
      accordance with such request (provided such action does not conflict with
      the express terms of this Agreement) and that no Secured Party shall have
      any liability to any other Party for any such request, except, in each
      case, liability arising from the gross negligence or willful misconduct of
      such Person. Collateral Agent shall give prompt notice to all Secured
      Parties of actions taken pursuant to the instructions of Requisite
      Obligees; provided, however, that the failure to give any such notice
      shall not impair the right of Collateral Agent to take any such action or
      the validity or enforceability under this Agreement and the applicable
      Collateral Documents of the action so taken.

            (c) Collateral Agent may at any time request directions from the
      Requisite Obligees with respect to the Collateral Documents as to any
      course of action or other matter relating hereto or to the Collateral
      Documents. Except as otherwise provided in the Collateral Documents,
      directions given by Requisite Obligees to Collateral Agent with respect to
      the Collateral and Collateral Documents shall be binding on all Secured
      Parties for all purposes (provided such directions do not conflict with
      the express terms of this Agreement).

            (d) Each Secured Party, by accepting the benefits hereof and of the
      Collateral Documents, agrees not to take any Enforcement Action
      whatsoever, in each case except through Collateral Agent in accordance
      with this Agreement.

                                       19
<PAGE>
            2.3 NET INSURANCE/CONDEMNATION PROCEEDS.

            (a) Unless prohibited by contractual or other legal requirement, all
      policies of insurance required to be maintained under any Credit Document
      shall (a) name Collateral Agent, for the benefit of Secured Parties, as an
      additional insured thereunder as its interests may appear and (b) in the
      case of each business interruption and casualty insurance policy, contain
      a loss payable clause or endorsement, satisfactory in form and substance
      to Revolver Loan Agent and Term Loan Agent, that names Collateral Agent
      for the benefit of Secured Parties as the loss payee thereunder for any
      covered loss in excess of $1,000,000 and provides for at least 30 days
      prior written notice to Collateral Agent of any modification or
      cancellation of such policy. As soon as practicable after the Closing
      Date, Company shall deliver to Agents, a certificate from Borrowers'
      insurance broker(s) or other evidence satisfactory to it that all
      insurance required to be maintained pursuant to this subsection 2.3 is in
      full force and effect and that Collateral Agent on behalf of Secured
      Parties has been named as additional insured and/or loss payee thereunder
      to the extent required under this subsection 2.3.

            (b) Upon receipt by Collateral Agent of any Net
      Insurance/Condemnation Proceeds as loss payee, (a) if and to the extent
      Company would have been required to apply such Net Insurance/Condemnation
      Proceeds (if it had received them directly) pursuant to the Revolver
      Credit Agreement (or, if the Revolver Loan Obligations have been Paid in
      Full, the Term Loan Agreement), Collateral Agent shall, and Company hereby
      authorizes Collateral Agent to, apply such Net Insurance/Condemnation
      Proceeds as provided in subsection 4.1(b) or, to the extent applicable,
      subsection 4.2, and (b) to the extent the foregoing clause (a) does not
      apply, Collateral Agent shall deliver such Net Insurance/Condemnation
      Proceeds to Company, and (1) Company and its Subsidiaries may retain and
      apply any portion thereof that is business interruption insurance proceeds
      for working capital purposes or any other purposes not prohibited under
      the Credit Agreements and (2) Company shall, or shall cause one or more of
      its Subsidiaries to, promptly apply such Net Insurance/Condemnation
      Proceeds that are not business interruption insurance proceeds to the
      costs of repairing, restoring, or replacing the assets in respect of which
      such Net Insurance/Condemnation Proceeds were received; provided, however
      that if at any time Senior Agent reasonably determines (A) that Company or
      such Subsidiary is not proceeding diligently with such repair, restoration
      or replacement or that such repair, restoration or replacement cannot be
      completed within 180 days after the receipt by Collateral Agent of such
      Net Insurance/Condemnation Proceeds, Senior Agent may direct Collateral
      Agent, and Company hereby authorizes Senior Agent and Collateral Agent to
      apply such Net Insurance/Condemnation Proceeds as provided in subsection
      4.1(b).

            2.4 AMENDMENTS, MODIFICATIONS, WAIVERS AND RELEASES. Notwithstanding
anything in the Credit Agreements, Collateral Documents and other Credit
Documents to the contrary (but subject to subsection 7.1(c)),

            (a) except in connection with any Enforcement Action, the release of
      the Lien granted in favor of Collateral Agent on all or substantially all
      of the Collateral under the Collateral Documents shall require the prior
      written consent of each Revolver Lender and

                                       20
<PAGE>
      each Term Loan Lender; (except that such Lien may be released on all or
      substantially all Collateral to the extent such release is required in
      connection with an Asset Sale or Asset Sales permitted under the Credit
      Agreements); provided however, that, if prior to or concurrently with any
      such release the Revolver Loan Obligations are Paid in Full, then such
      release shall not require any Revolver Lender's consent; and

            (b) except as set forth in subsection 2.4(a), any amendment,
      modification, termination or waiver of, any Collateral Documents shall
      require the prior written consent of (i) until Payment in Full of all
      Revolver Loan Obligations, Requisite Revolver Lenders and (ii) until
      Payment in Full of all Term Loan Obligations, Requisite Term Loan Lenders.

            2.5 AMENDMENTS, MODIFICATIONS AND WAIVERS WITH RESPECT TO CREDIT
DOCUMENTS. Any amendment or modification of, or waiver of compliance with the
terms of any Credit Document, shall (subject to subsection 7.1(c)) be subject to
the following requirements:

            (a) Until (i) the termination of the Term Loan Agreement and the
      Payment in Full of all Term Loan Obligations, without the prior written
      consent of Requisite Term Loan Lenders, and (ii) the termination of the
      Revolver Credit Agreement and the Payment in Full of all Revolver Loan
      Obligations, without the prior written consent of Requisite Revolver
      Lenders, Company shall not, and shall not permit any of its Subsidiaries
      to amend, restate, modify or waive (or make any payment consistent with an
      amendment, restatement, modification or waiver of) any material provision
      of the Management Services and Reimbursement Agreement, the Existing IPP
      Project Guaranties, or the DHC Tax Sharing Agreement, in each case if the
      effect of such amendment, restatement, modification or waiver, together
      with all other amendments, restatements, modifications or waivers made,
      (a) is to impose additional material obligations on, or confer additional
      material rights to the holders thereof (or to other obligees with respect
      thereto) against, Company or any of its Subsidiaries, (b) is otherwise
      adverse to the interests of the Term Loan Lenders in a manner deemed
      material in the judgment of the Term Loan Agents or Requisite Term Loan
      Lenders so notifying Term Loan Agents or Company, or (c) is otherwise
      adverse to the interests of the Revolver Lenders in a manner deemed
      material in the judgment of the Revolver Agent or Requisite Revolver
      Lenders so notifying Revolver Agent or Company.

            (b) Subject to the provisions of subsection 2.4, and until the
      termination of the Term Loan Agreement and the Payment in Full of all Term
      Loan Obligations, without the prior written consent of Requisite Term Loan
      Lenders, Revolver Lenders may not amend, restate, modify or waive (or
      receive any payment consistent with an amendment, restatement,
      modification or waiver of) any material provision of any of the Revolver
      Documents, unless (i) the terms of the Revolver Documents as so amended,
      restated, modified or waived are not more disadvantageous to Company and
      its Subsidiaries and the Term Loan Lenders (in a manner deemed material by
      Term Loan Agent or Requisite Term Loan Lenders so notifying Term Loan
      Agent or Company) than the Revolver Documents in effect on the Closing
      Date (it being understood and agreed that any amendment, restatement,
      modification or waiver having the effect of increasing the amount of, or
      reducing, delaying or waiving any otherwise required reduction in the

                                       21
<PAGE>
      amount of, any commitment to extend loans under the Revolver Documents
      shall be deemed to be more disadvantageous for purposes of this clause (i)
      without further notice or other action by Term Loan Agents or Requisite
      Term Loan Lenders), (ii) the aggregate amount of indebtedness and
      additional commitments to extend credit, if any, under the Revolver
      Documents as so amended, restated, modified or waived, do not exceed the
      aggregate amount of the commitments to extend credit in effect under the
      Revolver Documents on the Closing Date, (iii) the obligations under (and
      the Liens securing) such Revolver Documents as so amended, restated,
      modified or waived are subject to this Agreement on terms substantively
      identical to the terms applicable to the obligations in effect under the
      Revolver Documents on the Closing Date, and (iv) Company provides to Term
      Loan Agents reasonable prior advance written notice of such proposed
      amendment, restatement, modification or waiver and copies of all material
      contracts or other agreements being entered into in connection therewith.

