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                                                                    EXHIBIT 4.28

                               SECURITY AGREEMENT

                  This SECURITY AGREEMENT (this "AGREEMENT") is dated as of
March __, 2004 and entered into by and among COVANTA POWER INTERNATIONAL
HOLDINGS, INC., a Delaware corporation ("CPIH" or "COMPANY"), each of THE OTHER
BORROWERS LISTED ON THE SIGNATURE PAGES HEREOF (Borrowers are sometimes
collectively referred to herein as "GRANTORS" and individually as a "GRANTOR")
and BANK OF AMERICA, N.A., in its capacity as collateral agent for and
representative of the Secured Parties (as defined in the Intercreditor Agreement
referred to below) (the "COLLATERAL AGENT"). All capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Intercreditor Agreement.

                                    RECITALS

                  WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004 (said Credit Agreement or any credit agreement entered into by Revolver
Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness thereunder to the extent permitted
pursuant to the Term Loan Agreement (as defined below), as said Credit Agreement
or any replacement to said Credit Agreement may be amended, restated,
supplemented or otherwise modified from time to time, being the "REVOLVER CREDIT
AGREEMENT"), by and among Grantors as borrowers, the financial institutions from
time to time party thereto as lenders (the "REVOLVER LENDERS") and Deutsche Bank
AG, New York Branch, as administrative agent for the Revolver Lenders (the
"REVOLVER AGENT"), the Revolver Lenders have made certain commitments (each, a
"REVOLVER COMMITMENT"), subject to the terms and conditions set forth in the
Revolver Credit Agreement, to extend certain revolving credit facilities (each,
a "REVOLVER LOAN") to Grantors;

                  WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004, (said Credit Agreement or any credit agreement entered into by Term
Loan Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness thereunder to the extent permitted
pursuant to the Revolver Credit Agreement, as said Credit Agreement or any
replacement to said Credit Agreement may be amended, restated, supplemented or
otherwise modified from time to time, being the " TERM LOAN AGREEMENT"), by and
among Grantors as borrowers, the financial institutions listed therein as
lenders (the "TERM LOAN LENDERS"), Bank of America, N.A., as administrative
agent (in such capacity, the "TERM LOAN FACILITY AGENT") and Deutsche Bank
Securities, Inc., as documentation agent for the Term Loan Lenders (in such
capacity "TERM LOAN DOCUMENTATION AGENT," and together with the Term Loan
Facility Agent, the "TERM LOAN AGENTS" and collectively with the Revolver Agent,
the Revolver Lenders, the Term Loan Lenders and the Cash Management Bank (as
defined below), the "BENEFITED PARTIES"), the Term Loan Lenders have made
certain commitments (each, a "TERM LOAN COMMITMENT," and together with the
Revolver Commitments, collectively, the "COMMITMENTS"), subject to the terms and
conditions set forth in the Term Loan Agreement, to extend certain term loan
facilities (each, a "TERM LOAN," and together with the Revolver Loans, the
"LOANS") to the Term Loan Borrowers;

                  WHEREAS, in accordance with the terms of the Credit
Agreements, Borrowers are required to maintain the Cash Management System with
Bank of America (in such capacity, the "CASH MANAGEMENT BANK"), and it is
desired that the Cash Management Obligations be secured hereunder;

                  WHEREAS, Company, the Revolver Borrowers, the Term Loan
Borrowers, CEA, the Revolver Agent, the Revolver Lenders, the Term Loan Agents,
the Term Loan Lenders, the Cash Management Bank and Collateral Agent have
entered into that certain Intercreditor Agreement dated as of March __, 2004 (as
it may hereafter be amended, restated, supplemented or otherwise modified from
time to time, the "INTERCREDITOR AGREEMENT"), pursuant to which the Revolver
Agent, the Revolver Lenders, the Term Loan Agents, the Term Loan Lenders and
Cash Management Bank have appointed Collateral Agent, and Collateral Agent has
agreed to act, as collateral agent for the Revolver Agent, the Revolver Lenders,
the Term Loan Agents, the Term Loan Lenders and the Cash Management Bank
hereunder; and

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                  WHEREAS, it is a condition precedent to (i) the extension of
credit by the Revolver Lenders under the Revolver Credit Agreement and (ii) the
extension of credit by the Term Loan Lenders that the Grantors listed on the
signature pages hereof shall have granted the security interests and undertaken
the obligations contemplated by this Agreement;

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Revolver Lenders to make extensions of credit from time to time
under the Revolver Credit Agreement, the Term Loan Lenders to continue to make
extensions of credit from time to time under the Term Loan Agreement, the Cash
Management Bank to provide cash management services to the Grantors and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each Grantor hereby agrees with Collateral Agent as
follows:

SECTION 1. GRANT OF SECURITY.

                  Each Grantor hereby assigns and grants to Collateral Agent a
security interest, subject to the terms of the Intercreditor Agreement
(including, without limitation, the provisions regarding lien priority), in all
of such Grantor's right, title and interest in and to all of such Grantor's
personal property and fixture property of every kind and nature, and all
proceeds and products thereof, in each case whether now or hereafter acquired
and wherever the same may be located, including, without limitation, the
following (the "COLLATERAL"), to secure the obligations as set forth in Section
2 herein except as provided in the penultimate paragraph to this Section 1:

                  (a) all equipment, in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");

                  (b) all inventory in all of its forms, including but not
limited to (i) all goods held by such Grantor for sale or lease or to be
furnished under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (iii) all goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind, and (iv) all goods which are
returned to or repossessed by such Grantor and all accessions thereto and
products thereof (collectively the "INVENTORY") and all negotiable and
non-negotiable documents of title (including without limitation, documents,
warehouse receipts, dock receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");

                  (c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles, letter-of-credit rights and other rights and
obligations of any kind owned by or owing to such Grantor and all rights in, to
and under all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
documents, instruments, general intangibles, letter-of-credit rights or other
rights and obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, general intangibles, letter of credit rights and
other rights and obligations being the "ACCOUNTS," and any and all such security
agreements, leases and other contracts being the "RELATED CONTRACTS").

                  (d) all deposit accounts and all the accounts and
concentration accounts which constitute the Cash Management System, together
with (i) all amounts on deposit from time to time in such deposit accounts and
(ii) all interest, cash, instruments, securities and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing (the "DEPOSIT ACCOUNTS");

                  (e) the "SECURITIES COLLATERAL," which term means:

                           (i) the shares of stock, partnership interests,
                  interests in joint ventures, limited liability company
                  interests and all other equity interests in any other Person,
                  including all securities convertible into, and rights,
                  warrants, options and other rights to purchase or otherwise
                  acquire, any of the foregoing now or hereafter owned by such
                  Grantor, including those owned on the date hereof and
                  described on Schedule 1(e)(i), and the certificates or other
                  instruments representing any of the foregoing and any interest
                  of such Grantor in the entries on the books of

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                  any securities intermediary pertaining thereto (the "PLEDGED
                  SHARES"), and all dividends, distributions, returns of
                  capital, cash, warrants, options, rights, instruments, rights
                  to vote or manage the business of such Person pursuant to
                  organizational documents governing the rights and obligations
                  of the stockholders, partners, members or other owners thereof
                  and other property or proceeds from time to time received,
                  receivable or otherwise distributed in respect of or in
                  exchange for any or all of such Pledged Shares;

                           (ii) the indebtedness from time to time owed to such
                  Grantor by any obligor, and the instruments evidencing such
                  indebtedness (the "PLEDGED DEBT"), and all interest, cash,
                  instruments and other property or proceeds from time to time
                  received, receivable or otherwise distributed in respect of or
                  in exchange for any or all of the Pledged Debt; and

                           (iii) all other investment property of such Grantor
                  not otherwise included in this clause (e) or the definition of
                  Investment Collateral below; provided, however, that the
                  Securities Collateral shall not include (1) any shares of
                  stock, partnership interests, interests in joint ventures,
                  limited liability company interests or other equity interests
                  of any Subsidiary that was not incorporated or organized under
                  the laws of the United States, any state thereof or the
                  District of Columbia (a "FOREIGN SUBSIDIARY") in excess of the
                  number of shares or other such interests of such issuer
                  possessing up to but not exceeding 65% of the voting power of
                  all classes of capital stock or other such interests entitled
                  to vote of such Foreign Subsidiary, or (2) any shares of
                  stock, partnership interests, interests in joint ventures,
                  limited liability company interests or all other equity
                  interests of those Subsidiaries the pledge of which would
                  constitute a violation of (A) a valid and enforceable
                  Contractual Obligation in favor of or for the benefit of a
                  Person other than Company or any of its Subsidiaries and their
                  respective Affiliates for which the required consents have not
                  been obtained, or (B) applicable law affecting such Grantor or
                  such Subsidiary;

                  (f) the "INVESTMENT COLLATERAL", which term means:

                           (i) all securities accounts, including any restricted
                  securities accounts established and maintained by Collateral
                  Agent pursuant to Section 14 herein, (ii) all credit balances
                  held from time to time in such securities accounts, (iii) any
                  property, including any Financial Assets (as defined in the
                  UCC) credited to any such securities account by Collateral
                  Agent and any other property acquired by Collateral Agent as
                  securities intermediary in exchange for, with proceeds from or
                  distributions on, or otherwise in respect of any of the
                  foregoing (any such property an "INVESTMENT") and any security
                  entitlements, securities (whether certificated or
                  uncertificated), instruments, accounts, chattel paper, general
                  intangibles and deposits representing or evidencing any
                  Investment, and (iv) all interest, dividends, cash,
                  instruments, securities and other property from time to time
                  received, receivable or otherwise distributed in respect of or
                  in exchange for any or all of the Investments.

                  (g) the "INTELLECTUAL PROPERTY COLLATERAL," which term means:

                           (i) all rights, title and interest (including rights
                  acquired pursuant to a license or otherwise) in and to all
                  trademarks, service marks, designs, logos, indicia,
                  tradenames, trade dress, corporate names, company names,
                  business names, fictitious business names, trade styles and/or
                  other source and/or business identifiers and applications
                  pertaining thereto, owned by such Grantor, or hereafter
                  adopted and used, in its business (including, without
                  limitation, the trademarks specifically identified in Schedule
                  1(g)(i), as the same may be amended pursuant hereto from time
                  to time) (collectively, the "TRADEMARKS"), all registrations
                  that have been or may hereafter be issued or applied for
                  thereon in the United States and any state thereof and in
                  foreign countries (including, without limitation, the
                  registrations and applications specifically identified in
                  Schedule 1(g)(i), as the same may be amended pursuant hereto
                  from time to time) (the "TRADEMARK REGISTRATIONS"), all common
                  law and other rights in and to the Trademarks in the United
                  States and any state thereof and in foreign countries (the
                  "TRADEMARK RIGHTS"), and all goodwill of such Grantor's
                  business symbolized by the Trademarks and associated therewith
                  (the "ASSOCIATED GOODWILL");

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                           (ii) all rights, title and interest (including rights
                  acquired pursuant to a license or otherwise) in and to all
                  patents and patent applications and rights and interests in
                  patents and patent applications under any domestic or foreign
                  law that are presently, or in the future may be, owned or held
                  by such Grantor and all patents and patent applications and
                  rights, title and interests in patents and patent applications
                  under any domestic or foreign law that are presently, or in
                  the future may be, owned by such Grantor in whole or in part
                  (including, without limitation, the patents and patent
                  applications listed in Schedule 1(g)(ii), as the same may be
                  amended pursuant hereto from time to time), all rights
                  corresponding thereto (including, without limitation, the
                  right, exercisable only upon the occurrence and during the
                  continuation of an Event of Default, to sue for past, present
                  and future infringements in the name of such Grantor or in the
                  name of Collateral Agent, the Revolver Lenders or the Term
                  Loan Lenders and/or any other Benefited Parties), and all
                  re-issues, divisions, continuations, renewals, extensions and
                  continuations-in-part thereof (all of the foregoing being
                  collectively referred to as the "PATENTS"); it being
                  understood that the rights and interests included in the
                  Intellectual Property Collateral hereby shall include, without
                  limitation, all rights and interests pursuant to licensing or
                  other contracts in favor of such Grantor pertaining to patent
                  applications and patents presently or in the future owned or
                  used by third parties but, in the case of third parties which
                  are not Affiliates of such Grantor, only to the extent
                  permitted by such licensing or other contracts and, if not so
                  permitted, only with the consent of such third parties; and

                           (iii) all rights, title and interest (including
                  rights acquired pursuant to a license or otherwise) under
                  copyright in various published and unpublished works of
                  authorship including, without limitation, computer programs,
                  computer data bases, other computer software, layouts, trade
                  dress, drawings, designs, writings, and formulas owned by such
                  Grantor (including, without limitation, the works listed on
                  Schedule 1(g)(iii), as the same may be amended pursuant hereto
                  from time to time) (collectively, the "COPYRIGHTS"), all
                  copyright registrations issued to such Grantor and
                  applications for copyright registration that have been or may
                  hereafter be issued or applied for thereon by such Grantor in
                  the United States and any state thereof and in foreign
                  countries (including, without limitation, the registrations
                  listed on Schedule 1(g)(iii), as the same may be amended
                  pursuant hereto from time to time) (collectively, the
                  "COPYRIGHT REGISTRATIONS"), all common law and other rights in
                  and to the Copyrights in the United States and any state
                  thereof and in foreign countries including all copyright
                  licenses (but with respect to such copyright licenses, only to
                  the extent permitted by such licensing arrangements) (the
                  "COPYRIGHT RIGHTS"), including, without limitation, each of
                  the Copyrights, rights, titles and interests in and to the
                  Copyrights, all derivative works and other works protectable
                  by copyright, which are presently, or in the future may be,
                  owned, created (as a work for hire for the benefit of such
                  Grantor), authored (as a work for hire for the benefit of such
                  Grantor), or acquired by such Grantor, in whole or in part,
                  and all Copyright Rights with respect thereto and all
                  Copyright Registrations therefor, heretofore or hereafter
                  granted or applied for, and all renewals and extensions
                  thereof, throughout the world, including all proceeds thereof
                  (such as, by way of example and not by limitation, license
                  royalties and proceeds of infringement suits), the right to
                  renew and extend such Copyright Registrations and Copyright
                  Rights and to register works protectable by copyright and the
                  right to sue for past, present and future infringements of the
                  Copyrights and Copyright Rights;

                  (h) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;

                  (i) all licenses, contracts and agreements, as each such
license, contract and agreement may be amended, restated, supplemented or
otherwise modified from time to time (said agreements, as so amended, restated,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including,
without limitation, (i) all rights of such Grantor to receive moneys due or to
become due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) all claims of such Grantor for
damages arising out of any breach of or default under the Assigned Agreements,

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and (iv) all rights of such Grantor to terminate, amend, supplement, modify or
exercise rights or options under the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder;

                  (j) to the extent not included in any other paragraph of this
Section 1, each Grantor's commercial tort claims (as defined under Article 9 of
the UCC), potential claims, causes of action and potential causes of action,
including, but not limited to, those listed on Schedule 1(j) (collectively, the
"COMMERCIAL TORT CLAIMS"), and all general intangibles (including, without
limitation, tax refunds, payment intangibles, other rights to payment or
performance, choses in action, software and judgments taken on any rights or
claims included in the Collateral);

                  (k) all plant fixtures, business fixtures and other fixtures,
and storage and office facilities, and all accessions thereto and products
thereof;

                  (l) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and

                  (m) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance related to the Collateral (whether or not
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral. For purposes of this Agreement, the term
"PROCEEDS" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.

                  Notwithstanding anything herein to the contrary, in no event
shall the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
license, contract or agreement to which such Grantor is a party or any of its
rights or interests thereunder, to the extent, but only to the extent, that such
a grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under the
provisions of any license, contract or agreement to which such Grantor is a
party on the date hereof (other than to the extent that any such provision would
be rendered ineffective pursuant to the UCC or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Collateral, or (ii) any real property leasehold, unless a Grantor has executed a
leasehold mortgage or leasehold deed of trust covering such real property
leasehold.