            (c) Subject to the provisions of subsection 2.4, and until the
      termination of the Revolver Credit Agreement and the Payment in Full of
      all Revolver Loan Obligations, without the prior written consent of
      Requisite Revolver Lenders, Term Loan Lenders may not amend, restate,
      modify or waive (or receive any payment consistent with an amendment,
      restatement, modification or waiver of) any material provision of any of
      the Term Loan Documents, unless (i) the terms of the Term Loan Documents
      as so amended, restated, modified or waived are not more disadvantageous
      to Company and its Subsidiaries and the Revolver Lenders (in a manner
      deemed material by Revolver Agent or Requisite Revolver Lenders so
      notifying Revolver Agent or Company) than the Term Loan Documents in
      effect on the Closing Date (it being understood and agreed that any
      amendment, restatement, modification or waiver having the effect of
      increasing the amount of, or reducing, delaying or waiving any otherwise
      required reduction in the amount of, any commitment to extend loans under
      the Term Loan Documents shall be deemed to be more disadvantageous for
      purposes of this clause (i), without further notice or other action by
      Revolver Agent or Requisite Revolver Lenders), (ii) the aggregate amount
      of indebtedness and additional commitments to extend credit, if any, under
      the Term Loan Documents as so amended, restated, modified or waived, do
      not exceed the aggregate amount of the commitments to extend credit in
      effect under the Term Loan Documents on the Closing Date plus the amount
      of any Additional Interest Loans and other Term Loans deemed made
      thereunder from time to time pursuant to subsections 2.2B and 2.1A of the
      Term Loan Agreement, respectively, (iii) the obligations under (and the
      Liens securing) such Term Loan Documents as so amended, restated, modified
      or waived are subject to this Agreement on terms substantively identical
      to the terms applicable to the obligations in effect under the Term Loan
      Documents on the Closing Date, and (iv) Company provides to Revolver Agent
      reasonable prior advance written notice of such proposed amendment,
      restatement, modification or waiver and copies of all material contracts
      or other agreements being entered into in connection therewith.

            (d) Each Lender acknowledges and agrees that Borrowers have agreed
      to and are bound by the provisions of subsection 5.12 (Most Favored
      Nations Payments) of each Credit Agreement.

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<PAGE>
                                  SECTION III

            3.1 PRIORITY OF LIENS. Notwithstanding the order or time of
attachment, or the order, time or manner of perfection, or the order or time of
filing or recordation of any document or instrument, or other method of
perfecting a security interest in favor of Collateral Agent in any Collateral,
and notwithstanding any conflicting terms or conditions which may be contained
in any of the Credit Documents, the Secured Parties agree that as among the
Secured Parties, the following Lien priorities shall strictly apply in defining
the respective Lien priorities of each Secured Party in the Collateral:

            (a) first, the Liens upon the Collateral in favor of Collateral
      Agent to the extent securing the Secured Obligations owing from time to
      time to the Collateral Agent, in its capacity as Collateral Agent, to the
      full extent thereof;

            (b) second: the Liens upon the Collateral in favor of Collateral
      Agent to the extent securing, on a pari passu basis, the Secured
      Obligations owing from time to time to the Term Loan Agents and Revolver
      Loan Agent, in their capacities as Term Loan Agents and Revolver Loan
      Agent, respectively, to the full extent thereof;

            (c) third: the Liens upon the Collateral in favor of Collateral
      Agent to the extent securing, on a pari passu basis, (i) the remaining
      Revolver Loan Obligations, and (ii) the Cash Management Obligations, in
      each case to the full extent thereof; and

            (d) fourth: the Liens upon the Collateral in favor of Collateral
      Agent to the extent securing the Term Loan Obligations to the full extent
      thereof.

            3.2 PRIORITIES UNAFFECTED BY ACTION OR INACTION. The Lien priorities
in subsection 3.1 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of any
of the Secured Obligations, nor by any action or inaction which Collateral Agent
or any other Secured Party may take or fail to take in respect of the
Collateral.

                                   SECTION IV

            4.1 APPLICATION OF MANDATORY PREPAYMENTS UNDER CREDIT AGREEMENTS AND
NET ASSET SALE PROCEEDS. Notwithstanding anything in the Credit Documents to the
contrary but subject in all respects to subsection 4.2, so long as any Creditor
Obligations are outstanding (including any loans or any commitments to lend):

            (a) Any Mandatory Payments pursuant to subsection 2.4A(iii)(e) of
      the Revolver Credit Agreement and subsection 2.4A(ii)(e) of the Term Loan
      Agreement shall, in each case, be applied first, to the payment of any
      Approved Operating Expenses then due and payable to Management Services
      and Reimbursement Agreement Beneficiaries pursuant to the Management
      Services and Reimbursement Agreement; second, to the extent of any excess
      amounts remaining after application in clause first, to the payment of
      interest then due and payable on the Term Loans pursuant to subsection
      2.2B(ii) of the Term Loan Agreement; third, to the extent of any excess
      amounts remaining after the application described in clauses first and
      second, to repay any

                                       23
<PAGE>
      Management Services and Reimbursement Agreement Obligations then due and
      payable; and fourth to the extent of any excess amounts remaining after
      application in clauses first, second and third, to prepay outstanding Term
      Loans.

            (b) Any Mandatory Payments pursuant to subsections 2.4A(iii)(a) -
      (d) of the Revolver Credit Agreement and subsection 2.4A(ii)(a) - (d) of
      the Term Loan Agreement shall, in each case, be applied first, to the
      payment of any Approved Operating Expenses then due and payable to
      Management Services and Reimbursement Agreement Beneficiaries pursuant to
      the Management Services and Reimbursement Agreement, second, to the extent
      of any excess amounts remaining after the application described in clause
      first, (a) to reduce Revolver Loan Exposure in an amount equal to 50% of
      such excess amounts with such reduction in Revolver Loan Exposure to occur
      by repaying outstanding Revolver Loans to the full extent thereof and
      permanently reducing the Revolver Loan Commitments in the full amount of
      the portion of such payment so applied to reduce Revolver Loan Exposure
      (provided, however, that no such application shall reduce the Revolver
      Loan Commitments to the extent that the sum of any Cash On Hand plus the
      amount of Revolver Loan Commitments would be less than $10,000,000 after
      giving effect to such reduction), with any amounts so applied to Revolver
      Loan Exposure but not actually applied to repay Revolver Loans being
      retained by Revolver Borrowers, and (b) to repay any Management Services
      and Reimbursement Agreement Obligations then due and payable and
      outstanding Term Loans in an amount equal to 50% of such excess amounts,
      (with such amount being applied first to such Management Services and
      Reimbursement Agreement Obligations and then to prepay outstanding Term
      Loans); and third, if either (1) no Revolver Loans are outstanding and the
      sum of all Cash On Hand plus the amount of Revolver Loan Commitments is
      less than $10,000,000, or (2) no Management Services and Reimbursement
      Agreement Obligations and no Term Loans are outstanding, but both events
      described in clauses (1) and (2) shall not have occurred, to repay and
      reduce Revolver Loan Exposure by repaying Revolving Loans and permanently
      reducing Revolving Loan Commitment (with any amounts so applied to
      Revolver Loan Exposure but not actually applied to repay Revolver Loans
      being retained by Borrowers) or Management Services and Reimbursement
      Agreement Obligations and Term Loans (with amounts being applied first to
      Management Services and Reimbursement Agreement Obligations and then to
      Term Loans) to the extent required so that both such events shall occur;
      provided that, notwithstanding anything in the foregoing to the contrary,
      to the extent that any Mandatory Payment applied to prepay Term Loans
      pursuant to this subsection 4.1(b) constitutes Net Asset Sale Proceeds, 5%
      of the aggregate amount of such Net Asset Sale Proceeds shall be applied
      to the payment of Prepetition Unsecured Claims Participation Interest
      (provided, that the aggregate cumulative amount of all Net Asset Sale
      Proceeds so applied, when aggregated with all other Aggregate Net Sales
      Proceeds paid or distributed in respect of Prepetition Unsecured Claims
      Participation Interest, shall not exceed $4,000,000) and 95% of such
      amount shall be applied to prepay Term Loans).

            (c) In the event that at the time of receipt by Company or any of
      its Subsidiaries of any Net Asset Sale Proceeds, the Term Loan Obligations
      shall have been Paid in Full and the Prepetition Unsecured Claims
      Participation Interest shall not have been Paid in Full at such time, 5%
      of the aggregate amount of such Net Asset Sale

                                       24
<PAGE>
      Proceeds shall be applied to the payment of the Prepetition Unsecured
      Claims Participation Interest until such time as the aggregate amount of
      such Net Asset Sale Proceeds applied to the payment of the Prepetition
      Unsecured Claims Participation Interest when aggregated with all other
      Aggregate Net Sale Proceeds paid or distributed in respect of the
      Prepetition Unsecured Claims Participation Interest, shall total
      $4,000,000.

            (d) All payments of Term Loans pursuant to this subsection 4.1 shall
      made to the Term Loan Agent for distribution to the Term Loan Lenders and
      the Disbursing Agents in accordance with the Term Loan Agreement,
      including subsection 9.25 thereof.

            4.2 APPLICATION OF PROCEEDS OF COLLATERAL, ETC.

            (a) Except as provided in subsection 4.2(b) or 4.2(c) below, upon
      the occurrence and during the continuation of an Event of Default or the
      termination of the Revolver Loan Commitments (other than as a result of
      any voluntary termination of Revolver Loan Commitments by Revolver
      Borrowers pursuant to subsection 2.4A(ii) of the Revolver Credit
      Agreement), if requested by Requisite Revolver Lenders with respect to any
      Revolver Event of Default or termination of Revolver Loan Commitments, or
      if requested by Requisite Term Loan Lenders with respect to any Term Loan
      Event of Default, (1) all Mandatory Payments or other payments received by
      any Agent or other Creditor Party on account of the Creditor Obligations,
      whether from any Loan Party or otherwise, shall promptly be delivered to
      Collateral Agent and upon receipt by Collateral Agent, applied by
      Collateral Agent against the Creditor Obligations and (2) all Proceeds
      received by Collateral Agent in respect of any sale of, collection from,
      or other realization upon all or any part of the Collateral or other
      Enforcement Action may, in the discretion of Senior Agent upon written
      direction to Collateral Agent, be held by Collateral Agent as Collateral
      for, and/or (then or at any time thereafter) applied in full or in part by
      Collateral Agent against, the applicable Creditor Obligations, in each
      case under clauses (1) and (2) in the following order of priority:

                  (i) First, to the payment of the costs and expenses of the
      exercise of rights and remedies and such sale, collection or other
      realization or Enforcement Action, including reimbursement of all
      expenses, liabilities and advances made or incurred by Collateral Agent in
      connection therewith (including for reasonable cost, fees and expenses of
      counsel and other professionals and agents retained by the Collateral
      Agent) and all amounts for which Collateral Agent is entitled to
      compensation, reimbursement and indemnification under any Credit Document
      and any other amounts then owing to Collateral Agent, in its capacity as
      Collateral Agent, pursuant to the Collateral Documents;

                  (ii) Second, to the extent proceeds remain after application
      as described in clause (i) above, pro rata among the following, based on
      the amounts outstanding as of any date of determination: all Secured
      Obligations owing to Term Loan Agents and Revolver Agent, in their
      capacities as Term Loan Agents and Revolver Agent, respectively;

                                       25
<PAGE>
                  (iii) Third, to the extent proceeds remain after application
      as described in clauses (i) and (ii) above, to the payment of Approved
      Operating Expenses until all Approved Operating Expenses have been Paid in
      Full;

                  (iv) Fourth, to the extent proceeds remain after application
      as described in clauses (i) through (iii) above, pro rata among the
      following, based on the amounts outstanding as of any date of
      determination: (i) all Revolver Loan Obligations (with any payment of the
      Revolver Loans resulting in a corresponding permanent reduction in the
      Revolver Loan Commitments), and (ii) all Cash Management Obligations,
      until all such Revolver Loan Obligations and Cash Management Obligations
      have been Paid in Full;

                  (v) Fifth, to the extent proceeds remain after application as
      described in clauses (i) through (iv) above, to the payment of the
      Superpriority Term Loan Obligations, until all Superpriority Term Loan
      Obligations have been Paid in Full;

                  (vi) Sixth, to the extent proceeds remain after application as
      described in clauses (i) through (v) above, to the payment of the
      Management Services and Reimbursement Agreement Obligations then due and
      payable, until all Management Services and Reimbursement Agreement
      Obligations have been Paid in Full;

                  (vii) Seventh, to the extent proceeds remain after application
      as described in clauses (i) through (vi) above, 5% of any such excess
      proceeds constituting Aggregate Net Sales Proceeds to the payment of the
      Prepetition Unsecured Claims Participation Interest in an aggregate
      cumulative amount which, when added to all other Aggregate Net Sale
      Proceeds paid or distributed in respect of the Prepetition Unsecured
      Claims Participation Interest, does not exceed $ 4,000,000;

                  (viii) Eighth, to the extent proceeds remain after application
      as described in clauses (i) through (vii) above, to the payment of the
      remaining Term Loan Obligations, until all Term Loan Obligations have been
      Paid in Full; and

                  (ix) Ninth, after application as described in clauses (i)
      through (viii) above and Payment in Full of all other Secured Obligations
      under the Revolver Credit Agreement, Term Loan Agreement, and all Secured
      Obligations then due and payable under the Management Services and
      Reimbursement Agreement, if any, and the termination of all Revolver Loan
      Commitments, to Loan Parties, or, subject to subsection 7.1(c), their
      successors or assigns, or to whosoever may be lawfully entitled to receive
      the same or as a court of competent jurisdiction may direct, of any
      surplus then remaining from such Proceeds.

            (b) Notwithstanding anything in subsection 4.2(a) to the contrary,
      in the event that no Revolver Event of Default has occurred and is
      continuing under subsection 7.1 of the Revolver Credit Agreement and no
      Bankruptcy Proceeding has been commenced by or against any Loan Party, the
      Term Loan Lenders and Term Loan Agents shall be entitled to receive
      payments of current interest and fees with respect to the Term Loan
      Obligations when due under the Term Loan Agreement.

                                       26
<PAGE>

            (c) Until Proceeds are applied as set forth in this subsection 4.2,
      Collateral Agent shall hold such Proceeds in its custody in accordance
      with its regular procedures for handling deposited funds.

            (d) Payments by Collateral Agent to the Revolver Lenders in respect
      of the Obligations shall be made to the Revolver Agent for distribution to
      the Revolver Lenders in accordance with the Revolver Credit Agreement and
      this Agreement; payments by Collateral Agent to the Term Loan Lenders in
      respect of the Obligations shall be made to the Term Loan Agent for
      distribution to the Term Loan Lenders and the Disbursing Agents in
      accordance with the Term Loan Agreement (including subsection 9.25 of the
      Term Loan Agreement) and this Agreement; any payments in respect of
      Approved Operating Expenses shall be made to such Persons as shall be
      directed in writing by Company pursuant to an Officer's Certificate
      delivered pursuant to subsection 5.1(c); any payments in respect of any
      Management Services and Reimbursement Agreement Obligations shall be paid
      to Covanta, for distribution to the applicable Management Services and
      Reimbursement Agreement Beneficiary; payments in respect of any
      Prepetition Unsecured Claims Participation Interest shall be paid to
      Prepetition Unsecured Claims Agent for distribution to the holders of the
      Prepetition Unsecured Claims Participation Interest; and payments in
      respect of the Cash Management Obligations shall be made to Cash
      Management Bank for the benefit of Cash Management Bank.

            (e) In the event that any Creditor Party shall receive any
      Distribution that such Creditor Party is not entitled to receive or retain
      under the provisions of this Agreement (in such capacity, each, a "JUNIOR
      CREDITOR"), such Junior Creditor shall hold any such Distribution so
      received in trust for the benefit of the holders of other Creditor
      Obligations with the right to receive such Distribution under the
      provisions of this Agreement (in such capacity, each, a "SENIOR CREDITOR")
      and shall segregate such Distribution from other assets held by such
      Junior Creditor; and shall forthwith turn over such Distribution (without
      liability for interest thereon, but with any appropriate endorsements or
      assignments, if necessary) to the holders of, or to Collateral Agent for
      the benefit of the holders of, such Creditor Obligations in the form
      received (with any appropriate endorsement or assignment, if necessary) to
      be distributed in accordance with subsection 4.1 or 4.2, as applicable,
      and applied to such Creditor Obligations. In the event of a failure of any
      Junior Creditor to make any such endorsement or assignment to Collateral
      Agent or Senior Creditors, as the case may be, Collateral Agent and such
      Senior Creditors are hereby irrevocably authorized on behalf of such
      Junior Creditor to make such endorsement or assignment, as applicable. For
      the avoidance of doubt, the provisions of this Agreement regarding Junior
      Creditors and Senior Creditors apply regardless of whether or not a Junior
      Creditor or Senior Creditor is a Secured Party.

            (f) No payment or distribution to any Senior Creditor pursuant to
      the provisions of this Agreement shall entitle the applicable Junior
      Creditor or Junior Creditors to exercise any right of subrogation in
      respect thereof until (i) all Creditor Obligations of such Senior
      Creditors shall have been indefeasibly Paid in Full, or (ii) all of such
      Senior Creditors have consented in writing to the taking of such action.
      With respect to any subrogation claims, each Junior Creditor hereby (to
      the extent permitted by

                                       27
<PAGE>
      applicable law) waives, releases and discharges any and all rights,
      claims, causes of action, liabilities, claims and demands, in law or
      equity, which such Junior Creditor has had, now has, or may in the future
      have, arising out of or relating directly or indirectly to the taking or
      not taking of any act or proceeding or not proceeding with any action
      which the Senior Creditors (or that representatives) may take in an effort
      to collect in respect of the Creditor Obligations owed to such Senior
      Creditors.

            (g) In furtherance of, and without limiting, the priority provisions
      set forth in this subsection 4.2, but subject to the applicable voting
      provisions set forth in subsection 2.2, each Secured Party agrees that, in
      order to enable Collateral Agent to enforce its rights hereunder in any
      Bankruptcy Proceeding, Collateral Agent is hereby irrevocably authorized
      and empowered in its sole and absolute discretion to receive and collect
      any and all dividends or other payments or disbursements made on account
      of Collateral Agent's Lien on the Collateral in whatever form the same may
      be paid or issued and to apply the same on account of any such Creditor
      Obligations in accordance with the provisions of the Credit Documents and
      this Agreement. At any time, including but not limited to during any
      Bankruptcy Proceeding, Collateral Agent and each other Party will refrain
      from taking any action which would contest or challenge in any
      administrative, legal or equitable action or otherwise the validity or
      enforceability of the terms of this Agreement, including the priority
      provisions contained in subsection 4.1 and this subsection 4.2 and the
      Lien priority provisions contained in subsection 3.1.

            (h) Each Secured Party hereby covenants and agrees that (i) such
      Secured Party will not accept from any Person on behalf of the Borrowers
      any guarantee (a "THIRD-PARTY GUARANTY") of any Obligations unless such
      guarantor simultaneously guarantees the payment of all Secured Obligations
      owed to each of the other Secured Parties (or, if such Third-Party
      Guaranty guarantees only a portion of the Obligations owing to such
      Secured Party, such Secured Party will not accept such Third-Party
      Guaranty unless such guarantor simultaneously guarantees the same
      proportion of Obligations owing to the other Secured Parties), and (ii)
      such Secured Party will not take, accept or obtain any security interest
      in, or lien or encumbrance upon, any assets of any of the Borrowers or any
      Subsidiary or Affiliate thereof or any other Person to secure the payment
      and performance of the Obligations unless the Collateral Agent, for the
      benefit of all Secured Parties, is granted a pari passu security interest
      in, or lien upon, such assets, in either case, pursuant to documents in
      form and substance satisfactory to the Revolver Agent and Term Loan Agent.