                  Each item of Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall also include the meanings set forth
in the UCC, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets.

SECTION 2. SECURITY FOR OBLIGATIONS.

                  This Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the Secured Obligations.

SECTION 3. GRANTORS REMAIN LIABLE.

                  Anything contained herein to the contrary notwithstanding, (a)
each Grantor shall remain liable under any contracts, licenses and agreements
included in the Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts, licenses and agreements included in the Collateral, and (c)
Collateral Agent shall not

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have any obligation or liability under any contracts, licenses, and agreements
included in the Collateral by reason of this Agreement, nor shall Collateral
Agent be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

SECTION 4. REPRESENTATIONS AND WARRANTIES.

                  Each Grantor represents and warrants as follows:

                  (a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by
the Credit Documents, such Grantor owns the Collateral owned by such Grantor
free and clear of any Lien. Except as expressly permitted by the Credit
Documents and such as may have been filed in favor of Collateral Agent in
connection with this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office.

                  (b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment
and Inventory having a value in excess of $500,000 is, as of the date hereof,
located at the places specified in Schedule 4(b), except for Equipment that is
temporarily moved from places specified in Schedule 4(b) to undergo repair or
Inventory which, in the ordinary course of business, is in transit either (i)
from a supplier to a Grantor, (ii) between the locations specified in Schedule
4(b), or (iii) to customers of a Grantor.

                  (c) NEGOTIABLE DOCUMENTS OF TITLE. Except as set forth on
Schedule 4(c), no Negotiable Documents of Title are outstanding with respect to
any of the Inventory with a value in excess of $50,000.

                  (d) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.
The chief place of business, the chief executive office and the office where
such Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
described on Schedule 4(d), have been for the four-month period preceding the
date hereof, located at the locations described on Schedule 4(d); such Grantor's
type (i.e., corporation, limited partnership, etc.) and jurisdiction of
organization are listed on Schedule 4(d); and no Grantor is an unregistered
entity.

                  (e) NAMES. No Grantor (or predecessor by merger or otherwise
of such Grantor) has, within the four-month period preceding the date hereof,
had a different name from the name of such Grantor listed on the signature pages
hereof, except the names listed in Schedule 4(e) annexed hereto.

                  (f) DELIVERY OF CERTAIN COLLATERAL. All certificates or
instruments (excluding checks) evidencing, comprising or representing the
Collateral (including, without limitation, the Securities Collateral) have been
or, when required pursuant to this Agreement will be, delivered to Collateral
Agent duly endorsed or accompanied by duly executed instruments of transfer or
assignment in blank.

                  (g) SECURITIES COLLATERAL. (i) All of the Pledged Shares
described on Schedule 1(e)(i) have been duly authorized and validly issued in
compliance with all applicable federal and state securities laws and, in the
case of capital stock, are fully paid and non-assessable; (ii) all of the
Pledged Debt issued by Company or any of its Subsidiaries has been duly
authorized, authenticated or issued, and delivered and is the legal, valid and
binding obligation of the issuers thereof and is not in default; (iii) except as
described more fully on Schedule 1(e)(i), the Pledged Shares constitute all of
the issued and outstanding shares of stock or other equity interests of each
issuer thereof (subject to the proviso to Section 1(e)(iii) with respect to
shares of a Foreign Subsidiary), and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares, except pursuant to any Contractual
Obligation set forth on Schedule 4(g); (iv) the Pledged Debt issued by Company
or any of its Subsidiaries constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note; and (v) Schedule
1(e)(i) sets forth all of the Pledged Shares owned by each Grantor on the date
hereof.

                  (h) INTELLECTUAL PROPERTY COLLATERAL.

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                           (i) a true and complete list of all Trademark
                  Registrations and Trademark applications owned, held (whether
                  pursuant to a license or otherwise) or used by such Grantor,
                  in whole or in part, is set forth in Schedule 1(g)(i);

                           (ii) a true and complete list of all Patents owned,
                  held (whether pursuant to a license or otherwise) or used by
                  such Grantor, in whole or in part, is set forth in Schedule
                  1(g)(ii);

                           (iii) a true and complete list of all Copyright
                  Registrations and applications for Copyright Registrations
                  held (whether pursuant to a license or otherwise) by such
                  Grantor, in whole or in part, is set forth in Schedule
                  1(g)(iii);

                           (iv) after reasonable inquiry, such Grantor is not
                  aware of any pending or threatened claim by any third party
                  that any of the Intellectual Property Collateral owned, held
                  or used by such Grantor is invalid or unenforceable; and

                           (v) except as expressly permitted by each Credit
                  Document, no effective security interest or other Lien
                  covering all or any part of the Intellectual Property
                  Collateral is on file in the United States Patent and
                  Trademark Office or the United States Copyright Office.

                  (i) PERFECTION. The security interest in the Collateral is
granted to Collateral Agent on the basis described in Section 2 hereof and
constitutes a valid security interest (except for the security interest
purported to be granted in commercial tort claims other than those listed on
Schedule 1(j)), to the extent the UCC or United States patent, trademark or
copyright statutes are applicable thereto, securing the payment of the
applicable Secured Obligations. Upon (i) the filing of UCC financing statements
naming each Grantor as "debtor," naming Collateral Agent as "secured party" and
describing the Collateral in the filing office with respect to such Grantor set
forth on Schedule 4(i), (ii) in the case of the Securities Collateral consisting
of certificated securities or evidenced by instruments, delivery of the
certificates representing such certificated securities and delivery of such
instruments to Collateral Agent, in each case duly endorsed or accompanied by
duly executed instruments of assignment or transfer in blank, and (iii) in the
case of the Intellectual Property Collateral listed on Schedules 1g(i), (ii) and
(iii) hereto, excluding the Intellectual Property held under foreign law, in
addition to the filing of such UCC financing statements, the filing of a Grant
of Trademark Security Interest, substantially in the form of Exhibit I, and a
Grant of Patent Security Interest, substantially in the form of Exhibit II, with
the United States Patent and Trademark Office and the filing of a Grant of
Copyright Security Interest, substantially in the form of Exhibit III, with the
United States Copyright Office (each such Grant of Trademark Security Interest,
Grant of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "GRANT"), the security interest in the Collateral
referred to in the immediately preceding sentence in each case will constitute a
perfected security interest therein (except for the security interest purported
to be granted in commercial tort claims other than those listed on Schedule
1(j)), to the extent the UCC or United States patent, trademark or copyright
statutes are applicable thereto, prior to all other Liens (except for Liens
otherwise permitted under any Credit Document to the extent such Liens are
permitted to be senior in priority to the Liens in favor of the Collateral
Agent, the Cash Management Bank, the Revolver Agent and the Revolver Lenders,
the Term Loan Agents and the Term Loan Lenders, as the case may be), and all
filings and other actions in the United States necessary or desirable to perfect
and protect such security interest have been duly made or taken. In the case of
Intellectual Property held under foreign law, after the occurrence of an Event
of Default, all actions necessary or desirable to perfect and protect such
security interest shall be taken.

                  (j) COMMERCIAL TORT CLAIMS. Schedule 1(j) identifies with
specificity each claim or cause of action that any Grantor may have, which
arises in tort, for which a related action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration ("PROCEEDING") has been initiated by any Person.

                  (k) ROLLING STOCK. The rolling stock of the Grantors
(collectively) as of the date hereof has an aggregate book value of less than
$500,000.00.

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SECTION 5. FURTHER ASSURANCES.

                  (a) GENERALLY. Each Grantor agrees that from time to time, at
the expense of Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby under the UCC or United States patent, trademark or copyright
statutes or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the request of Collateral
Agent, upon the occurrence and continuation of an Event of Default, mark
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Collateral Agent, each of its records pertaining
to the Collateral, with a legend, in form and substance satisfactory to
Collateral Agent, indicating that such Collateral is subject to the security
interests granted hereby, (ii) at the request of Collateral Agent, upon the
occurrence and continuation of an Event of Default, deliver and pledge to
Collateral Agent hereunder all instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Collateral Agent, (iii) execute and file such
financing or continuation statements, or amendments thereto, and execute and
deliver such agreements establishing that Collateral Agent has control of
specified items of Collateral and such other instruments or notices, as may be
necessary, or as Collateral Agent may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
under the UCC or United States patent, trademark or copyright statutes, (iv)
furnish to Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Collateral Agent may reasonably request, all in
reasonable detail, (v) upon the reasonable request of Collateral Agent, execute
and file with the registrar of motor vehicles or other appropriate authority in
such jurisdiction an application or other document requesting the notation or
other indication of the security interest created hereunder on such certificate
of title or any item of Equipment that is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, (vi) at any time during normal business hours, upon reasonable request
by Collateral Agent, exhibit the Collateral in its existing location to, and
allow inspection of the Collateral by, Collateral Agent, or persons designated
by Collateral Agent, (vii) at Collateral Agent's request, appear in and defend
any action or proceeding that may affect such Grantor's title to, or Collateral
Agent's security interest in all or any material part of, the Collateral, except
for Intellectual Property Collateral; provided, however, that the foregoing
exception for Intellectual Property Collateral shall not apply if such
Intellectual Property is of material value as determined by Collateral Agent in
its sole and absolute discretion; (viii) use commercially reasonable efforts to
obtain any necessary consents of third parties to the assignment and perfection
of a security interest to Collateral Agent with respect to any Collateral, and
(ix) at Collateral Agent's reasonable request, Grantors shall promptly deliver,
execute and file any and all documents, instruments and certificates that
Collateral Agent deems necessary or desirable, and in each case in form and
substance satisfactory to Collateral Agent. Notwithstanding the foregoing
sentence, no Grantor shall be required to amend or otherwise modify the
description of the Collateral to provide a description of any claim or cause of
action which arises in tort unless and until a Proceeding relating to such claim
or cause of action has been initiated by any Person. Each Grantor hereby
authorizes Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of any Grantor. Each Grantor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed or authenticated by such Grantor shall be sufficient
authorization to file a financing statement and may be filed as a financing
statement in any and all jurisdictions.

                  (b) SECURITIES COLLATERAL. Without limiting the generality of
the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other equity or debt securities required to be
pledged hereunder, immediately (and in any event within five (5) Business Days)
deliver to Collateral Agent a Pledge Supplement, duly executed by such Grantor,
in substantially the form of Exhibit IV (a "PLEDGE SUPPLEMENT"), in respect of
the additional Pledged Shares or Pledged Debt (to the extent issued by Company
or any of its Subsidiaries) to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Collateral Agent, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Collateral Agent to attach each Pledge Supplement to this Agreement and agrees
that all Pledged Shares or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided that the failure of any Grantor to

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                                       8
<PAGE>

execute a Pledge Supplement with respect to any additional Pledged Shares or
Pledged Debt pledged pursuant to this Agreement shall not impair the security
interest of Collateral Agent therein or otherwise adversely affect the rights
and remedies of Collateral Agent hereunder with respect thereto.

                  (c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), each Grantor shall execute and deliver
to Collateral Agent contemporaneous with its execution and delivery of this
Agreement (i) with respect to all of such Grantor's Trademark Collateral, a
Grant of Trademark Security Interest, substantially in the form of Exhibit I,
(ii) with respect to all of such Grantor's Patent Collateral, a Grant of Patent
Security Interest, substantially in the form of Exhibit II, and (iii) with
respect to all of such Grantor's Copyright Collateral, a Grant of Copyright
Security Interest, substantially in the form of Exhibit III. In addition, if any
Grantor shall hereafter obtain rights to any new Intellectual Property
Collateral or become entitled to the benefit of (i) any patent application or
patent or any reissue, division, continuation, renewal, extension or
continuation-in-part of any Patent or any improvement of any Patent or (ii) any
material Copyright Registration, application for Copyright Registration or
renewals or extension of any material Copyright, then in any such case, the
provisions of this Agreement shall automatically apply thereto. Each Grantor
shall promptly notify Collateral Agent in writing of any of the foregoing rights
acquired by such Grantor after the date hereof and of (i) any Trademark
Registrations issued or application for a Trademark Registration or application
for a Patent made, and (ii) any Copyright Registrations issued or applications
for Copyright Registration made, in any such case, after the date hereof.
Promptly after the filing of an application for any material (1) Trademark
Registration; (2) Patent; or (3) Copyright Registration, each Grantor shall
execute and deliver to Collateral Agent and record in all places where a Grant
is recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
SUPPLEMENT"), pursuant to which such Grantor shall grant to Collateral Agent a
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Collateral Agent, such
Grantor shall give written notice to Collateral Agent as soon as reasonably
practicable and the filing shall instead be undertaken as soon as practicable
but in no case later than immediately following the grant of the applicable
Trademark Registration or Copyright Registration, as the case may be. Upon
delivery to Collateral Agent of an IP Supplement, Schedules 1(g)(i), 1(g)(ii),
and 1(g)(iii) hereto and Schedule A to each Grant, as applicable, shall be
deemed modified to include reference to any right, title or interest in any
existing Intellectual Property Collateral or any Intellectual Property
Collateral included on Schedule A to such IP Supplement. Each Grantor hereby
authorizes Collateral Agent to modify this Agreement without the signature or
consent of any Grantor by attaching Schedules 1(g)(i), 1(g)(ii), and 1(g)(iii),
as applicable, that have been modified to include such Intellectual Property
Collateral or to delete any reference to any right, title or interest in any
Intellectual Property Collateral in which any Grantor no longer has or claims
any right, title or interest; provided, the failure of any Grantor to execute an
IP Supplement with respect to any additional Intellectual Property Collateral
pledged pursuant to this Agreement shall not impair the security interests of
Collateral Agent therein or otherwise adversely affect the rights and remedies
of Collateral Agent hereunder with respect thereto.

SECTION 6. CERTAIN COVENANTS OF GRANTORS.

                  Each Grantor shall:

                  (a) not use or permit any material Collateral under its
control to be used unlawfully or in violation of any provision of this Agreement
or any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral;

                  (b) notify Collateral Agent of any change in such Grantor's
name, identity or corporate structure within 15 days of such change;

                  (c) give Collateral Agent 30 days' prior written notice of (i)
any change in such Grantor's chief place of business, chief executive office or
offices where such Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts or (ii) reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization, incorporation, formation or "location" of such Grantor under the
UCC;

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                                       9
<PAGE>

                  (d) if Collateral Agent gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes;

                  (e) except as expressly permitted by each Credit Document, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral; provided that no such
tax, assessment, charge, levy or claim need be paid if it is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (i) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(ii) in the case of a tax, assessment, charge, levy or claim which has or may
become a Lien against any of the Collateral, such proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim; provided however, that notwithstanding the foregoing proviso, such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment; and

                  (f) after the date hereof, give Collateral Agent prompt notice
with sufficient particularity of any claim or cause of action of any Grantor
arising in tort and not otherwise identified on Schedule 1(j) relating to a
Proceeding that has been initiated by any Person.

SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.

                  Each Grantor shall:

                  (a) keep the items of Equipment and Inventory owned by such
Grantor having a value in excess of $500,000 at its main place of business or
the places therefor specified on Schedule 4(b) or, upon 30 days' prior written
notice to Collateral Agent, at such other places in jurisdictions where all
action that may be necessary or desirable, or that Collateral Agent may
reasonably request, in order to perfect and protect the security interest
granted or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory shall have been taken;

                  (b) promptly furnish to Collateral Agent a statement
respecting any material loss or damage to any of the material Equipment owned by
such Grantor;

                  (c) keep correct and accurate records of Inventory owned by
such Grantor, in accordance with such Grantor's customary practices;

                  (d) if any Inventory is in possession or control of any of
such Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $250,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Collateral Agent and subject to the instructions of Collateral Agent;

                  (e) after an Event of Default has occurred and is continuing,
promptly upon the issuance and delivery to such Grantor of any Negotiable
Document of Title, deliver such Negotiable Document of Title to Collateral
Agent; and

                  (f) at its own expense, maintain insurance with respect to the
Equipment and Inventory in accordance with the terms of the Credit Documents.

SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED CONTRACTS.

                  (a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper in such
Grantor's possession that evidence Accounts, at the locations therefor set forth
on Schedule 4(d) or upon 30 days' prior written notice to Collateral Agent, at
such other location in a jurisdiction where all action that may be necessary, or
that Collateral Agent may reasonably request, in order to perfect and protect
the security interest

                                                              Security Agreement

                                       10
<PAGE>

granted or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Each Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Collateral Agent, upon reasonable notice during normal business hours, to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to Collateral Agent, at Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. Promptly upon the reasonable request of Collateral Agent, each Grantor
shall deliver to Collateral Agent complete and correct copies of each Related
Contract.

                  (b) Each Grantor shall maintain (i) complete records of each
Account, in accordance with its customary business practices, including records
of all payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.

                  (c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Collateral
Agent's direction, shall take) such action as such Grantor or Collateral Agent
may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Collateral Agent shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Collateral Agent and, to the extent such Grantor
is not legally or contractually prohibited from doing so and such contractual
prohibitions are enforceable under applicable law, to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Collateral Agent, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Collateral Agent and, upon such notification and at the expense of Grantors, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by such Grantor of the notice from
Collateral Agent referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by such
Grantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section 20
hereof, and (ii) such Grantor shall not adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.

SECTION 9. SPECIAL COVENANTS WITH RESPECT TO THE SECURITIES COLLATERAL.

                  (a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Collateral Agent pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to Collateral Agent. Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing such Securities Collateral for certificates or instruments of smaller
or larger denominations. Nothing in this Section 9(a) shall apply to Pledged
Shares held by a Grantor in a Person in whom Borrowers in the aggregate hold
less than 10% (whether in voting power or economic value or both) of the shares
of stock or other equity interests.

                  (b) COVENANTS. Each Grantor shall (i) not, except as expressly
permitted by each of the Credit Documents, permit any issuer of Pledged Shares
that is a Subsidiary or an Affiliate of any Grantor to merge or consolidate
unless all the outstanding capital stock or other equity interests of the
surviving or resulting Person is, upon such merger or consolidation, pledged
hereunder and no cash, securities or other property is distributed in respect of
the outstanding shares of any other constituent corporation; provided, if the
surviving or resulting Person upon any such merger or consolidation involving an
issuer of Pledged Shares which is a Foreign Subsidiary is a Foreign Subsidiary
then such Grantor shall only be required to pledge outstanding capital stock of
such surviving or resulting Person possessing up to but not exceeding 65% of the
voting power of all classes of capital stock or other

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                                       11
<PAGE>

equity interests of such issuer entitled to vote; (ii) to the extent legally
able to do so, cause each issuer of Pledged Shares that is controlled by such
Grantor not to issue any stock, other equity interests or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor or unless such stock, equity interests or securities
received by the Grantor are pledged hereunder; (iii) pledge hereunder, and
deliver to Collateral Agent as soon as practicable (but in no event later than
three Business Days) upon its acquisition (directly or indirectly) thereof, any
and all additional shares of stock, other equity interests or other securities
of each issuer of Pledged Shares; (iv) pledge hereunder, and deliver to
Collateral Agent as soon as practicable (but in no event later than three
Business Days) upon its acquisition (directly or indirectly) thereof, any and
all shares of stock or other equity interests of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of such Grantor; provided that, notwithstanding anything contained in this
clause (iv) to the contrary, such Grantor shall only be required to pledge the
outstanding capital stock or other equity interests of a Foreign Subsidiary up
to but not exceeding 65% of the voting power of all classes of capital stock or
other equity interests of such Foreign Subsidiary entitled to vote; (v) pledge
hereunder, as soon as practicable (but in no event later than five Business
Days) upon their issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to such Grantor by any obligor on
the Pledged Debt (to the extent issued by Company or any of its Subsidiaries);
(vi) pledge hereunder, as soon as practicable (but in no event later than five
Business Days) upon their issuance, any and all instruments or other evidences
of indebtedness from time to time owed to such Grantor by any Person that after
the date of this Agreement becomes, as a result of any occurrence, a direct or
indirect Subsidiary of such Grantor; and (vii) at the request of Collateral
Agent, promptly execute and deliver to Collateral Agent an agreement providing
for the control, as that term is defined in the UCC, by Collateral Agent of all
securities entitlements and securities accounts of such Grantor; provided,
however, that nothing in this Section 9(b) shall be construed as a waiver of the
prohibitions and restrictions on the Grantors with respect to investments as set
forth in any applicable Credit Document.

                  (c) VOTING AND DISTRIBUTIONS. So long as no Event of Default
shall have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement, the Revolver Credit Agreement, or the Term Loan
Agreement; provided, no Grantor shall exercise or refrain from exercising any
such right if Collateral Agent shall have notified such Grantor that, in
Collateral Agent's judgment, such action would have a material adverse effect on
the value of the Securities Collateral or any part thereof; and provided
further, such Grantor shall give Collateral Agent at least five Business Days'
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right if exercising, or
refraining from exercising, such right would reasonably be expected to have a
material adverse effect on the value of the Securities Collateral or any part
thereof (it being understood, however, that neither (among other things) (A) the
voting by such Grantor of any Pledged Shares for or such Grantor's consent to
the election of directors or other members of a governing body of an issuer of
Pledged Shares at a regularly scheduled annual or other meeting of stockholders
or holders of equity interests or with respect to incidental matters at any such
meeting, nor (B) such Grantor's consent to or approval of any action otherwise
permitted under this Agreement, the Revolver Credit Agreement or the Term Loan
Agreement shall be deemed inconsistent with the terms of this Agreement, the
Revolver Credit Agreement or the Term Loan Agreement, respectively, within the
meaning of this Section 9(c), and no notice of any such voting or consent need
be given to Collateral Agent) and (ii) each Grantor shall be entitled to receive
and retain, and to utilize any and all dividends, other distributions and
interest paid in respect of the Securities Collateral to the extent permitted
under the Credit Documents; provided, that except as otherwise provided in the
Credit Documents, any and all (A) dividends, distributions and interest paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Securities Collateral, (B) dividends and other distributions paid or payable
in cash in respect of any Securities Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange for any
Securities Collateral, shall be, and shall forthwith be delivered to Collateral
Agent to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Collateral
Agent as Securities Collateral in the same form as so received (with all
necessary endorsements).

                  Upon the occurrence and during the continuation of an Event of
Default, (x) all rights of such Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant

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                                       12
<PAGE>

hereto shall cease, and all such rights shall thereupon become vested in
Collateral Agent who shall thereupon have the sole right to exercise such voting
and other consensual rights; (y) all rights of such Grantor to receive the
dividends, other distributions and interest payments which it would otherwise be
authorized to receive and retain pursuant hereto shall cease, and all such
rights shall thereupon become vested in Collateral Agent who shall thereupon
have the sole right to receive and hold as Securities Collateral such dividends,
other distributions and interest payments; and (z) all dividends, principal,
interest payments and other distributions which are received by such Grantor
contrary to the provisions of clause (ii) of the immediately preceding paragraph
or clause (y) above shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of such Grantor and shall forthwith
be paid over to Collateral Agent as Securities Collateral in the same form as so
received (with any necessary endorsements).

                  (d) IRREVOCABLE PROXY. In order to permit Collateral Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends, principal or interest
payments and other distributions which it may be entitled to receive hereunder,
(I) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to Collateral Agent all such proxies, dividend payment orders and
other instruments as Collateral Agent may from time to time request, and (II)
without limiting the effect of clause (I) above, each Grantor hereby grants to
Collateral Agent an IRREVOCABLE PROXY to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders or other holders of equity interests, calling special
meetings of shareholders or other holders of equity interests and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence and
during the continuance of an Event of Default and which proxy shall only
terminate upon the Payment in Full of all Secured Obligations.

SECTION 10. SPECIAL COVENANTS WITH RESPECT TO THE INTELLECTUAL PROPERTY
COLLATERAL.

                  (a) Each Grantor shall:

                           (i) use commercially reasonable efforts so as not to
                  permit the inclusion in any contract to which it hereafter
                  becomes a party of any provision that could or might in any
                  way impair or prevent the creation of a security interest in,
                  or the assignment of, such Grantor's rights and interests in
                  any property that is material Intellectual Property Collateral
                  acquired under such contracts; and

                           (ii) furnish to Collateral Agent from time to time at
                  Collateral Agent's reasonable request statements and schedules
                  further identifying and describing any material Intellectual
                  Property Collateral and such other reports in connection with
                  such Collateral, all in reasonable detail.

                  (b) Except as otherwise provided in this Section 10, each
Grantor shall continue to collect in accordance with its customary business
practice, at its own expense, all amounts due or to become due to such Grantor
in respect of the material Intellectual Property Collateral or any portion
thereof. In connection with such collections, each Grantor may take (and, after
the occurrence and during the continuance of any Event of Default at Collateral
Agent's reasonable direction, shall take) such action as such Grantor or
Collateral Agent may deem reasonably necessary or advisable to enforce
collection of such amounts; provided, Collateral Agent shall have the right (but
not the obligation) at any time, upon the occurrence and during the continuation
of an Event of Default, to notify the obligors with respect to any such amounts
of the existence of the security interests created hereby and to direct such
obligors to make payment of all such amounts directly to Collateral Agent, and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. Upon the occurrence and during the continuation of any Event of Default,
(i) all amounts and proceeds (including checks and other instruments) received
by each Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property Collateral or any portion thereof shall be received in
trust for the benefit of Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and

                                                              Security Agreement

                                       13
<PAGE>

applied as provided by Section 20 herein, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.

                  (c) Each Grantor shall give Collateral Agent 10 Business Days
prior written notice of any abandonment of any material Intellectual Property
Collateral (it being understood that no such notice needs to be given by such
Grantor of the abandonment of non-material Intellectual Property) or any pending
patent application or any Patent.

                  (d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Each Grantor shall promptly, following its
becoming aware thereof, notify Collateral Agent of the institution of, or of any
adverse determination in, any proceeding (whether in the United States Patent
and Trademark Office, the United States Copyright Office or any federal, state,
local or foreign court) regarding such Grantor's ownership, right to use, or
interest in any material Intellectual Property Collateral. Each Grantor shall
provide to Collateral Agent any information with respect thereto requested by
Collateral Agent.

                  (e) In addition to, and not by way of limitation of, the
granting of a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Collateral Agent the
nonexclusive right and license to use all trademarks, tradenames, copyrights,
patents or technical processes (including, without limitation, the Intellectual
Property Collateral) owned or used by such Grantor that relate to the Collateral
and any other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Collateral Agent to realize on the Collateral in accordance
with this Agreement and to enable any transferee or assignee of the Collateral
to enjoy the benefits of the Collateral. This right shall inure to the benefit
of all successors, assigns and transferees of Collateral Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license shall be granted free of charge, without
requirement that any monetary payment whatsoever be made to such Grantor.

SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED AGREEMENTS.

                  (a) Each Grantor shall at its expense:

                           (i) if consistent with sound business practices,
                  perform and observe all terms and provisions of the Assigned
                  Agreements to be performed or observed by it, maintain the
                  Assigned Agreements in full force and effect, enforce the
                  Assigned Agreements in accordance with such Grantor's
                  customary business practice; and

                           (ii) after the occurrence and during the continuation
                  of an Event of Default and upon the request of Collateral
                  Agent, furnish to Collateral Agent, promptly upon receipt
                  thereof, copies of all notices, requests and other material
                  documents received by such Grantor under or pursuant to the
                  Assigned Agreements, and from time to time (A) furnish to
                  Collateral Agent such information and reports regarding the
                  Assigned Agreements as Collateral Agent may reasonably request
                  and (B) upon request of Collateral Agent make to the parties
                  to such Assigned Agreements such demands and requests for
                  information and reports or for action as such Grantor is
                  entitled to make under the Assigned Agreements.

                  (b) Upon the occurrence and during the continuance of an Event
of Default, no Grantor shall:

                           (i) cancel or terminate any of the Assigned
                  Agreements or consent to or accept any cancellation or
                  termination thereof;

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                                       14
<PAGE>

                           (ii) amend or otherwise modify the Assigned
                  Agreements or give any consent, waiver or approval thereunder;

                           (iii) waive any default under or breach of the
                  Assigned Agreements;

                           (iv) consent to or permit or accept any prepayment of
                  amounts to become due under or in connection with the Assigned
                  Agreements, except as expressly provided therein; or

                           (v) take any other action in connection with the
                  Assigned Agreements that could reasonably be expected to
                  materially impair the value of the interest or rights of such
                  Grantor thereunder or that could reasonably be expected to
                  materially impair the interest or rights of Collateral Agent.

SECTION 12. [INTENTIONALLY OMITTED.]

SECTION 13. [INTENTIONALLY OMITTED.]

SECTION 14. SPECIAL PROVISIONS WITH RESPECT TO THE COLLATERAL ACCOUNTS.

                  Collateral Agent is hereby authorized to establish and
maintain at its offices restricted deposit accounts and restricted securities
accounts which shall be in the names of Grantors, jointly or each individually,
and under the sole dominion and control of Collateral Agent. Each Grantor agrees
that from time to time, at the expense of Grantors, such Grantor will promptly
execute and deliver account control agreements in form and substance
satisfactory to Collateral Agent and take all further action that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby in such accounts or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any such accounts.

SECTION 15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

                  Each Grantor hereby irrevocably appoints Collateral Agent as
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor, Collateral Agent or otherwise,
from time to time in Collateral Agent's discretion to take any action and to
execute any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:

                  (a) upon the occurrence and during the continuance of an Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Collateral Agent pursuant to Section 7 hereof;

                  (b) upon the occurrence and during the continuance of an Event
of Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

                  (c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;

                  (d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;

                  (e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or each of the Credit Documents) levied or placed
upon the Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by Collateral Agent in its sole
discretion, any such payments made

                                                              Security Agreement

                                       15
<PAGE>

by Collateral Agent to become obligations of such Grantor to Collateral Agent,
due and payable immediately without demand;

                  (f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

                  (g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Collateral Agent were the absolute owner thereof for all purposes, and to
do, at Collateral Agent's option and Grantors' expense, at any time or from time
to time, all acts and things that Collateral Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Collateral Agent's security
interests therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.

SECTION 16. COLLATERAL AGENT MAY PERFORM.

                  If any Grantor fails to perform any agreement contained
herein, Collateral Agent may itself perform, or cause performance of (but shall
not be obligated to perform or cause the performance of), such agreement, and
the expenses of Collateral Agent incurred in connection therewith shall be
payable by Grantors under Section 21(b) hereof.

SECTION 17. STANDARD OF CARE.

                  The powers conferred on Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property.

SECTION 18. REMEDIES.

                  (a) GENERALLY. Subject to the terms of the Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral), and also may (i) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent reasonably deems appropriate, (iv) take possession
of any Grantor's premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of such Grantor's equipment for
the purpose of completing any work in process, taking any actions described in
the preceding clause (iii) and collecting any Secured Obligation, (v) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as Collateral Agent may
deem commercially reasonable, (vi) exercise dominion and control over and refuse
to permit further withdrawals from any Deposit Account maintained with
Collateral Agent or any Benefited Party and provide instructions directing the
disposition of funds in Deposit Accounts not maintained with Collateral Agent or
any Benefited Party and (vii) provide entitlement orders with respect to
securities entitlements and other investment property constituting a part of the
Collateral and with notice to the relevant Grantor, transfer to or register in
the name of Collateral Agent or any of its nominees any or all of the Securities
Collateral. Collateral Agent or any Benefited Party (subject to the terms of the
Intercreditor Agreement)

                                                              Security Agreement

                                       16
<PAGE>

may be the purchaser of any or all of the Collateral at any such sale and
Collateral Agent, as agent for and representative of the Benefited Parties (but
not any Benefited Party in its individual capacity unless Requisite Obligees
shall otherwise agree in writing), shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Collateral Agent at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, each Grantor hereby waives
any claims against Collateral Agent arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantors shall
be jointly and severally liable for the deficiency and the fees of any attorneys
employed by Collateral Agent to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to Collateral Agent, that Collateral Agent has no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against such Grantor, and each Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.