            (i) Each Junior Creditor hereby waives any rights it may have under
      applicable law to assert the doctrine of marshalling or to otherwise
      require Collateral Agent or any Senior Creditors to marshal any property
      of the Loan Parties or any of their respective Affiliates for the benefit
      of such Junior Creditors.

            (j) All payments of Term Loan Obligations pursuant to this
      subsection 4.2 (including Superpriority Term Loan Obligations) shall be
      made to the Term Loan Agent for distribution to the Term Loan Lenders and
      the Disbursing Agents in accordance with the Term Loan Agreement,
      including subsection 9.25 thereof.

                                       28
<PAGE>
                                   SECTION V

            5.1 INFORMATION. From time to time, upon the request of Collateral
Agent, each of the following Parties agrees to promptly provide to Collateral
Agent the information described below:

            (a) Revolver Agent agrees to promptly from time to time to (i)
      deliver to Collateral Agent a true, correct and complete copy of any
      amendment, waiver or modification of or supplement to any Revolver
      Document upon execution and delivery to Revolver Agent thereof by the
      relevant parties thereto and (ii) notify Collateral Agent of: (A) the
      aggregate amount of principal of and interest on the relevant Obligations
      arising under the Revolver Credit Agreement as at such date as Collateral
      Agent may specify, (B) the current Revolver Loan Commitment under the
      Revolver Credit Agreement, and (C) any payment received by Revolver Agent
      to be applied to the principal of or interest on the Obligations and (iii)
      the amount of any other fees or expenses outstanding under the Revolver
      Credit Agreement (including fees and expenses of Revolver Agent) and, in
      each case, Collateral Agent shall be entitled to rely conclusively upon
      such information.

            (b) Term Loan Agent agrees to promptly from time to time to (i)
      deliver to Collateral Agent a true, correct and complete copy of any
      amendment, waiver or modification of or supplement to any Term Loan
      Document upon execution and delivery to Term Loan Agent thereof by the
      relevant parties thereto and (ii) notify Collateral Agent of: (A) the
      aggregate amount of principal of and interest on the Obligations under the
      Term Loan Agreement as at such date as Collateral Agent may specify, (B)
      any payment received by Term Loan Agent to be applied to the principal of
      or interest on the Obligations and (C) the amount of any other fees or
      expenses outstanding under the Term Loan Agreement (including fees and
      expenses of Term Loan Agents) and, in each case, Collateral Agent shall be
      entitled to rely conclusively upon such information.

            (c) Company agrees promptly from time to time to (i) upon execution
      of any amendment, waiver, modification or supplement to the Management
      Services and Reimbursement Agreement, deliver to Collateral Agent an
      Officer's Certificate certifying that attached thereto is a true, correct
      and complete copy of any such amendment, waiver or modification or
      supplement and (ii) upon request of Collateral Agent, promptly deliver to
      Collateral Agent an Officer's Certificate certifying as to: (A) the
      outstanding amount of any claim or demand made against any Loan Party
      pursuant to the Management Services and Reimbursement Agreement and any
      other amounts owing thereunder, whether for Approved Operating Expenses,
      Management Services and Reimbursement Agreement Obligations or otherwise,
      at such date as Collateral Agent may specify, (B) the amount of any
      payment made pursuant to the Management Services and Reimbursement
      Agreement and received by any Management Services and Reimbursement
      Agreement Beneficiary and (C) the outstanding amount of, and applicable
      recipients of, any Approved Operating Expenses as at any date as
      Collateral Agent may specify, and, in each case, Collateral Agent shall be
      entitled to rely conclusively upon such certification.

                                       29
<PAGE>
                                   SECTION VI

            6.1 DISCLAIMERS, SUPPLEMENTAL COLLATERAL AGENT, INDEMNITY, ETC.

            (a) Collateral Agent shall have no duties or responsibilities except
      those expressly set forth in this Agreement and the Collateral Documents
      and Collateral Agent shall not by reason of this Agreement or the
      Collateral Documents be a trustee for any Party or have any other
      fiduciary obligation to any Party. Collateral Agent shall not be
      responsible to any Party for any recitals, statements, representations or
      warranties contained in this Agreement or any other Credit Document or in
      any certificate or other document referred to or provided for in, or
      received by any of them under, this Agreement or any other Credit
      Document, or for the value, validity, effectiveness, genuineness,
      enforceability or sufficiency of this Agreement or any other Credit
      Document or any other document referred to or provided for therein or any
      Lien under the Collateral Documents or the perfection or priority of any
      such Lien or for any failure by any Loan Party to perform any of its
      respective obligations this Agreement or any other Credit Document.
      Collateral Agent may exercise such powers, rights and remedies and perform
      such duties by or through its Affiliates, agents or employees.

            (b) Neither Collateral Agent nor any of its officers, directors,
      employees or agents shall be liable to any Parties for any action taken or
      omitted by Collateral Agent under or in connection with this Agreement or
      any of the Collateral Documents or other Credit Documents except to the
      extent caused by Collateral Agent's gross negligence or willful
      misconduct. Collateral Agent shall be entitled to refrain from any act or
      the taking of any action (including the failure to take an action) in
      connection with this Agreement or any of the Collateral Documents or other
      Credit Documents or from the exercise of any power, discretion or
      authority vested in it hereunder or thereunder unless and until Collateral
      Agent shall have received instructions in respect thereof from Requisite
      Obligees (or such other Secured Parties as may be required to give such
      instructions under subsection 2.4(a)) and, upon receipt of such
      instructions from Requisite Obligees (or such other Secured Parties, as
      the case may be), Collateral Agent shall be entitled to act or (where so
      instructed) refrain from acting, or to exercise such power, discretion or
      authority, in accordance with such instructions. Without prejudice to the
      generality of the foregoing, (i) Collateral Agent shall be entitled to
      rely, and shall be fully protected in relying, upon any communication,
      instrument or document believed by it to be genuine and correct and to
      have been signed or sent by the proper person or persons, and shall be
      entitled to rely and shall be protected in relying on opinions and
      judgments of attorneys (who may be attorneys for Company and its
      Subsidiaries), accountants, experts and other professional advisors
      selected by it; and (ii) no Party shall have any right of action
      whatsoever against an Agent as a result of Collateral Agent acting or
      (where so instructed) refraining from acting under this Agreement or any
      of the other Collateral Documents or other Credit Documents in accordance
      with the instructions of Requisite Obligees (or such other Secured Parties
      as may be required to give such instructions under subsection 2.4(a)).

            (c) It is the purpose of this Agreement and the Collateral Documents
      and other Credit Documents that there shall be no violation of any law of
      any jurisdiction

                                       30
<PAGE>
      denying or restricting the right of banking corporations or associations
      to transact business as agent or trustee in such jurisdiction. It is
      recognized that in case of litigation under this Agreement or any of the
      Collateral Documents or other Credit Documents, and in particular in case
      of the enforcement of any of the Collateral Documents, or in case
      Collateral Agent deems that by reason of any present or future law of any
      jurisdiction it may not exercise any of the rights, powers or remedies
      granted herein or in any of the other Collateral Documents or take any
      other action which may be desirable or necessary in connection therewith,
      it may be necessary that Collateral Agent appoint an additional individual
      or institution as a separate trustee, co-trustee, collateral agent or
      collateral co-agent (any such additional individual or institution being
      referred to herein individually as a "SUPPLEMENTAL COLLATERAL AGENT" and
      collectively as "SUPPLEMENTAL COLLATERAL AGENTS").

            In the event that Collateral Agent appoints a Supplemental
      Collateral Agent with respect to any Collateral, (i) each and every right,
      power, privilege or duty expressed or intended by this Agreement or any of
      the other Collateral Documents to be exercised by or vested in or conveyed
      to Collateral Agent with respect to such Collateral shall be exercisable
      by and vest in such Supplemental Collateral Agent to the extent, and only
      to the extent, necessary to enable such Supplemental Collateral Agent to
      exercise such rights, powers and privileges with respect to such
      Collateral and to perform such duties with respect to such Collateral, and
      every covenant and obligation contained in the Collateral Documents and
      necessary to the exercise or performance thereof by such Supplemental
      Collateral Agent shall run to and be enforceable by either Collateral
      Agent or such Supplemental Collateral Agent, and (ii) the provisions of
      this Agreement that refer to Collateral Agent shall inure to the benefit
      of such Supplemental Collateral Agent and all references herein to
      Collateral Agent shall be deemed to be references to Collateral Agent
      and/or such Supplemental Collateral Agent, as the context may require.

            Should any instrument in writing from any Loan Party be required by
      any Supplemental Collateral Agent so appointed by Collateral Agent for
      more fully and certainly vesting in and confirming to him or it such
      rights, powers, privileges and duties, such Loan Party shall execute,
      acknowledge and deliver any and all such instruments promptly upon request
      by Collateral Agent. In case any Supplemental Collateral Agent, or a
      successor thereto, shall die, become incapable of acting, resign or be
      removed, all the rights, powers, privileges and duties of such
      Supplemental Collateral Agent, to the extent permitted by law, shall vest
      in and be exercised by Collateral Agent until the appointment of a new
      Supplemental Collateral Agent.

            (d) Each Lender ratably in accordance with the amount of the
      Creditor Obligations of such Lenders, severally agrees that it shall
      indemnify Collateral Agent and the officers, directors, employees, agents,
      attorneys, professional advisors and affiliates of Collateral Agent to the
      extent that any such Person is neither reimbursed by any Loan Party under
      any Loan Document nor reimbursed out of any Proceeds pursuant to clause
      First of subsection 4.2(a), for and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses (including counsel fees and disbursements and fees and fees and
      disbursements of any advisor engaged by Collateral Agent) or disbursements
      of any kind and nature whatsoever which may be imposed on,

                                       31
<PAGE>
      incurred by or asserted against Collateral Agent or any such Person
      exercising the powers, rights and remedies of a Collateral Agent or
      performing duties of a Collateral Agent hereunder or under the other
      Collateral Documents or in any way relating to or arising out of this
      Agreement, any Collateral Document or any other Credit Document or any
      other documents contemplated hereby or thereby or referred to therein or
      the transactions contemplated hereby or thereby or the enforcement of any
      of the terms of any thereof; provided, however, that no Lender shall be
      liable for any of the foregoing to the extent they arise from the gross
      negligence or willful misconduct of Collateral Agent as determined by a
      final judgment of a court of competent jurisdiction. No Revolver Agent or
      Term Loan Agent shall have any liability to any Party under this
      subsection 6.1(d). Obligations of Non-Confirming Holders and Disbursing
      Agents pursuant to this subsection 6.1(d) shall be subject to the
      provisions of subsection 9.25 of the Term Loan Agreement.

            (e) The agency hereby created shall in no way impair or affect any
      of the rights and powers of, or impose any duties or obligations upon,
      Collateral Agent in its individual capacity as a Revolver Agent, Term Loan
      Agent or Term Loan Lender, as the case may be, hereunder or under any
      Credit Document. With respect to its participation in the Revolver Loan
      Obligations or Term Loan Obligations, Collateral Agent shall have the same
      rights and powers hereunder as any other Secured Party and may exercise
      the same as though it were not performing the duties and functions
      delegated to it hereunder. Collateral Agent and its Affiliates may accept
      deposits from, lend money to, acquire equity interests in and generally
      engage in any kind of commercial banking, investment banking, trust,
      financial advisory or other business with Company or any of its Affiliates
      as if it were not performing the duties specified herein, and may accept
      fees and other consideration from any Loan Party for services in
      connection with this Agreement and otherwise without having to account for
      the same to Creditor Parties.

            (f) Collateral Agent may deem and treat the payee of any promissory
      note or other evidence of indebtedness relating to the Creditor
      Obligations as the owner thereof for all purposes hereof unless and until
      a written notice of the assignment or transfer thereof, signed by such
      payee and in form satisfactory to Collateral Agent, shall have been filed
      with Collateral Agent. Any request, authority or consent of any Person who
      at the time of making such request or giving such authority or consent is
      the holder of any such note or other evidence of indebtedness shall be
      conclusive and binding on any subsequent holder, transferee or assignee of
      such note or other evidence of indebtedness and of any note or notes or
      other evidences of indebtedness issued in exchange therefor.
      Notwithstanding anything to the contrary contained in the Term Loan
      Documents, the Revolver Documents or Management Services and Reimbursement
      Agreement, (i) no assignment or transfer (including, without limitation, a
      refinancing or replacement) of any interest of (A) any Revolver Lender in
      the Revolver Loan Exposure or Revolver Loans (including pursuant to any
      refinancing, restatement, replacement or extension of the Revolver Credit
      Agreement not prohibited hereunder), or (B) any interest of any Term Loan
      Lender in the Term Loan or the Term Loans (including pursuant to any
      refinancing, restatement, replacement or extension of the Term Loan
      Agreement not prohibited hereunder), may in any case be made unless the
      transferee, assignee or any Person who became a lender pursuant to a
      refinancing, restatement, replacement or

                                       32
<PAGE>
      extension of the Term Loan Agreement or Revolver Credit Agreement, as the
      case may be, executes an Assumption Agreement in the form of Annex 1
      hereto, (ii) no appointment (A) of any successor Revolver Agent under the
      Revolver Credit Agreement (including pursuant to any refinancing,
      restatement, replacement or extension of the Revolver Credit Agreement not
      prohibited hereunder), (B) any successor Term Loan Agent or Term Loan
      Documentation Agent under the Term Loan Agreement (including pursuant to
      any refinancing, restatement, replacement or extension of the Term Loan
      Agreement not prohibited hereunder), or (C) any successor Prepetition
      Unsecured Claims Agent may in any case be made unless the successor
      executes an Assumption Agreement in the form of Annex 1 hereto and (iii)
      no Management Services and Reimbursement Agreement Beneficiary may assign
      or transfer any of its interest in the Management Services and
      Reimbursement Agreement without the prior written consent of Requisite
      Revolver Lenders and Requisite Term Loan Lenders.

            (g) Except as expressly provided herein and in the Collateral
      Documents, Collateral Agent shall have no duty to take any affirmative
      steps with respect to the collection of amounts payable in respect of the
      Collateral. Collateral Agent shall incur no liability to any Party as a
      result of any sale of any Collateral at any private sale.

            (h) Collateral Agent may resign at any time by giving at least 30
      days' notice thereof to the Parties and Collateral Agent may be removed as
      Collateral Agent at any time by Requisite Obligees. In the event of such
      resignation or removal of Collateral Agent, Requisite Obligees shall
      thereupon have the right to appoint a successor Collateral Agent. If no
      successor Collateral Agent shall have been so appointed by Requisite
      Obligees within 30 days after the resigning Collateral Agent's giving
      notice of its intention to resign, then the resigning Collateral Agent may
      appoint, on behalf of Secured Parties, a successor Collateral Agent and
      Company hereby agrees to pay to such successor Collateral Agent, in
      addition to any other amounts payable to Collateral Agent hereunder and
      under the Collateral Documents, such reasonable annual fees in such
      amounts and at such times as may be requested by such successor Collateral
      Agent.

            (i) Upon the acceptance of any appointment as Collateral Agent
      hereunder by a successor Collateral Agent, such successor Collateral Agent
      shall thereupon succeed to and become vested with all the rights, powers,
      privileges and duties of the retiring or removed Collateral Agent under
      this Agreement and the Collateral Documents. After any retiring or removed
      Collateral Agent's resignation or removal hereunder as Collateral Agent,
      the provisions of this subsection 6.1 shall continue in effect for its
      benefit in respect of any actions taken or omitted to be taken by it while
      it was acting as Collateral Agent.

            (j) In no event shall Collateral Agent or any Secured Party be
      liable or responsible for any funds or investments of funds held by any
      Loan Party.

            (k) Upon the proposed sale or other disposition of any Collateral
      that is permitted by the Credit Agreements and is not prohibited by
      subsection 2.4(a) or has been consented to by Requisite Obligees in
      connection with an Enforcement Action, and for which a Loan Party desires
      to obtain a security interest release from Collateral Agent,

                                       33
<PAGE>
      such Loan Party shall deliver an Officer's Certificate to Collateral
      Agent, Revolver Loan Agent and Term Loan Agent (i) stating that the
      Collateral or the Capital Stock subject to such disposition is being sold
      or otherwise disposed of in compliance with the terms hereof and of the
      Credit Agreements and (ii) specifying the Collateral or Capital Stock
      being sold or otherwise disposed of in the proposed transaction. Upon the
      receipt of such Officer's Certificate, Collateral Agent shall, at Loan
      Parties' joint and several expense, so long as Senior Agent has not
      informed Collateral Agent that it (a) has reason to believe that the facts
      stated in such Officer's Certificate are not true and correct and (b) if
      the sale or other disposition of such item of Collateral or Capital Stock
      constitutes an Asset Sale (as defined in each Credit Agreement) has not
      received evidence satisfactory to it that arrangements satisfactory to it
      have been made for delivery of the Net Asset Sale Proceeds (as defined in
      each Credit Agreement) if and as required by subsection 2.4 of the
      respective Credit Agreement, execute and deliver such releases of its
      security interest in such Collateral as may be reasonably requested by
      such Loan Party. In the event of any conflict or inconsistency between
      this subsection 6.1(k) and the terms of any other Credit Document, the
      terms of this Agreement shall prevail.

                                  SECTION VII

            7.1 MISCELLANEOUS.

            (a) All notices and other communications provided for herein shall
      be in writing and may be personally served, or sent by telefacsimile or
      United States mail or courier service or electronic mail (as further
      provided in this clause (a)) and shall be deemed to have been given (i)
      when delivered in person or by courier service, (ii) upon receipt of
      telefacsimile in complete and legible form, (iii) three Business Days
      after deposit in the United States mail with postage prepaid and properly
      addressed, or (iv) in the case of electronic mail to the extent provided
      in this clause (a); provided that notices to Collateral Agent shall not be
      effective until received. For the purposes hereof, the addresses of the
      parties hereto (until notice of a change thereof is delivered as provided
      in this subsection 7.1(a)) shall be as set forth under each party's name
      on the signature pages (including acknowledgments) hereof. Notices and
      other communications to the Lenders, Revolver Agent and Term Loan Agents
      hereunder may be delivered or furnished by electronic communication
      (including e-mail and Internet or intranet websites) pursuant to
      procedures approved by Collateral Agent. Collateral Agent or any Borrower
      may, in its discretion, agree to accept notices and other communications
      to it hereunder by electronic communications pursuant to procedures
      approved by it, provided that approval of such procedures may be limited
      to particular notices or communications.