                  (b) SECURITIES COLLATERAL.

                           (i) Each Grantor recognizes that, by reason of
                  certain prohibitions contained in the Securities Act and
                  applicable state securities laws, Collateral Agent may be
                  compelled, with respect to any sale of all or any part of the
                  Securities Collateral conducted without prior registration or
                  qualification of such Securities Collateral under the
                  Securities Act and/or such state securities laws, to limit
                  purchasers to those who will agree, among other things, to
                  acquire the Securities Collateral for their own account, for
                  investment and not with a view to the distribution or resale
                  thereof. Each Grantor acknowledges that any such private sales
                  may be at prices and on terms less favorable than those
                  obtainable through a public sale without such restrictions
                  (including a public offering made pursuant to a registration
                  statement under the Securities Act) and, notwithstanding such
                  circumstances and the registration rights granted to
                  Collateral Agent by such Grantor pursuant hereto and
                  notwithstanding the provisions of Section 9-610(c) of the UCC,
                  which each Grantor hereby waives to the extent permitted by
                  applicable law, each Grantor agrees that any such private sale
                  shall be deemed to have been made in a commercially reasonable
                  manner and that Collateral Agent shall have no obligation to
                  engage in public sales and no obligation to delay the sale of
                  any Securities Collateral for the period of time necessary to
                  permit the issuer thereof to register it for a form of public
                  sale requiring registration under the Securities Act or under
                  applicable state securities laws, even if such issuer would,
                  or should, agree to so register it. If Collateral Agent
                  determines to exercise its right to sell any or all of the
                  Securities Collateral, upon written request, each Grantor
                  shall and shall cause each issuer of any Pledged Shares to be
                  sold hereunder from time to time to furnish to Collateral
                  Agent all such information as Collateral Agent may request in
                  order to determine the number of shares and other instruments
                  included in the Securities Collateral which may be sold by
                  Collateral Agent in exempt transactions under the Securities
                  Act and the rules and regulations of the Securities and
                  Exchange Commission thereunder, as the same are from time to
                  time in effect and to otherwise comply with the Securities Act
                  and such rules and regulations in connection with such sale.

                                                              Security Agreement

                                       17
<PAGE>

                           (ii) If Collateral Agent shall determine to exercise
                  its right to sell all or any of the Securities Collateral
                  pursuant to this Section, each Grantor agrees that, upon
                  request of Collateral Agent (which request may be made by
                  Collateral Agent in its sole discretion), such Grantor will,
                  at its own expense (A) execute and deliver, and cause each
                  issuer of the Securities Collateral contemplated to be sold
                  and the directors and officers thereof to execute and deliver,
                  all such instruments and documents, and do or cause to be done
                  all such other acts and things, as may be necessary or, in the
                  opinion of Collateral Agent, advisable to register such
                  Securities Collateral under the provisions of the Securities
                  Act and to cause the registration statement relating thereto
                  to become effective and to remain effective for such period as
                  prospectuses are required by law to be furnished, and to make
                  all amendments and supplements thereto and to the related
                  prospectus which, in the opinion of Collateral Agent, are
                  necessary or advisable, all in conformity with the
                  requirements of the Securities Act and the rules and
                  regulations of the Securities and Exchange Commission
                  applicable thereto; (B) use its best efforts to qualify the
                  Securities Collateral under all applicable state securities or
                  "Blue Sky" laws and to obtain all necessary governmental
                  approvals for the sale of the Securities Collateral, as
                  requested by Collateral Agent; (C) cause each such issuer to
                  make available to its security holders, as soon as
                  practicable, an earnings statement which will satisfy the
                  provisions of Section 11(a) of the Securities Act; (D) do or
                  cause to be done all such other acts and things as may be
                  necessary to make such sale of the Securities Collateral or
                  any part thereof valid and binding and in compliance with
                  applicable law; and (E) bear all costs and expenses, including
                  reasonable attorneys' fees, of carrying out its obligations
                  under this Section.

                           (iii) Without limiting the generality of those
                  provisions of the Revolver Credit Agreement (or any successor
                  provisions thereto) and the Term Loan Agreement (or any
                  successor provisions thereto) that require one or more of the
                  Grantors to reimburse expenses of or indemnify the Collateral
                  Agent or any Benefited Party in the event of any public sale
                  described herein, each Grantor agrees to indemnify and hold
                  harmless Collateral Agent and the Benefited Parties and each
                  of their respective directors, officers, employees and agents
                  from and against any loss, fee, cost, expense, damage,
                  liability or claim, joint or several, to which any such
                  Persons may become subject or for which any of them may be
                  liable, under the Securities Act or otherwise, insofar as such
                  losses, fees, costs, expenses, damages, liabilities or claims
                  (or any litigation commenced or threatened in respect thereof)
                  arise out of or are based upon an untrue statement or alleged
                  untrue statement of a material fact contained in any
                  preliminary prospectus, registration statement, prospectus or
                  other such document published or filed in connection with such
                  public sale, or any amendment or supplement thereto, or arise
                  out of or are based upon the omission or alleged omission to
                  state therein a material fact required to be stated therein or
                  necessary to make the statements therein not misleading, and
                  will reimburse Collateral Agent and such other Persons for any
                  legal or other expenses reasonably incurred by Collateral
                  Agent and such other Persons in connection with any
                  litigation, of any nature whatsoever, commenced or threatened
                  in respect thereof (including any and all fees, costs and
                  expenses whatsoever reasonably incurred by Collateral Agent
                  and such other Persons and counsel for Collateral Agent and
                  such other Persons in investigating, preparing for, defending
                  against or providing evidence, producing documents or taking
                  any other action in respect of, any such commenced or
                  threatened litigation or any claims asserted). This indemnity
                  shall be in addition to any liability which any Grantor may
                  otherwise have and shall extend upon the same terms and
                  conditions to each Person, if any, that controls Collateral
                  Agent or such Persons within the meaning of the Securities
                  Act.

                  (c) REMEDIES WITH RESPECT TO BORROWERS. Furthermore, upon the
occurrence and during the continuance of any Event of Default, Collateral Agent
may revoke each Grantor's rights to use cash collateral in which Collateral
Agent has an interest; provided that, any other provision of this Agreement or
any other Credit Document to the contrary notwithstanding, with respect to the
foregoing, Collateral Agent shall give each Loan Party five Business Days prior
written notice (which notice shall be delivered by facsimile or overnight
courier) of the exercise of its rights and remedies with respect to the
Collateral. The enumeration of the foregoing rights and remedies is not intended
to be exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative and
not alternative. Each Grantor hereby waives (i) presentment, demand and protest
and notice of presentment, dishonor, notice of intent to accelerate, notice of

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                                       18
<PAGE>

acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties or other
property at any time held by Collateral Agent and any Benefited Party on which
Loan Parties may in any way be liable and hereby ratify and confirm whatever
Collateral Agent and the Benefited Parties may lawfully do in this regard, (ii)
subject to the notice provisions of the preceding paragraph, all rights to
notice and hearing prior to Collateral Agent's taking possession or control of,
or to the reply of Collateral Agent or any Benefited Party, attachment or levy
upon, the Collateral, or any bond or security which might be required by any
court prior to allowing Collateral Agent or any Benefited Party to exercise any
of their remedies, and (iii) the benefit of all valuation, appraisal and
exemption laws. Each Grantor acknowledges they have been advised by counsel of
their choice with respect to the effect of the foregoing waivers and this
Agreement, the Credit Documents and the transactions evidenced by this Agreement
and the Credit Documents.

SECTION 19. ADDITIONAL REMEDIES FOR INTELLECTUAL PROPERTY COLLATERAL.

                  (a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Collateral Agent shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Collateral Agent or otherwise, to enforce any
Intellectual Property Collateral, in which event each Grantor shall, at the
request of Collateral Agent, do any and all lawful acts and execute any and all
documents required by Collateral Agent in aid of such enforcement and each
Grantor shall promptly, upon demand, reimburse and indemnify Collateral Agent as
provided in those provisions of the Revolver Credit Agreement (or any successor
provisions thereto) or the Term Loan Agreement (or any successor provisions
thereto) that require one or more of the Grantors to reimburse expenses of or
indemnify the Collateral Agent or the Benefited Parties and as provided in
Section 21 hereof, as applicable, in connection with the exercise of its rights
under this Section, and, to the extent that Collateral Agent shall elect not to
bring suit to enforce any Intellectual Property Collateral as provided in this
Section, each Grantor agrees to use all reasonable measures, whether by action,
suit, proceeding or otherwise, to prevent the infringement of any of the
Intellectual Property Collateral by others and for that purpose agrees to use
its commercially reasonable judgment in maintaining any action, suit or
proceeding against any Person so infringing reasonably necessary to prevent such
infringement; (ii) upon written demand from Collateral Agent, each Grantor shall
execute and deliver to Collateral Agent an assignment or assignments of the
Intellectual Property Collateral and such other documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement; (iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that Collateral
Agent (or any Revolver Lender or Term Loan Lender, subject to the terms of the
Intercreditor Agreement) receives cash proceeds in respect of the sale of, or
other realization upon, the Intellectual Property Collateral; and (iv) within
five Business Days after written notice from Collateral Agent, each Grantor
shall make available to Collateral Agent, to the extent within such Grantor's
power and authority, such personnel in such Grantor's employ on the date of such
Event of Default as Collateral Agent may reasonably designate, by name, title or
job responsibility, to permit such Grantor to continue, directly or indirectly,
to produce, advertise and sell the products and services sold or delivered by
such Grantor under or in connection with the Trademarks, Trademark Registrations
and Trademark Rights, such persons to be available to perform their prior
functions on Collateral Agent's behalf and to be compensated by Collateral Agent
at such Grantor's expense on a per diem, pro-rata basis consistent with the
salary and benefit structure applicable to each as of the date of such Event of
Default.

                  (b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Collateral Agent of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Collateral
Agent shall promptly execute and deliver to such Grantor, at such Grantor's cost
and expense, such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by Collateral Agent; provided, after giving effect to such reassignment,
Collateral Agent's security interests granted pursuant hereto, as well as all
other rights and remedies of Collateral Agent granted hereunder, shall continue
to be in full force and effect; and provided further, the rights, title and
interests so reassigned shall be free and clear of all Liens other than Liens
(if any) encumbering such rights, title and interest at the time of their
assignment to Collateral Agent and Liens permitted under the relevant provisions
of the Credit Documents.

                                                              Security Agreement

                                       19
<PAGE>

SECTION 20. APPLICATION OF PROCEEDS.

                  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 shall be applied in accordance with the Intercreditor Agreement.

SECTION 21. INDEMNITY AND EXPENSES.

                  (a) Grantors jointly and severally agree to indemnify
Collateral Agent, the Revolver Agent, each Revolver Lender, each Term Loan
Agent, each Term Loan Lender, and each other Benefited Party from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including without limitation enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such Revolver Agent's, Revolver Lender's, Term Loan Agent's, Term Loan
Lender's or Benefited Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.

                  (b) Grantors jointly and severally agree to pay to Collateral
Agent upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.

                  (c) The obligations of Grantors in this Section 21 shall
survive the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Revolver Credit Agreement and the Term
Loan Agreement (subject to the terms of the Intercreditor Agreement).

SECTION 22. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND
RELEASE.

                  (a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
Payment in Full of all Secured Obligations, (ii) be binding upon Grantors and
their respective successors and assigns, and (iii) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), but subject to the relevant assignment
provisions set forth in each of the Credit Documents and the Intercreditor
Agreement, (A) the Revolver Agent or any Revolver Lender may assign or otherwise
transfer its rights under the Revolver Credit Agreement to any other Person, and
in each case such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Revolver Agent or Revolver Lenders, as
applicable, herein or otherwise (subject to the terms of the Intercreditor
Agreement) and (B) any Term Loan Agent and any Term Loan Lender may assign or
otherwise transfer its rights under the Term Loan Agreement to any other Person,
and in each case such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Term Loan Agent or such Term Loan
Lender, as applicable, herein or otherwise (subject to the terms of the
Intercreditor Agreement).

                  (b) Upon the Payment in Full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantors. Upon any such termination
Collateral Agent will, at Grantors' expense, execute and deliver to Grantors
such documents as Grantors shall reasonably request to evidence such
termination. In addition, upon the proposed sale, transfer or other disposition
of any Collateral by a Grantor in accordance with the relevant provisions of
each Credit Document for which such Grantor desires to obtain a security
interest release from Collateral Agent, such Grantor shall deliver an Officer's
Certificate (x) stating that the Collateral subject to such disposition is being
sold, transferred or otherwise disposed of in compliance with the terms of the
Credit Documents and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such
Officer's Certificate and so long as no Event of Default has occurred and is
continuing or would result from the proposed disposition of the Collateral and
so long as the proceeds from such disposition are applied in accordance with the
Credit Documents, Collateral Agent shall, at Grantor's expense, so long as
Collateral Agent believes in good faith that the Officer's Certificate delivered
by such Grantor with respect to such sale is true, correct and complete, execute
and deliver such releases

                                                              Security Agreement

                                       20
<PAGE>

of its security interest in such Collateral which is to be so sold, transferred
or disposed of, as may be reasonably requested by such Grantor.

SECTION 23. COLLATERAL AGENT AS AGENT.

                  (a) Collateral Agent has been appointed to act as Collateral
Agent hereunder by the Revolver Agent, the Revolver Lenders, the Term Loan
Agents, the Term Loan Lenders and the Cash Management Bank. Collateral Agent
shall be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Documents.

                  (b) Collateral Agent shall at all times be the same Person
that is the Collateral Agent under the Intercreditor Agreement. Written notice
of resignation by Collateral Agent pursuant to subsections 6.1(h) or (i) of the
Intercreditor Agreement shall also constitute notice of resignation as
Collateral Agent under this Agreement; removal of Collateral Agent pursuant to
subsections 6.1(h) or (i) of the Intercreditor Agreement shall also constitute
removal as Collateral Agent under this Agreement; and appointment of a successor
Collateral Agent pursuant to subsections 6.1(h) or (i) of the Intercreditor
Agreement shall also constitute appointment of a successor Collateral Agent
under this Agreement. Upon the acceptance of any appointment as Collateral Agent
under subsections 6.1(h) or (i) of the Intercreditor Agreement by a successor
Collateral Agent, that 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 retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.

SECTION 24. [INTENTIONALLY OMITTED.]

SECTION 25. AMENDMENTS; ETC.

                  No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantors. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given. In
the event of any refinancing, replacement or extension of the Term Loan
Agreement or Revolver Credit Agreement, references in this Agreement to sections
or subsections of the Term Loan Agreement and Revolver Credit Agreement shall
refer to the functionally equivalent sections or subsections in such refinanced,
replaced or extended agreement as the context requires.

SECTION 26. NOTICES.

                  Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Collateral Agent shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature page hereof or such other address as shall be designated by
such party in a written notice delivered to the other parties hereto. Electronic
mail and Internet and intranet websites may be used to distribute routine
communications, provided, however, that no signature with respect to any notice,
request, agreement, waiver, amendment or other document or any notice that is
intended to have a binding effect may be sent by electronic mail.

                                                              Security Agreement

                                       21
<PAGE>

SECTION 27. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.

                  No failure or delay on the part of Collateral Agent in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 28. SEVERABILITY.

                  In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

SECTION 29. HEADINGS.

                  Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

SECTION 30. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION.

                  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Documents, terms used in Articles 8 and 9 of the
UCC are used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Revolver Credit Agreement shall be applicable to this
Agreement mutatis mutandis.