            (b) Subject to Section 7.1(c), no amendment, modification,
      termination or waiver of any provision of this Agreement, and no consent
      to any departure by any Party therefrom, shall in any event be effective
      without the written concurrence of Requisite Revolver Lenders and
      Requisite Term Loan Lenders; provided that (i) no such amendment,
      modification, termination or waiver shall, without the consent of each
      Secured Party with Secured Obligations directly affected thereby, amend,
      modify, terminate or waive, or have the effect of amending, modifying,
      terminating or waiving, the definition of "Requisite Obligees" or
      subsection 3.1, (ii) no such amendment,

                                       34
<PAGE>
      modification, termination or waiver shall, without the consent of each
      Creditor Party (other than Prepetition Unsecured Claims Agent) with
      Creditor Obligations directly affected thereby, amend, modify, terminate
      or waive, or have the effect of amending, modifying, terminating or
      waiving (A) subsection 4.1 or 4.2 or this subsection 7.1(b), or (B) any
      other provision of this Agreement in a manner that would impose any
      additional material obligations on such Creditor Party or prejudice any
      material rights or remedies of such Creditor Party, (iii) no amendment,
      modification, termination or waiver of any provision of subsection 2.1 or
      2.2 or Section 5 or 6 or of any other provision of this Agreement which,
      by its terms, expressly requires the approval or concurrence of Collateral
      Agent shall be effective without the written concurrence of Collateral
      Agent; and (iv) no such amendment, modification, termination or waiver of
      this Agreement shall materially increase or materially adversely affect
      obligations of any Loan Party or adversely affect any rights of a Loan
      Party under the other Credit Documents in each case without such Loan
      Party's prior written consent; provided, further, that, without the prior
      written consent of Prepetition Unsecured Claims Agent, no such amendment,
      modification, termination or waiver shall (x) modify or otherwise alter in
      any manner adverse to the holders of the Prepetition Unsecured Claims
      Participation Interest the right of such holders to receive Proceeds in
      the amount and order of priority and under the circumstances described in
      subsections 4.1(b), 4.1(c) and 4.2(a), as in effect on the date hereof,
      (y) impose any additional obligation on Prepetition Unsecured Claims Agent
      or (z) amend, modify, terminate or waive, or have the effect of amending,
      modifying, terminating or waiving the rights of Prepetition Unsecured
      Claims Agent under this subsection 7.1(b). To the extent (if any) the
      provisions of this Agreement are inconsistent with the provisions set
      forth in any Credit Agreement in any particular circumstance, then the
      provisions set forth in this Agreement shall prevail to the extent
      necessary to eliminate or avoid such inconsistency in such circumstance;
      provided further, however, that no concurrence of any Lender or Lenders
      shall be required (I) for any amendment, modification, termination or
      waiver of any provision of subsection 7.1(c) or any other section or
      provision herein that only affects the rights and obligations of Debenture
      Disbursing Agent under this Agreement, so long as Term Loan Agents and
      Term Loan Borrowers (and, after execution hereof, the Debenture Disbursing
      Agent) approve such amendment, modification, termination or waiver; and
      (II) for any amendment, modification, termination or waiver of any
      provision of subsection 7.1(c) or any other section or provision that only
      affects the rights and obligations of Allowed Class 6 Disbursing Agent
      under this Agreement, so long as Term Loan Agents and Term Loan Borrowers
      (and, after execution hereof, the Allowed Class 6 Disbursing Agent)
      approve such amendment, modification, termination or waiver.

            (c) All Term Loans that would otherwise be distributed on the
      Allowed Class 6 Closing Date or the Determination Date (if the Allowed
      Class 6 Closing Date shall have occurred prior to the Determination Date)
      on account of Allowed Class 6 Interests shall be held on such date by the
      Allowed Class 6 Disbursing Agent; and all Term Loans that would otherwise
      be distributed on the Debenture Closing Date or the Determination Date (if
      the Debenture Closing Date shall have occurred prior to the Determination
      Date) on account of 9.25% Debentures shall be held on such date by the
      Debenture Disbursing Agent. For so long as Debenture Disbursing Agent or
      Allowed Class 6 Disbursing Agent holds Term Loans (subject to subsection
      9.25 of the Term Loan

                                       35
<PAGE>
      Agreement) that would otherwise have been Term Loans deemed made directly
      by or distributed directly to Non-Confirming Holders, such Disbursing
      Agent shall be the Term Loan Lender of record with respect to such Term
      Loan Loans held by it (and the corresponding Term Loan Commitments and
      Term Loan Exposure), except that no Disbursing Agent shall be deemed a
      "Term Loan Lender", "Creditor Party" or "Secured Party" for purposes of
      voting on any matters (including the granting of any approvals, consents
      or waivers) with respect to this Agreement; provided, however, that this
      clause (c) shall not be construed as permitting, without the prior written
      consent of the relevant Non-Confirming Holder, (a) modification of the
      rights, duties or obligations under the this Agreement (other than with
      respect to voting on any matters) of any Disbursing Agent or of the
      Non-Confirming Holders for whom such Disbursing Agent serves as record
      Term Loan Lender, without concurrent and corresponding modification of the
      rights, duties and obligations of Term Loan Lenders other than such
      Disbursing Agent, (b) this Agreement to be modified to require that any
      Disbursing Agent or Non-Confirming Holder make any loan, advance or other
      extension of credit to, or incur any additional obligation to, any
      Borrower or any other Person on or after the Closing Date, other than the
      Term Loans and monetary obligations pursuant to the provisions of the Term
      Loan Documents in effect on the Closing Date, or (c) modification of the
      provisions of this clause (c) in a manner that is adverse in any material
      respect to the Disbursing Agents or the Non-Confirming Holders. For the
      avoidance of any doubt, the Term Loans, Term Loan Commitments and Term
      Loan Exposure of each Disbursing Agent shall be excluded in calculating
      the number or percentage of Term Loans, Term Loan Commitments, Term Loan
      Exposure and/or Term Loan Lenders whose votes are required and obtained
      (or not obtained, as the case may be) for purposes of voting on any
      matters with respect to this Agreement.

            Any Non-Confirming Holder that executes and delivers to Collateral
      Agent, in accordance with subsection 9.25 of the Term Loan Agreement, an
      acknowledgment and counterpart, in substantially the form of Annex 2
      hereto, shall cease to be a Non-Confirming Holder and shall thereupon
      become a "Term Loan Lender", "Creditor Party" and "Secured Party" for all
      purposes hereunder and such Non-Confirming Holder holding a Term Loan and
      Term Loan Commitments in amounts equal to the amounts so confirmed by the
      Debenture Disbursing Agent, the Debenture Disbursing Agent shall be deemed
      to have assigned such Term Loan and Term Loan Commitment to such Term Loan
      Lender on such date for all purposes of this Agreement (without having to
      execute an Assumption Agreement in the form of Annex 1 hereto
      notwithstanding subsection 6.1(f)).

            Nothing in this Agreement, express or implied, shall be construed to
      confer upon any Non-Confirming Holder that does not become a Term Loan
      Lender any legal or equitable right, remedy or claim under or by reason of
      this Agreement; Collateral Agent shall not have, by reason of this
      Agreement, a fiduciary relationship in respect of any Disbursing Agent or
      any Non-Confirming Holder; and nothing in this Agreement, expressed or
      implied, is intended to or shall be so construed as to impose upon
      Collateral Agent any obligations to any Disbursing Agent or any
      Non-Confirming Holder in respect of this Agreement except as expressly set
      forth herein.

                                       36
<PAGE>
            Subject to the occurrence of the Debenture Closing Date, the
      Debenture Disbursing Agent shall execute and deliver this Agreement and
      the Term Loan Agreement as the agent for the Non-Confirming Holders on
      account of the 9.25% Debentures under the Approved Plan of Reorganization
      and the Confirmation Order. Subject to the occurrence of the Allowed Class
      6 Closing Date, the Allowed Class 6 Disbursing Agent shall execute and
      deliver this Agreement and the Term Loan Agreement as the agent for the
      Non-Confirming Holders on account of the Allowed Class 6 Claims under the
      Approved Plan of Reorganization and the Confirmation Order.

            (d) Subject to the provisions of subsection 6.1(f), this Agreement
      shall be binding upon and inure to the benefit of Collateral Agent and
      each other Party and, other than with respect to the Management Services
      and Reimbursement Agreement Beneficiaries (except pursuant to a merger of
      Covanta otherwise permitted pursuant to the Credit Agreements), their
      respective successors and assigns, including successors to Revolver Agents
      and Revolver Lenders under the Revolver Loan Documents, Term Agents and
      Term Loan Lenders under the Term Loan Documents and Prepetition Unsecured
      Claims Agent.

            (e) This Agreement may be executed in any number of counterparts,
      all of which taken together shall constitute one and the same instrument,
      and any of the parties hereto may execute this Agreement by signing any
      such counterpart.

            (f) This Agreement shall become effective on the Closing Date and
      upon the execution of this Agreement by each Loan Party, each Term Loan
      Lender, each Revolver Lender, each Term Loan Agent, Revolver Agent, each
      Management Services and Reimbursement Agreement Beneficiary, Prepetition
      Unsecured Claims Agent and Collateral Agent.

            (g) The Collateral Agent may deem and treat the Secured Parties as
      the "Secured Parties" for all purposes hereof unless and until a notice of
      the assignment or transfer of any interest held by such Party shall have
      been filed with the Collateral Agent in accordance with subsection 6.1(f).
      The Company agrees that it will advise the Collateral Agent of any
      transfer by any Secured Party of any Revolver Loan Exposure or Term Loan
      Exposure held by such Secured Party and will, from time to time upon
      request of the Collateral Agent, deliver a list to the Collateral Agent
      (which shall be distributed by the Collateral Agent to each Secured Party)
      setting forth, for the Revolver Loan Exposure, Term Loan Exposure and
      Management Services and Reimbursement Agreement Obligations, the unpaid
      principal amount and holder thereof. The Collateral Agent may rely on such
      list unless, after the distribution thereof, the Collateral Agent is
      notified by a Secured Party that such information as set forth on such
      list is inaccurate.

            (h) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OF THE PARTIES
      ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
      OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
      EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY
      (I) ACCEPTS FOR ITSELF, IN CONNECTION WITH ITS PROPERTIES,

                                       37
<PAGE>
      GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
      AFORESAID COURTS, (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, (III)
      AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
      COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
      REQUESTED, TO SUCH PARTY HERETO AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
      SUBSECTION 7.1(a) HEREOF, (IV) AGREES THAT SERVICE OF PROCESS AS PROVIDED
      IN CLAUSE (III) IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
      PERSON IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
      EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT, (V) AGREES THAT THE
      PARTIES HERETO RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
      PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH PARTY IN THE COURTS
      OF ANY OTHER JURISDICTION, AND (VI) AGREES THAT THE PROVISIONS OF THIS
      SUBSECTION 7.1(h) RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
      ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
      OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

            (i) 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 OR ANY DEALINGS BETWEEN THEM
      RELATING TO THE SUBJECT MATTER OF THE INTERCREDITOR RELATIONSHIP THAT IS
      BEING ESTABLISHED. The scope of this waiver is intended to be
      all-encompassing of any and all disputes that may be filed in any court
      and that relate to the subject matter of this transaction, including
      contract claims, tort claims, breach of duty claims, and all other common
      law and statutory claims. Each party hereto acknowledges that this waiver
      is a material inducement to enter into a business relationship, that each
      has already relied on the waiver in entering into this Agreement, and that
      each will continue to rely on the waiver in their related future dealings.
      Each party hereto further warrants and represents that each has reviewed
      this waiver with its legal counsel, and that each knowingly and
      voluntarily waives its jury trial rights following consultation with legal
      counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
      EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
      AMENDMENTS, RENEWALS, REPLACEMENTS, 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.

            (j) NO CLAIM MAY BE MADE BY ANY CREDITOR PARTY OR ANY OF THEIR
      RESPECTIVE AFFILIATES, PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES, OR
      ATTORNEYS AGAINST ANY OTHER CREDITOR PARTY OR THEIR RESPECTIVE AFFILIATES,
      DIRECTORS, OFFICERS, EMPLOYEES, OR ATTORNEYS FOR ANY SPECIAL, INDIRECT OR
      CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT
      (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY
      LAW) IN CONNECTION WITH,

                                       38
<PAGE>
      ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND
      RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT
      OCCURRING IN CONNECTION THEREWITH; AND EACH CREDITOR PARTY HEREBY WAIVES,
      RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES,
      WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN
      ITS FAVOR.

            (k) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
      HEREUNDER OR ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
      GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
      CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER
      LAW.

            (l) All undertakings and agreements contained in this Agreement are
      solely for the benefit of the Creditor Parties and there are no other
      Persons (other than the Loan Parties to the extent expressly provided
      herein) who are intended to be benefited in any way by this Agreement.
      Each Loan Party agrees that no Creditor Party shall have any liability to
      any of the Loan Parties for performing its obligations and
      responsibilities under this Agreement with respect to the other Creditor
      Parties.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
      be duly executed as of the day and year first above written.

         LOAN PARTIES:

                                      COVANTA POWER INTERNATIONAL HOLDINGS, INC.

                                      By:  _____________________________________
                                           Name:  Ashish Sarkar
                                           Title:  Authorized Officer

                                      Notice Address:
                                               c/o Covanta Energy Corporation
                                               40 Lane Road
                                               Fairfield, NJ 07007
                                               Attn:  Timothy J. Simpson

                                      COVANTA ENERGY AMERICAS, INC.

                                      By:  _____________________________________
                                           Name:  Anthony Orlando
                                           Title:  Authorized Officer

                                      Notice Address:
                                               c/o Covanta Energy Corporation
                                               40 Lane Road
                                               Fairfield, NJ 07007
                                               Attn:  Timothy J. Simpson
<PAGE>
                                      EACH OF THE ENTITIES NAMED ON SCHEDULE A
                                      ANNEXED HERETO, AS REVOLVER BORROWERS,
                                      TERM BORROWERS AND MANAGEMENT SERVICES AND
                                      REIMBURSEMENT AGREEMENT OBLIGORS

                                      By:  _____________________________________
                                           Name:  Anthony Orlando

                                                    Authorized Officer

                                      Notice Address for each Borrower and
                                      Management Services Agreement Obligor:

                                               c/o Covanta Energy Corporation
                                               40 Lane Road
                                               Fairfield, NJ 07007
                                               Attn:  Timothy J. Simpson
<PAGE>
                                   Schedule A

1.    Covanta Power Development, Inc.

2.    Covanta Power Development of Bolivia, Inc.

3.    Covanta Waste to Energy of Italy, Inc.

4.    OPI Quezon, Inc.
<PAGE>
                           MANAGEMENT SERVICES AND REIMBURSEMENT
                           AGREEMENT BENEFICIARIES:

                                      COVANTA ENERGY CORPORATION

                                      By:  _____________________________________
                                          Name:  Anthony Orlando
                                          Title:  Authorized Officer

                                      Notice Address:
                                              c/o Covanta Energy Corporation
                                              40 Lane Road
                                              Fairfield, NJ 07007
                                              Attn:  Timothy J. Simpson

                                      EACH OF THE ENTITIES NAMED ON SCHEDULE B
                                      ANNEXED HERETO, AS MANAGEMENT SERVICES AND
                                      REIMBURSEMENT AGREEMENT BENEFICIARIES

                                      By:  _____________________________________
                                           Name:  Timothy J. Simpson
                                                    Authorized Officer

                                      Notice Address for each Management
                                      Services Agreement Beneficiary:

                                               c/o Covanta Energy Corporation
                                               40 Lane Road
                                               Fairfield, NJ 07007
                                               Attn:  Timothy J. Simpson
<PAGE>
                                   Schedule B

1.    Covanta Energy Group, Inc.

2.    Covanta Projects, Inc.
<PAGE>
         AGENTS AND LENDERS:

                       BANK OF AMERICA, N.A.,
                       as Collateral Agent and Term Loan Agent

                       By:
                          ------------------------------------------------
                            Name:  Henry Y. Yu
                            Title:  Managing Director

                            Notice Address:
                            Bank of America, N.A., as Administrative Agent
                            555 So. Flower Street, 17th Floor
                            CA9-706-17-54
                            Los Angeles, California 90071
                            Attention:  David Price, Vice President
                            Voice: (213) 345-1300
                            Fax: (415) 503-5011
                            email: david.price@bankofamerica.com

                       BANK OF AMERICA, N.A.,
                       as Term Loan Lender

                       By:
                          ------------------------------------------------
                            Name:  Henry Y. Yu
                            Title:  Managing Director
                           Notice Address:
                            Bank of America, N.A.
                            555 California Street
                            San Francisco, CA 94104-1503
                            Phone:  415-622-4438
                            Fax:415-622-0234
                            Attention: Henry Yu
                            Email:  henry.yu@bankofamerica.com
<PAGE>
                                            BANK OF AMERICA, N.A.,
                                            as Cash Management Bank

                                            By:
                                               ---------------------------
                                                 Name:  Henry Y. Yu
                                                 Title:  Managing Director

                                                 Notice Address:
<PAGE>
                                      DEUTSCHE BANK SECURITIES, INC.,

                                      as Term Loan Documentation Agent

                                      By:
                                         ---------------------------------------
                                           Name:
                                           Title:

                                      By:
                                         ---------------------------------------
                                           Name:
                                           Title:

                                           Notice Address:
                                                  Attention:
                                                  Deutsche Bank Securities, Inc.
                                                  60 Wall Street
                                                  New York, NY 10005

                                      DEUTSCHE BANK AG, NEW YORK BRANCH,
                                      By:  DB Services New Jersey, Inc.
                                      as Revolver Agent

                                      By:
                                         ---------------------------------------
                                           Name:
                                           Title:

                                      By:
                                         ---------------------------------------
                                           Name:
                                           Title:

                                           Notice Address:
                                               Attention:  Keith Braun
                                               Deutsche Bank AG, New York Branch
                                               60 Wall Street
                                               New York, NY 10005
<PAGE>
                                   DEUTSCHE BANK AG, NEW YORK BRANCH,
                                   By:  DB Services New Jersey, Inc.
                                   as a Revolver Lender

                                   By:
                                      ---------------------------------
                                        Name:
                                        Title:

                                   By:
                                      ---------------------------------
                                        Name:
                                        Title:

                                        Notice Address:
                                               Attention:  Troy Ennico
                                               Deutsche Bank AG, New York Branch
                                               60 Wall Street
                                               New York, NY 10005
<PAGE>
                                      BANC OF AMERICA SECURITIES LLC, as
                                      Agent for BANK OF AMERICA, N.A., as a Term
                                      Loan Lender

                                      By:  ___________________________________
                                           Name:
                                           Title:
<PAGE>
                                      BANK OF TOKYO MITSUBISHI (CANADA),

                                      as a Term Loan Lender

                                      By:  ___________________________________
                                           Name: Angelo Bisutti
                                           Title: Senior Vice President
<PAGE>
                                      BAYERISCHE HYPO-UND VEREINSBANK AG,
                                      as a Term Loan Lender

                                      By:  ___________________________________
                                           Name:
                                           Title:

                                      By:  ___________________________________
                                           Name:
                                           Title:
<PAGE>
                                      BEAR STEARNS & CO. INC.,
                                      as a Term Loan Lender

                                      By:  ___________________________________
                                           Name:
                                           Title:
<PAGE>
                                      CANADIAN IMPERIAL BANK OF COMMERCE,
                                      as a Term Loan Lender

                                      By:  ___________________________________
                                           Name:
                                           Title:
<PAGE>
                                      CREDIT SUISSE FIRST BOSTON,
                                      as a Term Loan Lender