SECTION 31. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

                  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH 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 GRANTOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 26 HEREOF; (IV) AGREES THAT SERVICE
AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31 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.

                                                              Security Agreement

                                       22
<PAGE>

SECTION 32. WAIVER OF JURY TRIAL.

                  GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. 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 without limitation
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Each Grantor and Collateral Agent acknowledge that this
waiver is a material inducement for Grantors and Collateral Agent to enter into
a business relationship, that Grantors and Collateral Agent have already relied
on this waiver in entering into this Agreement and that each will continue to
rely on this waiver in their related future dealings. Each Grantor and
Collateral Agent further warrant and represent 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
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.

SECTION 33. COUNTERPARTS.

                  This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart thereof.

                  [Remainder of page intentionally left blank]

                                                              Security Agreement

                                       23
<PAGE>

                  IN WITNESS WHEREOF, Grantors and Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                                 GRANTORS:

                                 COVANTA POWER INTERNATIONAL HOLDINGS, INC.

                                 By:______________________________
                                    Name: Vincent L. Bolognini
                                    Title: Senior Vice President

                                 Notice Address:

                                        c/o Covanta Energy Group, Inc.
                                        40 Lane Road
                                        Fairfield, New Jersey 07007
                                        Attn: Jeffrey Horowitz, Esq.

                                 COVANTA POWER DEVELOPMENT, INC.
                                 COVANTA POWER DEVELOPMENT OF BOLIVIA, INC.
                                 COVANTA WASTE TO ENERGY OF ITALY, INC.,

                                 By:  ____________________________________
                                      Name: Vincent L. Bolognini
                                      Title: Senior Vice President

                                 Notice Address for Borrowers:

                                        c/o Covanta Energy Group, Inc.
                                        40 Lane Road
                                        Fairfield, NJ 07007
                                        Attn:  Jeffrey Horowitz, Esq.

Security Agreement

<PAGE>

                                 BANK OF AMERICA, N.A.,
                                 as Collateral Agent

                                 By:______________________________
                                      Name:
                                      Title:

                                 Notice Address:
                                 Bank of America, N.A., as Collateral 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

Security Agreement

<PAGE>

                               SCHEDULE 1(e)(i) TO
                               SECURITY AGREEMENT

                                 PLEDGED SHARES

<TABLE>
<CAPTION>
                             CLASS OF                                                                 PERCENTAGE OF
                              PLEDGED                                  PAR          NUMBER OF          OUTSTANDING
 ISSUER OF PLEDGED SHARES     SHARES         CERTIFICATE NOS.         VALUE       PLEDGED SHARES     PLEDGED SHARES
<S>                          <C>             <C>                      <C>         <C>                <C>
</TABLE>

Security Agreement

                                   1(e)(i)-1

<PAGE>

                               SCHEDULE 1(g)(i) TO

                               SECURITY AGREEMENT

U.S. TRADEMARKS:

<TABLE>
<CAPTION>
                                           Trademark                    Registration                   Registration
       Registered Owner                   Description                      Number                          Date
<S>                                       <C>                           <C>                            <C>
</TABLE>

FOREIGN TRADEMARKS:

<TABLE>
<CAPTION>
                                           Trademark                    Registration                   Registration
       Registered Owner                   Description                      Number                          Date
<S>                                       <C>                           <C>                            <C>
</TABLE>

Security Agreement

                                   1(g)(i)-1

<PAGE>

                              SCHEDULE 1(g)(ii) TO
                               SECURITY AGREEMENT

U.S. PATENTS ISSUED:

<TABLE>
<CAPTION>
         Patent No.                    Issue Date                    Invention                    Inventor
<S>                                    <C>                           <C>                          <C>
</TABLE>

U.S. PATENTS PENDING:

<TABLE>
<CAPTION>
      Applicant's                 Date                Application
          Name                    Filed                 Number                Invention              Inventor
<S>                               <C>                 <C>                     <C>                    <C>
</TABLE>

FOREIGN PATENTS ISSUED:

<TABLE>
<CAPTION>
         Patent No.                    Issue Date                    Invention                    Inventor
<S>                                    <C>                           <C>                          <C>
</TABLE>

Security Agreement

                                   1(g)(ii)-1

<PAGE>

FOREIGN PATENTS PENDING:

<TABLE>
<CAPTION>
      Applicant's                 Date                Application
          Name                    Filed                 Number                Invention              Inventor
<S>                               <C>                 <C>                     <C>                    <C>
</TABLE>

Security Agreement

                                   1(g)(ii)-2

<PAGE>

                              SCHEDULE 1(g)(iii) TO
                               SECURITY AGREEMENT

U.S. COPYRIGHTS:
<TABLE>
<CAPTION>
Title             Registration No.  Date of Issue             Registered Owner
<S>               <C>               <C>                       <C>
</TABLE>

FOREIGN COPYRIGHT REGISTRATIONS:

<TABLE>
<CAPTION>
Country  Title                      Registration No.   Date of Issue
<S>                                 <C>                <C>
</TABLE>

PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:

<TABLE>
<CAPTION>
Title             Reference No.             Date of Application        Copyright Claimant
<S>               <C>                       <C>                        <C>
</TABLE>

PENDING FOREIGN COPYRIGHT REGISTRATIONS & APPLICATIONS:

<TABLE>
<CAPTION>
Country  Title                      Registration No. Date of Issue
<S>                                 <C>
</TABLE>

Security Agreement

                                   1(g)(iii)-1

<PAGE>

                                  SCHEDULE 1(j)
                                       TO
                               SECURITY AGREEMENT

                             COMMERCIAL TORT CLAIMS

                               Security Agreement

                                     1(j)-1

<PAGE>

                                  SCHEDULE 4(b)
                                       TO
                               SECURITY AGREEMENT

                      LOCATIONS OF EQUIPMENT AND INVENTORY

<TABLE>
<CAPTION>
NAME OF GRANTOR                                       LOCATIONS OF EQUIPMENT AND INVENTORY
<S>                                                   <C>
</TABLE>

Security Agreement

                                     4(b)-1

<PAGE>

                                  SCHEDULE 4(d)
                                       TO
                               SECURITY AGREEMENT

             OFFICE LOCATIONS, TYPE AND JURISDICTION OF ORGANIZATION

<TABLE>
<CAPTION>
                                                                                               JURISDICTION OF
NAME OF GRANTOR                     TYPE OF ORGANIZATION      OFFICE LOCATIONS                   ORGANIZATION
<S>                                 <C>                       <C>                              <C>
</TABLE>

Security Agreement

                                     4(d)-1

<PAGE>

                                  SCHEDULE 4(e)
                                       TO
                               SECURITY AGREEMENT

                                   OTHER NAMES

<TABLE>
<CAPTION>
NAME OF GRANTOR                                             OTHER NAMES
<S>                                                         <C>
</TABLE>

Security Agreement

                                     4(e)-1

<PAGE>

                                  SCHEDULE 4(g)
                                       TO
                               SECURITY AGREEMENT

                         CERTAIN CONTRACTUAL OBLIGATIONS

Security Agreement

                                     4(g)-1

<PAGE>

                                  SCHEDULE 4(i)
                                       TO
                               SECURITY AGREEMENT

                                 FILING OFFICES

<TABLE>
<CAPTION>
         Grantor                                                       Filing Offices
<S>                                                                    <C>
</TABLE>

Security Agreement

                                     4(i)-1

<PAGE>

                                                                    EXHIBIT I TO
                                                              SECURITY AGREEMENT

                 [FORM OF GRANT OF TRADEMARK SECURITY INTEREST]

                      GRANT OF TRADEMARK SECURITY INTEREST

                  WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Trademark Collateral (as defined
below);

                  WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;

                  WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;

                  WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and

                  WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Trademark Collateral;

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
a security interest, (subject to the terms of the Intercreditor Agreement (as
defined in the Security Agreement) (including, without limitation, the
provisions regarding lien priority)), in all of Grantor's right, title and

Security Agreement

                                      I-1
<PAGE>

interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "TRADEMARK COLLATERAL"):

         (i) all rights, title and interest (including rights acquired pursuant
         to a license or otherwise but only to the extent permitted by
         agreements governing such license or other use) in and to all
         trademarks, service marks, designs, logos, indicia, tradenames, trade
         dress, corporate names, company names, business names, fictitious
         business names, trade styles and/or other source and/or business
         identifiers and applications pertaining thereto, owned by such Grantor,
         or hereafter adopted and used, in its business (including, without
         limitation, the trademarks specifically identified in Schedule A)
         (collectively, the "TRADEMARKS"), all registrations that have been or
         may hereafter be issued or applied for thereon in the United States and
         any state thereof and in foreign countries (including, without
         limitation, the registrations and applications specifically identified
         in Schedule A) (the "TRADEMARK REGISTRATIONS"), all common law and
         other rights (but in no event any of the obligations) in and to the
         Trademarks in the United States and any state thereof and in foreign
         countries (the "TRADEMARK RIGHTS"), and all goodwill of such Grantor's
         business symbolized by the Trademarks and associated therewith (the
         "ASSOCIATED GOODWILL"); and

         (ii) all proceeds, products, rents and profits of or from any and all
         of the foregoing Trademark Collateral and, to the extent not otherwise
         included, all payments under insurance (whether or not Collateral Agent
         is the loss payee thereof), or any indemnity, warranty or guaranty,
         payable by reason of loss or damage to or otherwise with respect to any
         of the foregoing Trademark Collateral. For purposes of this Grant of
         Trademark Security Interest, the term "PROCEEDS" includes whatever is
         receivable or received when Trademark Collateral or proceeds are sold,
         exchanged, collected or otherwise disposed of, whether such disposition
         is voluntary or involuntary.

                  Notwithstanding anything herein to the contrary, in no event
shall the Trademark Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Trademark Collateral.

                  Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Trademark Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

Security Agreement

                                      I-2

<PAGE>

                  IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the __ day of _______, 200__.

                                 [NAME OF GRANTOR]

                                 By:_____________________________
                                   Name:_________________________
                                   Title:__________________________

Security Agreement

                                     I-S-1

<PAGE>

                                   SCHEDULE A
                                       TO
                      GRANT OF TRADEMARK SECURITY INTEREST

<TABLE>
<CAPTION>
                                         United States
                                           Trademark                    Registration                   Registration
Registered Owner                          Description                      Number                          Date
<S>                                      <C>                            <C>                            <C>
</TABLE>

Security Agreement

                                     I-A-1

<PAGE>

                                                                   EXHIBIT II TO
                                                              SECURITY AGREEMENT

                   [FORM OF GRANT OF PATENT SECURITY INTEREST]

                        GRANT OF PATENT SECURITY INTEREST

                  WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Patent Collateral (as defined
below);

                  WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;

                  WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;

                  WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and

                  WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Patent Collateral;

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
four separate security interests, (subject to the terms of the Intercreditor
Agreement (as defined in the Security Agreement) (including, without limitation,
the provisions regarding lien priority)), in all of Grantor's

Security Agreement

                                      II-1

<PAGE>

right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "PATENT COLLATERAL"):

         (i) all rights, title and interest (including rights acquired pursuant
         to a license or otherwise but only to the extent permitted by
         agreements governing such license or other use) in and to all patents
         and patent applications and rights and interests in patents and patent
         applications under any domestic or foreign law that are presently, or
         in the future may be, owned or held by such Grantor and all patents and
         patent applications and rights, title and interests in patents and
         patent applications under any domestic or foreign law that are
         presently, or in the future may be, owned by such Grantor in whole or
         in part (including, without limitation, the patents and patent
         applications listed in Schedule A), all rights (but not obligations)
         corresponding thereto to sue for past, present and future infringements
         and all re-issues, divisions, continuations, renewals, extensions and
         continuations-in-part thereof (all of the foregoing being collectively
         referred to as the "PATENTS"); and

         (ii) all proceeds, products, rents and profits of or from any and all
         of the foregoing Patent Collateral and, to the extent not otherwise
         included, all payments under insurance (whether or not Collateral Agent
         is the loss payee thereof), or any indemnity, warranty or guaranty,
         payable by reason of loss or damage to or otherwise with respect to any
         of the foregoing Patent Collateral. For purposes of this Grant of
         Patent Security Interest, the term "PROCEEDS" includes whatever is
         receivable or received when Patent Collateral or proceeds are sold,
         exchanged, collected or otherwise disposed of, whether such disposition
         is voluntary or involuntary.

                  Notwithstanding anything herein to the contrary, in no event
shall the Patent Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Patent Collateral.

                  Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Patent Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

             [The remainder of this page intentionally left blank.]

Security Agreement

                                      II-2

<PAGE>

                  IN WITNESS WHEREOF, Grantor has caused this Grant of Patent
         Security Interest to be duly executed and delivered by its officer
         thereunto duly authorized as of the ___ day of ____________, 200__.

                                 [NAME OF GRANTOR]

                                 By:_____________________________
                                   Name:_________________________
                                   Title:__________________________

Security Agreement

                                     II-S-1

<PAGE>

                                   SCHEDULE A
                                       TO
                        GRANT OF PATENT SECURITY INTEREST

PATENTS ISSUED:

<TABLE>
<CAPTION>
         Patent No.                    Issue Date                    Invention                    Inventor
<S>                                    <C>                           <C>                          <C>
</TABLE>

PATENTS PENDING:

<TABLE>
<CAPTION>
      Applicant's                 Date                Application
          Name                    Filed                 Number                Invention              Inventor
<S>                               <C>                 <C>                     <C>                    <C>
</TABLE>

Security Agreement

                                     II-A-1

<PAGE>

                                                                  EXHIBIT III TO
                                                              SECURITY AGREEMENT

                 [FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]

                      GRANT OF COPYRIGHT SECURITY INTEREST

                  WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Copyright Collateral (as defined
below);

                  WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;

                  WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;

                  WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and

                  WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Copyright Collateral;

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
four separate security interests, (subject to the terms of the Intercreditor
Agreement (as defined in the Security Agreement) (including, without limitation,
the provisions regarding lien priority)), in all of Grantor's

Security Agreement

                                     III-1

<PAGE>

right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "COPYRIGHT COLLATERAL"):

         (i) all rights, title and interest (including rights acquired pursuant
         to a license or otherwise but only to the extent permitted by
         agreements governing such license or other use) under copyright in
         various published and unpublished works of authorship including,
         without limitation, computer programs, computer data bases, other
         computer software layouts, trade dress, drawings, designs, writings,
         and formulas (including, without limitation, the works listed on
         Schedule A, as the same may be amended pursuant hereto from time to
         time) (collectively, the "COPYRIGHTS"), all copyright registrations
         issued to Grantor and applications for copyright registration that have
         been or may hereafter be issued or applied for thereon in the United
         States and any state thereof and in foreign countries (including,
         without limitation, the registrations listed on Schedule A, as the same
         may be amended pursuant hereto from time to time) (collectively, the
         "COPYRIGHT REGISTRATIONS"), all common law and other rights in and to
         the Copyrights in the United States and any state thereof and in
         foreign countries including all copyright licenses (but with respect to
         such copyright licenses, only to the extent permitted by such licensing
         arrangements) (the "COPYRIGHT RIGHTS"), including, without limitation,
         each of the Copyrights, rights, titles and interests in and to the
         Copyrights, all derivative works and other works protectable by
         copyright, which are presently, or in the future may be, owned, created
         (as a work for hire for the benefit of Grantor), authored (as a work
         for hire for the benefit of Grantor), or acquired by Grantor, in whole
         or in part, and all Copyright Rights with respect thereto and all
         Copyright Registrations therefor, heretofore or hereafter granted or
         applied for, and all renewals and extensions thereof, throughout the
         world, including all proceeds thereof (such as, by way of example and
         not by limitation, license royalties and proceeds of infringement
         suits), the right (but not the obligation) to renew and extend such
         Copyright Registrations and Copyright Rights and to register works
         protectable by copyright and the right (but not the obligation) to sue
         in the name of such Grantor or in the name of Collateral Agent or
         Lenders for past, present and future infringements of the Copyrights
         and Copyright Rights; and

         (ii) all proceeds, products, rents and profits of or from any and all
         of the foregoing Copyright Collateral and, to the extent not otherwise
         included, all payments under insurance (whether or not Collateral Agent
         is the loss payee thereof), or any indemnity, warranty or guaranty,
         payable by reason of loss or damage to or otherwise with respect to any
         of the foregoing Copyright Collateral. For purposes of this Grant of
         Copyright Security Interest, the term "PROCEEDS" includes whatever is
         receivable or received when Copyright Collateral or proceeds are sold,
         exchanged, collected or otherwise disposed of, whether such disposition
         is voluntary or involuntary.

                  Notwithstanding anything herein to the contrary, in no event
shall the Copyright Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Copyright Collateral.

                  Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Copyright Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

Security Agreement

             [The remainder of this page intentionally left blank.]

                                     III-2
<PAGE>

                  IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the ___ day of ___________, 200__.

                                 [NAME OF GRANTOR]

                                 By:_____________________________
                                   Name:_________________________
                                   Title:__________________________

Security Agreement

                                    III-S-1

<PAGE>

                                   SCHEDULE A
                                       TO
                      GRANT OF COPYRIGHT SECURITY INTEREST

U.S. COPYRIGHTS:

<TABLE>
<CAPTION>
Title             Registration No.  Date of Issue                      Registered Owner
<S>               <C>               <C>                                <C>
</TABLE>

PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:

<TABLE>
<CAPTION>
Title             Reference No.             Date of Application                 Copyright Claimant
<S>               <C>                       <C>                                 <C>
</TABLE>

Security Agreement

                                    III-A-1

<PAGE>

                                                                   EXHIBIT IV TO
                                                              SECURITY AGREEMENT

                                PLEDGE SUPPLEMENT

                  This Pledge Supplement, dated as of _________________, 200__
is delivered pursuant to the Security Agreement, dated as of March __, 2004
among ____________, a ____________ ("GRANTOR"), the other Grantors named
therein, and Bank of America, N.A., as Collateral Agent (as it may heretofore
have been and as it may from time to time hereafter be amended, restated,
supplemented or otherwise modified, the "SECURITY AGREEMENT"). Capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.

                  Grantor hereby agrees that the [Pledged Shares] [Pledged Debt]
listed on the schedule attached hereto shall be deemed to be part of the
[Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.

                  IN WITNESS WHEREOF, Grantor has caused this Amendment to be
duly executed and delivered by its duly authorized officer as of
_______________, 200__.

                                      [GRANTOR]

                                      By:_____________________________
                                        Name:_________________________
                                        Title:__________________________

Security Agreement

                                      IV-1

<PAGE>

                                                                    EXHIBIT V TO
                                                              SECURITY AGREEMENT

                                  IP SUPPLEMENT

                  This IP SUPPLEMENT, dated as of ____________, 200__ is
delivered pursuant to and supplements (i) the Security Agreement, dated as of
March __, 2004 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among _______________ ("GRANTOR"), the other Grantors
named therein, and Bank of America, N.A., as Collateral Agent, and (ii) the
[Grant of Trademark Security Interest] [Grant of Patent Security Interest]
[Grant of Copyright Security Interest] dated as of ___________, 200__ (the
"GRANT") executed by Grantor. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.

                  Grantor grants to Collateral Agent some separate security
interests (as set forth in the Security Agreement) in all of Grantor's right,
title and interest in and to the [Trademark Collateral] [Patent Collateral]
[Copyright Collateral] listed on Schedule A attached hereto. All such [Trademark
Collateral] [Patent Collateral] [Copyright Collateral] shall be deemed to be
part of the [Trademark Collateral] [Patent Collateral] [Copyright Collateral]
and shall be hereafter subject to each of the terms and conditions of the
Security Agreement and the Grant.

                  IN WITNESS WHEREOF, Grantor has caused this Supplement to be
duly executed and delivered by its duly authorized officer as of ______________,
200__.

                                      [GRANTOR]

                                      By:_____________________________
                                        Name:_________________________
                                        Title:__________________________

                               [Attach Schedule A]

Security Agreement

                                      V-1<PAGE>

                                                                    EXHIBIT 4.29

                                  EXHIBIT VIII

                      [FORM OF CEA STOCK PLEDGE AGREEMENT]

                                PLEDGE AGREEMENT

                  This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of March
__, 2004 and entered into by and between COVANTA ENERGY AMERICAS, INC., a
Delaware corporation (the "PLEDGOR"), and BANK OF AMERICA, N.A., in its capacity
as collateral agent for and representative of the Secured Parties (as defined in
the Intercreditor Agreement referred to below) (the "COLLATERAL AGENT"). All
capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Intercreditor Agreement.

                             PRELIMINARY STATEMENTS

                  A. As of the date hereof, Pledgor is the legal and beneficial
owner of the shares of Capital Stock issued by Covanta Power International
Holdings, Inc. ("COMPANY") listed on Schedule I hereto.

                  B. Pursuant to the Credit Agreement dated as of March ___,
2004 (said Credit Agreement or any credit agreement entered into by Revolver
Borrowers (as defined below) to refinance, replace, renew or extend, in whole or
in part, said Credit Agreement and the indebtedness thereunder to the extent
permitted pursuant to the Term Loan Agreement (as defined below), as said Credit
Agreement or any replacement to said Credit Agreement may be amended, restated,
supplemented or otherwise modified from time to time, being the "REVOLVER CREDIT
AGREEMENT"), by and among Company as a borrower, the Subsidiaries of Company
party thereto from time to time as additional borrowers (collectively, Company
and such Subsidiaries being the "REVOLVER BORROWERS" and each a "REVOLVER
BORROWER"), the financial institutions from time to time party thereto as
lenders (the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
administrative agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), the Revolver Lenders have made certain commitments (each, a "REVOLVER
COMMITMENT"), subject to the terms and conditions set forth in the Revolver
Credit Agreement, to extend certain revolving credit facilities to Revolver
Borrowers.

                  C. Pursuant to the Credit Agreement dated as of March ___,
2004 (said Credit Agreement or any credit agreement entered into by Term Loan
Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness thereunder to the extent permitted
pursuant to the Revolver Credit Agreement, as said Credit Agreement or any
replacement to said Credit Agreement may be amended, restated, supplemented or
otherwise modified from time to time, being the "TERM LOAN AGREEMENT," and
collectively with the Revolver Credit Agreement, the "CREDIT AGREEMENTS"), by
and among Company as a borrower, the Subsidiaries of Company party thereto from
time

CEA Stock Pledge Agreement

                                     VIII-1

<PAGE>

to time as additional borrowers (collectively, Company and such Subsidiaries
being the "TERM LOAN BORROWERS" and each a "TERM LOAN BORROWER," and
collectively with the Revolver Borrowers, the "BORROWERS"), the financial
institutions from time to time party thereto as lenders (the "TERM LOAN
LENDERS") and Bank of America, N.A., as administrative agent for the Term Loan
Lenders (in such capacity, the "TERM LOAN AGENT"), and Deutsche Bank Securities,
Inc., as documentation agent for the Term Loan Lenders (in such capacity, the
"TERM LOAN DOCUMENTATION AGENT," and collectively with the Term Loan Agent, the
Term Loan Lenders, the Revolver Agent and the Revolver Lenders, the "BENEFITED
PARTIES"), the Term Loan Lenders have made certain commitments (each, a "TERM
LOAN COMMITMENT," and together with the Revolver Commitments, collectively, the
"COMMITMENTS"), subject to the terms and conditions set forth in the Term Loan
Agreement, to extend certain term loan facilities to the Term Loan Borrowers.

                  D. In accordance with the terms of the Credit Agreements,
Borrowers are required to maintain the Cash Management System with Bank of
America (in such capacity, the "CASH MANAGEMENT BANK"), and it is desired that
the Cash Management Obligations be secured hereunder.

                  E. The Revolver Borrowers, the Term Loan Borrowers, Pledgor,
the Revolver Agent, the Revolver Lenders, the Term Loan Agents, the Term Loan
Lenders, the Cash Management Bank and Collateral Agent have entered into that
certain Intercreditor Agreement dated as of March ___, 2004 (as it may hereafter
be amended, restated, supplemented or otherwise modified from time to time, the
"INTERCREDITOR AGREEMENT"), pursuant to which the Revolver Agent, the Revolver
Lenders, the Term Loan Agents, the Term Loan Lenders and the Cash Management
Bank have appointed Collateral Agent, and Collateral Agent has agreed to act, as
collateral agent for the Revolver Agent, the Revolver Lenders, the Term Loan
Agents, the Term Loan Lenders and the Cash Management Bank hereunder.

                  F. It is a condition precedent to (i) the extension of credit
by the Revolver Lenders under the Revolver Credit Agreement and (ii) the
extension of credit by the Term Loan Lenders under the Term Loan Agreement that
the Pledgor shall have granted the security interest and undertaken the
obligations contemplated by this Agreement.

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Revolver Lenders to make extensions of credit from time to time
under the Revolver Credit Agreement, the Term Loan Lenders to continue their
extensions of credit under the Term Loan Agreement, the Cash Management Bank to
provide cash management services to the Borrowers and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor hereby agrees with Collateral Agent as follows:

                  SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges and
collaterally assigns to Collateral Agent, and hereby grants to Collateral Agent
a security interest in, all of Pledgor's right, title and interest in and to the
following (the "PLEDGED COLLATERAL"):

                  (a) all Capital Stock in Company now or hereafter owned by
Pledgor, whether such Capital Stock is classified as investment property or
general intangibles under

CEA Stock Pledge Agreement

                                     VIII-2

<PAGE>

the Uniform Commercial Code as in effect in the State of New York ("UCC"),
including all securities convertible into, and rights, warrants, options and
other rights to purchase or otherwise acquire, any Capital Stock in Company, and
including those owned on the date hereof and described in Schedule I for
Pledgor, the certificates or other instruments representing any of the foregoing
and any interest of Pledgor in the entries on the books of any securities
intermediary pertaining thereto (the "PLEDGED EQUITY"), and all distributions,
dividends, and other property received, receivable or otherwise distributed in
respect of or in exchange therefor;

                  (b) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence any of the Pledged Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon;

                  (c) to the extent not covered by clauses (a) and (b) above,
all proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Collateral Agent from time to time with respect to any of the Pledged
Collateral.

                  The security interest granted hereby is subject to the terms
of the Intercreditor Agreement (including, without limitation, the provisions
regarding lien priority).

                  SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Pledged Collateral assigned by Pledgor is collateral security for, the
Secured Obligations.

                  SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Collateral Agent. Upon the occurrence and during the continuation of an Event of
Default, Collateral Agent shall have the right, with notice to Pledgor, to
transfer to or to register in the name of Collateral Agent or any of its
nominees any or all of the Pledged Collateral, subject to the revocable rights
specified in Section 7(a). In addition, Collateral Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Pledged Equity for certificates or instruments of smaller or larger
denominations.

                  SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents
and warrants as follows:

                  (a) Organization and Powers. Pledgor is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and

CEA Stock Pledge Agreement

                                     VIII-3

<PAGE>

proposed to be conducted and to enter into this Agreement and carry out the
transactions contemplated hereby.

                  (b) Good Standing. Pledgor is qualified to do business and in
good standing wherever necessary to carry on its present business and
operations, except in jurisdictions in which the failure to be so qualified or
in good standing has not had and will not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of Pledgor and its subsidiaries, taken as a whole.

                  (c) Authorization. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action by
Pledgor.

                  (d) No Conflict. The execution, delivery and performance by
Pledgor of this Agreement will not (i) violate the Certificate of Incorporation
or Bylaws of Pledgor, (ii) violate any provision of law applicable to Pledgor,
or any order, judgment or decree of any court or other agency of government
binding on Pledgor, (iii) be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Pledgor, (iv) result in or require the creation or
imposition of any Lien upon any of its properties or assets other than the Lien
created by this Agreement, or (v) require the approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Pledgor.

                  (e) Binding Obligation. This Agreement is the legally valid
and binding obligation of Pledgor, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.

                  (f) Due Authorization, etc. of Pledged Equity. All of the
Pledged Equity described on Schedule I has been duly authorized and validly
issued and is fully paid and non-assessable.

                  (g) Description of Pledged Equity. The Pledged Equity
constitutes all of the issued and outstanding Capital Stock in Company and there
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Capital Stock of
Company.

                  (h) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral and its interests in the
Pledged Collateral are free and clear of any Lien except for Permitted
Encumbrances.

                  (i) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any Government Authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interests granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Collateral Agent of the voting or
other rights, or the remedies in respect of the Pledged Collateral, provided for
in this Agreement (except as may be required in connection with a

CEA Stock Pledge Agreement

                                     VIII-4

<PAGE>

disposition of Pledged Collateral by laws affecting the offering and sale of
securities generally).

                  (j) Perfection. The security interest in the Pledged
Collateral granted to Collateral Agent in Section 2 hereof constitutes a valid
security interest, to the extent the UCC is applicable thereto, securing the
payment of the applicable Secured Obligations. Upon (i) the filing of UCC
financing statements naming Pledgor as "debtor", naming Collateral Agent as
"secured party" and describing the Pledged Collateral in the filing offices
listed on Schedule II and (ii) in the case of Pledged Collateral consisting of
certificated securities, in addition to filing such financing statements,
delivery of the certificates representing such certificated securities to
Collateral Agent, duly endorsed or accompanied by duly executed instruments of
assignment or transfer in blank, the security interest in the Pledged Collateral
referred to in the immediately preceding sentence will constitute a perfected
security interest therein, to the extent the UCC is applicable thereto, prior to
all other Liens, securing the payment of the Secured Obligations, and all
filings and other actions in the United States necessary to perfect and protect
such security interest have been duly made or taken.

                  (k) Office Locations; Type and Jurisdiction of Organization.
The chief executive office of Pledgor is as of the date hereof, located at the
location set forth on Schedule III annexed hereto; as of the date hereof,
Pledgor's name as it appears in official filings in its jurisdiction of
incorporation, jurisdiction of incorporation and corporation number provided by
the applicable Government Authority of its jurisdiction of incorporation are set
forth on Schedule III annexed hereto.

                  (l) Names. Pledgor (or predecessor by merger or otherwise of
Pledgor) has not, within the five year period preceding the date hereof, had a
different name from the name of Pledgor listed on the signature pages hereof,
except the names set forth on Schedule III annexed hereto.

                  (m) Margin Regulations. The pledge of the Pledged Collateral
pursuant to this Agreement does not violate Regulations T, U or X of the Board
of Governors of the Federal Reserve System.

                  (n) Other Information. All information heretofore, supplied to
Collateral Agent pursuant to the Revolver Credit Agreement or the Term Loan
Agreement by or on behalf of Pledgor with respect to the Pledged Collateral is
accurate and complete in all material respects.

                  SECTION 5.        COVENANTS.  Pledgor shall:

                  (a) not, except as expressly permitted by the Credit Documents
with respect to actions taken or omitted to be taken by Pledgor or Company or
its Subsidiaries, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral, (ii) create or suffer to exist any Lien upon or with respect to any
of the Pledged Collateral, except for Permitted Encumbrances, or (iii) permit
any issuer of Pledged Equity to merge or consolidate;

CEA Stock Pledge Agreement

                                     VIII-5

<PAGE>

                  (b) (i) cause Company not to issue any Capital Stock in
addition to or in substitution for the Pledged Equity issued by Company, except
to Pledgor and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional Capital Stock of Company;

                  (c) at its expense (i) perform and comply in all material
respects with all terms and provisions of any agreement related to the Pledged
Collateral required to be performed or complied with by it, (ii) maintain all
such agreements in full force and effect, and (iii) enforce all such agreements
in accordance with their terms;

                  (d) give Collateral Agent at least 30 days' prior written
notice of any (i) change in Pledgor's name, identity or corporate structure and
(ii) reincorporation, reorganization or other action that results in a change of
the jurisdiction or organization of Pledgor;

                  (e) promptly deliver to Collateral Agent all written notices
received by it with respect to the Pledged Collateral; and

                  (f) if any Pledged Collateral is not a security pursuant to
Section 8-103 of the UCC, not take any action that, under such Section, converts
such Pledged Collateral into a security without causing the issuer thereof to
issue to it certificates or instruments evidencing such Pledged Collateral,
which it shall promptly deliver to Collateral Agent as provided in this Section
5.