                                      By:  ___________________________________
                                           Name:
                                           Title:

<PAGE>
                                   DEUTSCHE BANK AG, NEW YORK BRANCH,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:  Keith Braun
                                      Title:  Director

                                   By:
                                      ---------------------------------------
                                      Name: Patrick Dowling
                                      Title: Vice President

<PAGE>
                                   HSBC BANK USA,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   IIB BANK LIMITED,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   JPMORGAN CHASE BANK
                                   (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK),
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name: Michael Lancia
                                      Title: Vice President

<PAGE>
                                   KBC BANK NV, NEW YORK BRANCH,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   Notice Address:
                                      Attention: Rose Pagan
                                      KBC Bank NV, New York Branch
                                      125 West 55th Street
                                      New York, NY 10019
                                      Telephone No.: (212) 541-0657
                                      Fax No.: (212) 956-5581

<PAGE>
                                   LANDESBANK HESSEN-THURINGEN
                                   GIROZENTRALE,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   Notice Address:
                                   420 Fifth Avenue
                                   New York, New York 10018
                                   Attention: Structured Finance
                                   Telephone: 212-703-5303
                                   Telecopier: 212-703-5262

<PAGE>
                                   MERRILL LYNCH, PIERCE, FENNER &
                                   SMITH, INCORPORATED,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   MINTO APARTMENTS LIMITED,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name: Peter Goring
                                      Title: Senior Vice President

                                   By:
                                      ---------------------------------------
                                      Name: Steve Creighton
                                      Title: Senior Vice President

<PAGE>
                                   QUANTUM PARTNERS LDC
                                   C/O SOROS FUND MANAGEMENT LLC,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   SPECIAL SITUATIONS INVESTING GROUP,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   SUNTRUST BANK,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   TD SECURITIES (USA) INC.,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   THE BANK OF NEW YORK,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   THE TORONTO-DOMINION BANK,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   THE TORONTO-DOMINION BANK,
                                   as a Term Loan Lender(1)

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

----------
(1) With respect to the interest acquired from Sun Life Assurance Company of
Canada (formerly known as Clarica Life Insurance Company) and HSBC Bank Canada
on October 28, 2003 by assignment.

<PAGE>
                                   UBS LOAN FINANCE LLC,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   U.S. BANK NATIONAL ASSOCIATION
                                   (FORMERLY KNOWN AS FIRSTAR BANK, N.A.),
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name: Alan R. Milster
                                      Title: Vice President

<PAGE>
                                   WACHOVIA BANK, NATIONAL ASSOCIATION,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name: Joel Thomas
                                      Title: Director

<PAGE>
                                   WESTLB AG (FORMERLY KNOWN AS WESTDEUTSCHE
                                   LANDESBANK GIROZENTRALE), NEW YORK BRANCH,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   2005646 ONTARIO INC.,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
                                   4212657 CANADA INC., SUCCESSOR TO DRESDNER
                                   BANK CANADA,
                                   as a Term Loan Lender

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

<PAGE>
      PREPETITION UNSECURED CLAIMS AGENT:

                                   U.S. BANK NATIONAL ASSOCIATION, AS
                                   PREPETITION UNSECURED CLAIMS AGENT

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   Notice Address:

<PAGE>
      DEBENTURE DISBURSING AGENT:

                                   WELLS FARGO BANK, N.A., AS DEBENTURE
                                   DISBURSING AGENT

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   Notice Address:

<PAGE>
      ALLOWED CLASS 6 DISBURSING AGENT:

                                   U.S. BANK NATIONAL ASSOCIATION, AS ALLOWED
                                   CLASS 6 DISBURSING AGENT

                                   By:
                                      ---------------------------------------
                                      Name:
                                      Title:

                                   Notice Address:

<PAGE>
                                                                      Annex 1 to
                                                         Intercreditor Agreement

            ASSUMPTION AGREEMENT, dated as of __________, 200_, made by
_________________ (the "ADDITIONAL CREDITOR PARTY").

                              W I T N E S S E T H :

            WHEREAS, Covanta Power International Holdings, Inc. ("COMPANY") and
the Subsidiaries of Company listed on the signature pages thereof; Covanta
Energy Americas, Inc., certain Persons listed on the signature pages thereof as
Term Loan Lenders (together with any lenders that subsequently become party
thereto, the "TERM LOAN LENDERS"); certain financial institutions listed on the
signature pages thereof as Revolver Lenders (the "REVOLVER LENDERS"); Deutsche
Bank AG, New York Branch, as administrative agent for Revolver Lenders, Bank of
America, N.A., as administrative agent for Term Loan Lenders, as collateral
agent, and cash management bank, Deutsche Bank Securities, Inc., as
documentation agent for Term Loan Lenders, the companies listed on the signature
pages thereof as Management Services and Reimbursement Agreement Beneficiaries,
the companies listed on the signature pages thereof as Management Services and
Reimbursement Agreement Obligors, U.S Bank National Association, as agent for
the holders of the Prepetition Unsecured Claims Participation Interest, and
Wells Fargo Bank, N.A., as Debenture Disbursing Agent, and U.S. Bank National
Association, as Allowed Class 6 Disbursing Agent are parties to that certain
Intercreditor Agreement dated as of March 10, 2004 (as amended, supplemented or
otherwise modified from time to time (the "INTERCREDITOR AGREEMENT");

            WHEREAS, the Loan Parties have executed the Collateral Documents
pursuant to which the Loan Parties party to each such document have granted to
the Collateral Agent, for the benefit of the Secured Parties, a security
interest in the Collateral to secure their respective obligations arising in
connection with the Credit Document;

            WHEREAS, subsection 6.1(f) of the Intercreditor Agreement requires
the Additional Creditor Party to become a party to the Intercreditor Agreement;
and

            WHEREAS, the Additional Creditor Party has agreed to execute and
deliver this Assumption Agreement in order to become a party to the
Intercreditor Agreement;

            NOW, THEREFORE, IT IS AGREED:

            1. Defined Terms. Unless otherwise defined herein, terms defined in
the Intercreditor Agreement and used herein shall have the meanings given to
them in the Intercreditor Agreement.

            2. Intercreditor Agreement. By executing and delivering this
Assumption Agreement, the Additional Creditor Party hereby becomes a party to
the Intercreditor Agreement as [Revolver Agent][Term Loan Agent][Term Loan
Documentation Agent][a Revolver Lender][a Term Loan Lender][Prepetition
Unsecured Claims Agent] and Secured Party thereunder with the same force and
effect as if originally named therein as [Revolver

                                     A-1-1
<PAGE>
Agent][Term Loan Agent][Term Loan Documentation Agent][a Revolver Lender][a Term
Loan Lender][Prepetition Unsecured Claims Agent] and a Secured Party and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of [Revolver Agent][Term Loan Agent][Term Loan
Documentation Agent][a Revolver Lender][a Term Loan Lender][Prepetition
Unsecured Claims Agent] and a Secured Party thereunder and agrees to be bound by
the terms thereof.

            2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

            IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.

                                 [ADDITIONAL CREDITOR PARTY]

                                 By:
                                    -----------------------------
                                 Name:
                                 Title:

                                      A-1-2
<PAGE>
                                                                      Annex 2 to
                                                         Intercreditor Agreement

                         ACKNOWLEDGMENT AND COUNTERPART

      ACKNOWLEDGMENT AND COUNTERPART (this "COUNTERPART"), dated as of _______,
is entered into in connection with the Intercreditor Agreement dated as of March
10, 2004 (said Intercreditor Agreement, as it may heretofore have been and as it
may hereafter be further amended, restated, supplemented or otherwise modified
from time to time being the "INTERCREDITOR AGREEMENT"; capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed therein),
by and among Covanta Power International Holdings, Inc. ("COMPANY") and the
Subsidiaries of Company listed on the signature pages thereof, as Borrowers;
Covanta Energy Americas, Inc.; certain Persons listed on the signature pages
thereof as Term Loan Lenders (together with any other lenders that subsequently
become party thereto, the "TERM LOAN LENDERS"); certain financial institutions
listed on the signature pages thereof as Revolver Lenders; Deutsche Bank AG, New
York Branch, as administrative agent for Revolver Lenders; Bank of America,
N.A., as administrative agent for Term Loan Lenders, as collateral agent, and
cash management bank; Deutsche Bank Securities, Inc., as documentation agent for
Term Loan Lenders; the companies listed on the signature pages thereof as
Management Services and Reimbursement Agreement Beneficiaries; the companies
listed on the signature pages thereof as Management Services and Reimbursement
Agreement Obligors; U.S. Bank National Association, as agent for the holders of
the Prepetition Unsecured Claims Participation Interest, and Wells Fargo Bank,
N.A., as Debenture Disbursing Agent, and U.S. Bank National Association, as
Allowed Class 6 Disbursing Agent. The undersigned, by executing and delivering
this Counterpart, hereby acknowledges and agrees (a) that upon acceptance of
this Counterpart by Administrative Agent it shall become party to the
Intercreditor Agreement as a "Term Loan Lender" in accordance with the terms
thereof and shall have the rights and obligations of a Term Loan Lender under
the Intercreditor Agreement, (b) that it shall be bound by all of the terms of
the Intercreditor Agreement as a Term Loan Lender, and (c) that this Counterpart
may be attached to the Intercreditor Agreement. The undersigned hereby further
agrees that the address and facsimile number of the undersigned for notice
purposes pursuant to Section 7.1(a) of the Intercreditor Agreement shall be
initially as set forth below.

                                    [NAME OF TERM LOAN LENDER]

                                    By:
                                       -----------------------------
                                    Name:
                                    Title:
                                    Notice Address:

                                     A-2-1

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