                  SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.

                  (a) Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that
Collateral Agent may reasonably request, in order to perfect and protect the
security interest granted or purported to be granted hereby or to enable
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral. Without limiting the generality of the
foregoing, Pledgor will: (i) execute (if necessary) and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as Collateral Agent may reasonably request, in
order to perfect and preserve the security interest granted or purported to be
granted hereby and (ii) at Collateral Agent's reasonable request, appear in and
defend any action or proceeding that may affect Pledgor's title to or Collateral
Agent's security interest in all or any material part of the Pledged Collateral.
Pledgor hereby authorizes Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Pledged Collateral.

                  (b) Pledgor further agrees that it will, upon obtaining any
additional Capital Stock in Company, promptly (and in any event within five
Business Days) deliver to Collateral Agent a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule IV annexed hereto (a "PLEDGE
AMENDMENT"), together with supplements to the Schedules annexed hereto, as
applicable, to cause such Schedules to be complete and accurate at such time, in
respect of the additional Pledged Equity to be pledged pursuant to this

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Agreement; provided that the failure of Pledgor to execute a Pledge Amendment
with respect to any additional Pledged Equity shall not impair the security
interest of Collateral Agent therein or otherwise adversely affect the rights
and remedies of Collateral Agent hereunder with respect thereto. Upon each such
acquisition, the representations and warranties contained in Section 4 hereof
shall be deemed to have been made by Pledgor as to the Pledged Collateral
described in such Pledge Amendment.

                  SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.

                  (a) So long as no Event of Default shall have occurred and be
continuing:

         (i) Pledgor shall be entitled to exercise any and all voting and other
         consensual rights pertaining to the Pledged Collateral or any part
         thereof for any purpose not inconsistent with the terms of this
         Agreement or the Credit Documents; provided, however, that Pledgor
         shall not exercise or refrain from exercising any such right if
         Collateral Agent shall have notified Pledgor that, in Collateral
         Agent's judgment, such action would have a material adverse effect on
         the value of the Pledged Collateral or any part thereof; and

         (ii) Pledgor shall be entitled to receive and retain, and to utilize
         free and clear of the lien of this Agreement, any and all dividends,
         other distributions and interest paid in respect of the Pledged
         Collateral; provided, however, that any and all

                          (A) dividends, other distributions and interest paid
                 or payable other than in cash in respect of, and instruments
                 and other property received, receivable or otherwise
                 distributed in respect of, or in exchange for, any Pledged
                 Collateral,

                          (B) dividends and other distributions paid or payable
                 in cash in respect of any Pledged Collateral in connection with
                 a partial or total liquidation or dissolution or in connection
                 with a reduction of capital, capital surplus or
                 paid-in-surplus, and

                          (C) cash paid, payable or otherwise distributed in
                 respect of principal or in redemption of or in exchange for any
                 Pledged Collateral,

         in each case shall be, and shall forthwith be delivered to Collateral
         Agent to hold as, Pledged Collateral and shall, if received by Pledgor,
         be received in trust for the benefit of Collateral Agent, be segregated
         from the other property or funds of Pledgor and be forthwith delivered
         to Collateral Agent as Pledged Collateral in the same form as so
         received (with all necessary endorsements).

                  Notwithstanding the foregoing, the parties hereto acknowledge
that the Credit Agreements contain restrictions on the payment of dividends and
distributions on the Pledged Collateral, none of which restrictions are waived
or otherwise prejudiced hereby.

                  (b) Upon the occurrence and during the continuation of an
Event of Default:

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<PAGE>

         (i) upon written notice from Collateral Agent to Pledgor, all rights of
         Pledgor to exercise the voting and other consensual rights that it
         would otherwise be entitled to exercise pursuant to Section 7(a)(i)
         shall cease, and all such rights shall thereupon become vested in
         Collateral Agent who shall thereupon have the sole right to exercise
         such voting and other consensual rights;

         (ii) except as otherwise provided in the Credit Documents, upon written
         notice from Collateral Agent to Pledgor all rights of Pledgor to
         receive the dividends, other distributions and interest payments that
         it would otherwise be authorized to receive and retain pursuant to
         Section 7(a)(ii) shall cease, and all such rights shall thereupon
         become vested in Collateral Agent who shall thereupon have the sole
         right to receive and hold as Pledged Collateral such dividends, other
         distributions and interest payments; and

         (iii) all dividends, principal, interest payments and other
         distributions that are received by Pledgor contrary to the provisions
         of paragraph (ii) of this Section 7(b) shall be received in trust for
         the benefit of Collateral Agent, shall be segregated from other funds
         of Pledgor and shall forthwith be paid over to Collateral Agent as
         Pledged Collateral in the same form as so received (with any necessary
         endorsements).

                  (c) IRREVOCABLE PROXY. In order to permit Collateral Agent to
exercise the voting and other consensual rights that it may be entitled to
exercise pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), (i) Pledgor shall promptly execute and deliver (or cause to be
executed and delivered) to Collateral Agent all such proxies, dividend payment
orders and other instruments as Collateral Agent may from time to time
reasonably request and (ii) without limiting the effect of the immediately
preceding clause (i), Pledgor hereby grants to Collateral Agent an IRREVOCABLE
PROXY to vote the Pledged Equity and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Equity would be
entitled (including, without limitation, giving or withholding written consents
of holders of the Pledge Equity, calling special meetings of holders of the
Pledged Equity and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Equity on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Equity or any officer or agent
thereof), only upon the occurrence and during the continuance of an Event of
Default and which proxy shall only terminate upon the payment in full of all
Secured Obligations (other than contingent indemnification Secured Obligations
with respect to claims which have not yet arisen).

                  SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
Pledgor hereby irrevocably appoints Collateral Agent as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Collateral Agent or otherwise, from time to time in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:

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                                     VIII-8

<PAGE>

                  (a) upon the occurrence and during the continuance of an Event
of Default, to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;

                  (b) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same;

                  (c) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Pledged Collateral or otherwise to enforce the rights of Collateral Agent
with respect to any of the Pledged Collateral;

                  (d) with notice to the Pledgor, to pay or discharge taxes or
Liens (other than Liens permitted under this Agreement or the Credit Documents)
levied or placed upon or threatened against the Pledged Collateral, the legality
or validity thereof and the amounts necessary to discharge the same to be
determined by Collateral Agent in its sole discretion, any such payments made by
Collateral Agent to become obligations of Pledgor to Collateral Agent, due and
payable immediately without demand; and

                  (e) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Pledged Collateral as fully and completely
as though Collateral Agent were the absolute owner thereof for all purposes, and
to do, at Collateral Agent's option and Pledgor's expense, at any time or from
time to time, all acts and things that Collateral Agent deems necessary to
protect, preserve or realize upon the Pledged Collateral and Collateral Agent's
security interest therein in order to effect the intent of this Agreement, all
as fully and effectively as Pledgor might do.

                  SECTION 9. COLLATERAL AGENT MAY PERFORM; NO ASSUMPTION.

                  (a) If Pledgor fails to perform any agreement contained
herein, Collateral Agent may itself perform, or cause performance of, such
agreement, and the expenses of Collateral Agent incurred in connection therewith
shall be payable by Pledgor under Section 13(b).

                  (b) Anything contained herein to the contrary notwithstanding,
(i) Pledgor shall remain liable under any agreements included in or related to
the Pledged Collateral, to the extent set forth therein, to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (ii) the exercise by Collateral Agent of any of its rights
hereunder shall not release Pledgor from any of its duties or obligations under
any such agreements, and (iii) Collateral Agent shall not have any obligation or
liability under any such agreements by reason of this Agreement, nor shall
Collateral Agent be obligated to perform any of the obligations or duties of
Pledgor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

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<PAGE>

                  SECTION 10. STANDARD OF CARE. The powers conferred on
Collateral Agent hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Pledged
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Collateral Agent shall have no duty as to any Pledged Collateral,
it being understood that Collateral Agent shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not Collateral Agent has or is deemed to have knowledge of such matters, (b)
taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any prior parties or any other rights
pertaining to any Pledged Collateral, (c) taking any necessary steps to collect
or realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Pledged Collateral, or (d) initiating any action to
protect the Pledged Collateral against the possibility of a decline in market
value. Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Collateral
Agent accords its own property consisting of negotiable securities.

                  SECTION 11.  REMEDIES.

                  (a) Subject to the terms of the Intercreditor Agreement, if
any Event of Default shall have occurred and be continuing, Collateral Agent may
exercise in respect of the Pledged Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Pledged Collateral), and Collateral Agent may also in
its sole discretion, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker's board or at any of Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Collateral Agent may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Collateral Agent or any Benefited Party
(subject to the terms of the Intercreditor Agreement) may be the purchaser of
any or all of the Pledged Collateral at any such sale, and Collateral Agent, as
agent for and representative of Lenders (but not any Benefited Party in its
individual capacity unless Requisite Obligees shall otherwise agree in writing),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Pledged Collateral sold at
any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Pledged Collateral payable by
Collateral Agent at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by applicable law) all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given.

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                                     VIII-10

<PAGE>

Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives (to the extent permitted by applicable law) any claims
against Collateral Agent arising by reason of the fact that the price at which
any Pledged Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if Collateral
Agent accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.

                  (b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), and applicable state securities laws, Collateral Agent may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private placement may be at
prices and on terms less favorable than those obtainable through a sale without
such restrictions (including, without limitation, an offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances and the registration rights granted to Collateral Agent by Pledgor
pursuant to Section 11(d), Pledgor agrees that any such private placement shall
not be deemed, in and of itself, to be commercially unreasonable and that
Collateral Agent shall have no obligation to delay the sale of any Pledged
Collateral for the period of time necessary to permit the issuer thereof to
register it for a form of sale requiring registration under the Securities Act
or under applicable state securities laws, even if such issuer would, or should,
agree to so register it.

                  (c) If Collateral Agent determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, Pledgor shall
and shall cause each issuer of any Pledged Equity to be sold hereunder from time
to time to furnish to Collateral Agent all such information as Collateral Agent
may request in order to determine the amount of Pledged Collateral that may be
sold by Collateral Agent in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as
the same are from time to time in effect.

                  (d) If Collateral Agent shall determine to exercise its right
to sell all or any of the Pledged Collateral, Pledgor agrees that, upon request
of Collateral Agent (which request may be made by Collateral Agent in its sole
discretion), Pledgor will, at its own expense:

                  (i) execute and deliver, and use best efforts to cause each
         issuer of the Pledged Collateral contemplated to be sold and the
         directors and officers thereof to execute and deliver, all such
         instruments and documents, and do or cause to be done all such other
         acts and things, as may be necessary or, in the opinion of Collateral
         Agent, advisable to register such Pledged Collateral under the
         provisions of the Securities Act and to cause the registration
         statement relating thereto to become effective and to remain effective
         for such period as prospectuses are required by law

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                                     VIII-11

<PAGE>

         to be furnished, and to make all amendments and supplements thereto and
         to the related prospectus which, in the opinion of Collateral Agent,
         are necessary or advisable, all in conformity with the requirements of
         the Securities Act and the rules and regulations of the Securities and
         Exchange Commission applicable thereto;

                  (ii) use its best efforts to qualify the Pledged Collateral
         under all applicable state securities or "Blue Sky" laws and to obtain
         all necessary governmental approvals for the sale of the Pledged
         Collateral, as requested by Collateral Agent;

                  (iii) cause each such issuer to make available to its security
         holders, as soon as practicable, an earnings statement which will
         satisfy the provisions of Section 11(a) of the Securities Act;

                  (iv) do or cause to be done all such other acts and things as
         may be necessary to make such sale of the Pledged Collateral or any
         part thereof valid and binding and in compliance with applicable law;
         and

                  (v) bear all costs and expenses, including reasonable
         attorneys' fees, of carrying out its obligations under this Section
         11(d).

                  Pledgor further agrees that a breach of any of the covenants
contained in Section 11 will cause irreparable injury to Collateral Agent, that
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in Sections 11 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
(to the extent permitted by applicable law) not to assert any defenses against
an action for specific performance of such covenants except for a defense that
no default has occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section 11(d) shall in
any way alter the rights of Collateral Agent hereunder.

                  SECTION 12. APPLICATION OF PROCEEDS. To the extent any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral is expressly permitted by the Credit Documents, Pledgor shall pay to
Collateral Agent any Net Asset Sale Proceeds received by Pledgor or any of its
Subsidiaries in respect of such sale, collection or other realization (to the
extent required by the Credit Documents). Except as expressly provided elsewhere
in this Agreement, all proceeds received by Collateral Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Pledged Collateral (whether pursuant to the preceding sentence or otherwise)
shall be applied in accordance with the Intercreditor Agreement.

                  SECTION 13.  INDEMNITY AND EXPENSES.

                  (a) Pledgor agrees to indemnify Collateral Agent and each
Benefited Party from and against any and all claims, losses and liabilities in
any way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Collateral Agent's or such Benefited Party's gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction.

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<PAGE>

                  (b) Pledgor agrees to pay to Collateral Agent upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Collateral Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Collateral Agent hereunder, or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.

                  (c) Anything contained in this Agreement to the contrary
notwithstanding, the obligations of Pledgor set forth in this Section 13 are
included herein solely for the purpose of including such obligations within the
Secured Obligations, and such obligations shall in all respects be limited by
the provisions of Section 27; accordingly, nothing in this Section 13 shall be
construed in a manner which shall obligate Pledgor to make any payment, or
provide any security, to Collateral Agent with respect to such obligations apart
from the grant of the security interest in the Pledged Collateral as set forth
in Section 1 hereof.

                  (d) In the event of any registered offering described in
Section 11(d), Pledgor agrees to indemnify and hold harmless Collateral Agent
and each of Collateral Agent's directors, officers, employees and agents from
and against any loss, fee, cost, expense, damage, liability or claim, joint or
several, to which Collateral Agent or such other persons may become subject or
for which any of them may be liable, under the Securities Act or otherwise,
insofar as such losses, fees, costs, expenses, damages, liabilities or claims
(or any litigation commenced or threatened in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, registration statement, prospectus
or other such document published or filed in connection with such registered
offering, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will promptly reimburse Collateral Agent and such other persons for any
legal or other expenses reasonably incurred by Collateral Agent and such other
persons in connection with any litigation, of any nature whatsoever, commenced
or threatened in respect thereof (including without limitation any and all fees,
costs and expenses whatsoever reasonably incurred by Collateral Agent and such
other persons and counsel for Collateral Agent and such other persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity shall be in
addition to any liability which Pledgor may otherwise have and shall extend upon
the same terms and conditions to each person, if any, that controls Collateral
Agent or such persons within the meaning of the Securities Act.

                  (e) The obligations of Pledgor in this Section 13 shall (i)
survive the termination of this Agreement and the discharge of Pledgor's other
obligations under this Agreement, the Revolver Credit Agreement and the Term
Loan Agreement (subject to the terms of the Intercreditor Agreement).

                  SECTION 14.  CONTINUING SECURITY INTERESTS; TRANSFER OF LOANS.

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<PAGE>

                  (a) This Agreement shall create a continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect until
the payment in full of all Secured Obligations (other than contingent
indemnification Secured Obligations with respect to claims which have not yet
arisen), and the cancellation or termination of all commitments to extend credit
under the Credit Documents (collectively, the "COMMITMENTS"), (ii) be binding
upon Pledgor, its successors and assigns, and (iii) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), but subject to the relevant assignment
provisions set forth in each of the Credit Documents and the Intercreditor
Agreement, (A) the Revolver Agent or any Revolver Lender may assign or otherwise
transfer its rights under the Revolver Credit Agreement to any other Person, and
in each case such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Revolver Agent or such Revolver
Lender, as applicable, herein or otherwise (subject to the terms of the
Intercreditor Agreement) and (B) any Term Loan Agent and any Term Loan Lender
may assign or otherwise transfer its rights under the Term Loan Agreement to any
other Person, and in each case such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Term Loan Agent or such
Term Loan Lender, as applicable, herein or otherwise (subject to the terms of
the Intercreditor Agreement).

                  (b) Upon the payment in full of all Secured Obligations (other
than contingent indemnification Secured Obligations with respect to claims which
have not yet arisen), and the cancellation or termination of the Commitments,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to Pledgor. Upon any such termination Collateral
Agent will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination. In addition,
upon the proposed sale, transfer or other disposition of any Pledged Collateral
by Pledgor in accordance with the relevant provisions of each Credit Document
for which Pledgor desires to obtain a security interest release from Collateral
Agent, Pledgor shall deliver an Officer's Certificate (x) stating that the
Pledged Collateral subject to such disposition is being sold, transferred or
otherwise disposed of in compliance with the terms of the Credit Documents and
(y) specifying the Pledged Collateral being sold, transferred or otherwise
disposed of in the proposed transaction. Upon the receipt of such Officer's
Certificate and so long as (i) no Event of Default has occurred and is
continuing or would result from the proposed disposition of the Pledged
Collateral, (ii) such disposition is expressly permitted by the Credit
Documents, and (iii) the proceeds from such disposition are applied in
accordance with the Credit Documents and, with respect to proceeds received by
Pledgor, in accordance with this Agreement, Collateral Agent shall, at Pledgor's
expense, so long as Collateral Agent believes in good faith that the Officer's
Certificate delivered by Pledgor with respect to such sale is true, correct and
complete, execute and deliver such releases of its security interest in such
Pledged Collateral which is to be so sold, transferred or disposed of, as may be
reasonably requested by Pledgor.

                  SECTION 15.  COLLATERAL AGENT AS AGENT.

                  (a) Pursuant to the Intercreditor Agreement, Collateral Agent
has been appointed to act as Collateral Agent hereunder by the Benefited
Parties. Collateral Agent

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                                     VIII-14

<PAGE>

shall be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation the release or
substitution of Pledged Collateral), solely in accordance with this Agreement,
the Intercreditor Agreement and the other Credit Documents; provided that
Collateral Agent shall exercise, or refrain from exercising, any remedies
provided for in Section 11 in accordance with the instructions of Requisite
Obligees.

                  (b) Collateral Agent shall at all times be the same Person
that is Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to subsections 6.1(h) or (i) of the
Intercreditor Agreement shall also constitute notice of resignation as
Collateral Agent under this Agreement; removal of Collateral Agent pursuant to
subsections 6.1(h) or (i) of the Intercreditor Agreement shall also constitute
removal as Collateral Agent under this Agreement; and appointment of a successor
Collateral Agent pursuant to subsections 6.1(h) or (i) of the Intercreditor
Agreement shall also constitute appointment of a successor Collateral Agent
under this Agreement. Upon the acceptance of any appointment as Collateral Agent
under subsections 6.1(h) or (i) of the Intercreditor Agreement by a successor
Collateral Agent, that 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 retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interest created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.

                  SECTION 16.  [INTENTIONALLY OMITTED]

                  SECTION 17. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Collateral Agent and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.

                  SECTION 18. NOTICES. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, or sent by telefacsimile
or United States mail or courier service or electronic mail and shall be deemed
to have been given (a) when delivered in person or by courier service, (b) upon
receipt of telefacsimile in complete and legible form, or (c) three

CEA Stock Pledge Agreement

                                     VIII-15

<PAGE>

Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Collateral Agent shall not be
effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such Person in a written
notice delivered to such other party hereto.

                  Notices and other communications 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
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.

                  SECTION 19. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Collateral Agent in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

                  SECTION 20. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

                  SECTION 21. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.

                  SECTION 22. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION 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, EXCEPT TO THE EXTENT THAT THE UCC
PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Documents, terms used in Articles 8 and 9 of the
UCC are used herein as therein defined. The rules of construction set forth in
subsection 1.3 of each Credit Agreement shall be applicable to this Agreement
mutatis mutandis.

CEA Stock Pledge Agreement

                                     VIII-16

<PAGE>

                  SECTION 23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, PLEDGOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH 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 PLEDGOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 18; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PLEDGOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT; (V) AGREES THAT COLLATERAL AGENT RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT
THE PROVISIONS OF THIS SECTION 23 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.

                  SECTION 24. WAIVER OF JURY TRIAL. PLEDGOR AND COLLATERAL AGENT
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. 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 without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Pledgor and Collateral
Agent acknowledge that this waiver is a material inducement for Pledgor and
Collateral Agent to enter into a business relationship, that Pledgor and
Collateral Agent have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Pledgor and Collateral Agent further warrant and represent 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 (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,

CEA Stock Pledge Agreement

                                     VIII-17

<PAGE>

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.

                  SECTION 25. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart thereof.

                  SECTION 26.  SURETYSHIP WAIVERS BY PLEDGOR, ETC.

                  (a) Pledgor agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than payment in full of all Secured Obligations (other
than contingent indemnification Secured Obligations with respect to claims which
have not yet arisen). In furtherance of the foregoing and without limiting the
generality thereof, Pledgor agrees as follows: (i) Collateral Agent or any
Benefited Party may from time to time, without notice or demand and without
affecting the validity or enforceability of this Agreement or giving rise to any
limitation, impairment or discharge of Pledgor's liability hereunder, (A) renew,
extend, accelerate or otherwise change the time, place, manner or terms of
payment of the Secured Obligations, (B) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Secured Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations, (C) request and accept guaranties of the Secured Obligations and
take and hold other security for the payment of the Secured Obligations, (D)
release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Secured Obligations, any
guaranties of the Secured Obligations, or any other obligation of any Person
with respect to the Secured Obligations, (E) enforce and apply any other
security now or hereafter held by or for the benefit of Collateral Agent or any
Benefited Party in respect of the Secured Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that Collateral
Agent or any Benefited Party, or any of them, may have against any such
security, as Collateral Agent in its discretion may determine consistent with
the Credit Documents and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (F) exercise any other rights available to Collateral Agent or any Benefited
Party under the Credit Documents at law or in equity; and (ii) this Agreement
and the obligations of Pledgor hereunder shall be valid and enforceable and
shall not be subject to any limitation, impairment or discharge for any reason
(other than payment in full of the Secured Obligations (other than contingent
indemnification Secured Obligations with respect to claims which have not yet
arisen)), including without limitation the occurrence of any of the following,
whether or not Pledgor shall have had notice or knowledge of any of them: (A)
any failure to assert or enforce or agreement not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law or otherwise, of the

CEA Stock Pledge Agreement

                                     VIII-18

<PAGE>

exercise or enforcement of, any claim or demand or any right, power or remedy
with respect to the Secured Obligations or any agreement relating thereto, or
with respect to any guaranty of or other security for the payment of the Secured
Obligations, (B) any waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions of the Credit Documents, or any
agreement or instrument executed pursuant thereto, or of any guaranty or other
security for the Secured Obligations, (C) the Secured Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (D) the application of payments received from any
source to the payment of indebtedness other than the Secured Obligations, even
though Collateral Agent or Benefited Parties, or any of them, might have elected
to apply such payment to any part or all of the Secured Obligations, (E) any
failure to perfect or continue perfection of a security interest in any other
collateral which secures any of the Secured Obligations, (F) any defenses,
set-offs or counterclaims which any Borrower may allege or assert against
Collateral Agent or any Benefited Party in respect of the Secured Obligations,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury, and (G) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of
Pledgor as an obligor in respect of the Secured Obligations.

                  (b) Pledgor hereby waives, for the benefit of Benefited
Parties and Collateral Agent: (i) any right to require Collateral Agent or
Benefited Parties as a condition of payment or performance by Pledgor, to (A)
proceed against any Borrower, any guarantor of the Secured Obligations or any
other Person, (B) proceed against or exhaust any other security held from any
Borrower, any guarantor of the Secured Obligations or any other Person, (C)
proceed against or have resort to any balance of any deposit account or credit
on the books of Collateral Agent, any Benefited Party in favor of any Borrower
or any other Person, or (D) pursue any other remedy in the power of Collateral
Agent or any Benefited Party whatsoever; (ii) any defense arising by reason of
the incapacity, lack of authority or any disability or other defense of any
Borrower including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Secured Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of any Borrower from any cause other than payment in full of all
Secured Obligations; (iii) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (iv) any
defense based upon Collateral Agent's or any Benefited Party's errors or
omissions in the administration of the Secured Obligations, except behavior
which amounts to gross negligence or willful misconduct; (v) (A) any principles
or provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Agreement and any legal or equitable discharge of
Pledgor's obligations hereunder, (B) the benefit of any statute of limitations
affecting Pledgor's liability hereunder or the enforcement hereof, (C) any
rights to set-offs, recoupments and counterclaims, and (D) promptness, diligence
and any requirement that Collateral Agent or any Benefited Party protect,
secure, perfect or insure any other security interest or lien or any property
subject thereto; (vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, notices of
default under the Credit Documents or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the Secured
Obligations or any agreement related thereto, notices of any extension of credit
to any Borrower and

CEA Stock Pledge Agreement

                                     VIII-19

<PAGE>

notices of any of the matters referred to in Section 26(a) and any right to
consent to any thereof; and (vii) to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties, or which may conflict with the
terms of this Agreement.

                  (c) Until the Secured Obligations shall have been paid in full
and the Commitments shall have terminated, Pledgor shall withhold exercise of
(i) any claim, right or remedy, direct or indirect, that Pledgor now has or may
hereafter have against any Borrower or any assets of any Borrower in connection
with this Agreement or the performance by Pledgor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise and including without
limitation (A) any right of subrogation, reimbursement or indemnification that
Pledgor now has or may hereafter have against any Borrower, (B) any right to
enforce, or to participate in, any claim, right or remedy that Collateral Agent
or any Benefited Party now has or may hereafter have against any Borrower, and
(C) any benefit of, and any right to participate in, any other collateral or
security now or hereafter held by Collateral Agent or any Benefited Party, and
(ii) any right of contribution Pledgor now has or may hereafter have against any
guarantor of any of the Secured Obligations. Pledgor further agrees that, to the
extent the agreement to withhold exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification Pledgor may have against
any Borrower or against any other collateral or security, and any rights of
contribution Pledgor may have against any such guarantor, shall be junior and
subordinate to any rights Collateral Agent or Benefited Parties may have against
such Borrower, to all right, title and interest Collateral Agent or Benefited
Parties may have in any such other collateral or security, and to any right
Collateral Agent or Benefited Parties may have against any such guarantor.

                  (d) Benefited Parties and Collateral Agent shall have no
obligation to disclose or discuss with Pledgor their respective assessments, or
Pledgor's assessment, of the financial condition of Borrowers. Pledgor has
adequate means to obtain information from Borrowers on a continuing basis
concerning the financial condition of Borrowers and their ability to perform
their obligations under the Credit Documents and Pledgor assumes the
responsibility for being and keeping informed of the financial condition of
Borrowers and of all circumstances bearing upon the risk of nonpayment of the
Secured Obligations. Pledgor hereby waives and relinquishes any duty on the part
of Collateral Agent or any Benefited Party to disclose any matter, fact or thing
relating to the business, operations or condition of Borrowers now known or
hereafter known by Collateral Agent or any Benefited Party.

                  SECTION 27. LIMITED RECOURSE. Notwithstanding anything to the
contrary in this Agreement, no recourse shall be had, whether by levy or
execution, or under any law, or by the enforcement of any assessment or penalty
or otherwise, for the payment of any of the Secured Obligations, against Pledgor
individually or personally, any successor or Affiliate of Pledgor, or any of the
assets of the aforesaid persons, it being expressly understood that the sole
remedies available to Collateral Agent and the Secured Parties pursuant to this
Agreement with respect to the Secured Obligations shall be against the Pledged
Collateral; provided that nothing in this Section 27 shall (i) constitute a
waiver, release or discharge of

CEA Stock Pledge Agreement

                                     VIII-20

<PAGE>

any of the Secured Obligations, but the same shall continue until fully paid,
discharged, observed or performed, or (ii) in any way limit or restrict any
right of Collateral Agent or the Secured Parties to foreclose the Liens and the
security interest granted pursuant to this Agreement or otherwise realize upon
any of the Pledged Collateral.

                  [Remainder of page intentionally left blank.]

CEA Stock Pledge Agreement

                                     VIII-21

<PAGE>

                  IN WITNESS WHEREOF, Pledgor and Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                                 COVANTA ENERGY AMERICAS, INC.,
                                 as Pledgor

                                 By: __________________________
                                 Name:  _______________________
                                 Title:  ________________________

                                 Notice Address for Pledgor:

CEA Stock Pledge Agreement

                                      S-1

<PAGE>

                                 BANK OF AMERICA, N.A.,
                                 as Collateral Agent

                                 By: __________________________
                                 Name:  _______________________
                                 Title:  ________________________

                                 Notice Address for Collateral Agent:

                                 Bank of America, N.A., as Collateral 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

<PAGE>

                                   SCHEDULE I

                  Attached to and forming a part of the Pledge Agreement dated
as of March __, 2004 between Covanta Energy Americas, Inc., as Pledgor, and Bank
of America, N.A., as Collateral Agent.

                                     Part A

<TABLE>
<CAPTION>
                                                                         AMOUNT OF
                                    CLASS                                 EQUITY          PERCENTAGE
          ISSUER              OF EQUITY INTEREST    CERTIFICATE NOS.     INTERESTS         PLEDGED
<S>                           <C>                   <C>                  <C>              <C>
</TABLE>

CEA Stock Pledge Agreement

                                  SCHEDULE-I-1

<PAGE>

                                   SCHEDULE II

                                PLEDGE AGREEMENT

                                  FILING OFFICE

<TABLE>
<CAPTION>
Pledgor                                     Filing Office
<S>                                         <C>
</TABLE>

CEA Stock Pledge Agreement

                                  SCHEDULE II-1

<PAGE>

                                  SCHEDULE III

                  OFFICE, TYPE AND JURISDICTION OF ORGANIZATION

<TABLE>
<CAPTION>
NAME OF                 TYPE OF                   JURISDICTION OF
PLEDGOR                 ORGANIZATION              ORGANIZATION                ORGANIZATION NUMBER
<S>                     <C>                        <C>                        <C>
</TABLE>

                    NAMES OF PLEDGOR USED IN PAST FIVE YEARS

CEA Stock Pledge Agreement

                                 SCHEDULE III-1

<PAGE>

                                   SCHEDULE IV

                                PLEDGE AMENDMENT

                  This Pledge Amendment, dated ____________, ____, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated March __, 2004, between Covanta Energy Americas, Inc., as
Pledgor, and Bank of America, N.A., as Collateral Agent (the "PLEDGE AGREEMENT,"
capitalized terms defined therein being used herein as therein defined), and
that the Capital Stock listed on this Pledge Amendment shall be deemed to be
part of the Pledged Equity and shall become part of the Pledged Collateral and
shall secure all Secured Obligations.

                                 COVANTA ENERGY AMERICAS, INC.,
                                 as Pledgor

                                 By: ___________________________
                                 Title:

<TABLE>
<CAPTION>
                 Class of                          Amount of       Percentage
                 Equity          Certificate       Equity          Ownership           Percentage
  Issuer         Interests       Nos.              Interests       Interest            Pledged
<S>              <C>             <C>               <C>             <C>                 <C>
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]